Apartments at LQ Village/Afford Housing 02AFFORDABLE HOUSING AGREEMENT
BY AND AMONG
LA QUINTA REDEVELOPMENT AGENCY
FrE
APARTMENTS AT LA QUINTA VILLAGE L.P.
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TABLE OF CONTENTS
Pie
1.0 DEFINITIONS..................................................................................................................1
1.1 Agency Deed of Trust...........................................................................................1
1.2 Agency Loan.........................................................................................................1
1.3 Agency Loan Documents......................................................................................2
1.4 Agency Note......................................................................................................... 2
1.5 Agency Regulatory Agreement.............................................................................2
1.6 Approved Project Plans and Permits.....................................................................2
1.7 Assignment and Assumption Agreement..............................................................2
1.8 CEQA....................................................................................................................2
1.9 City........................................................................................................................2
1.10 Days...................................................................................................................... 2
1.11 Effective Date.......................................................................................................2
1.12 Enforced Delay.....................................................................................................2
1.13 Executive Director................................................................................................ 2
1.14 Hazardous Materials.............................................................................................2
1.15 Landaq...................................................................................................................3
1.16 Landaq Restrictions.............................................................................................. 3
1.17 Participant............................................................................................................. 3
1.18 Project................................................................................................................... 3
1.19 Project Area.......................................................................................................... 3
1.20 Redevelopment Plan ............................................................................................. 3
1.21 Release of Construction Covenants...................................................................... 3
1.22 Restricted Units.....................................................................................................3
1.23 Schedule of Performance...................................................................................... 4
1.24 Site........................................................................................................................4
1.25 Subordination Agreement..................................................................................... 4
1.26 Title Commitment................................................................................................. 4
1.27 Title Company......................................................................................................4
1.28 Unrestricted Units................................................................................................. 4
2.0 PURPOSE OF AGREEMENT.........................................................................................4
3.0 CURRENT OWNERSHIP OF THE SITE; PARTICIPANT ACQUISITION
OFTHE SITE...................................................................................................................4
3.1 Ownership of the Site............................................................................................4
3.2 Agency Title Policy.............................................................................................. 5
3.3 Conditions to Agency's Performance................................................................... 5
3.4 Brokerage Commissions....................................................................................... 6
3.5 Taxes and Assessments and Liens........................................................................ 6
4.0 AGENCY LOAN; PHYSICAL CONDITION OF SITE.................................................6
4.1 Agency Loan; Disbursement.................................................................................6
4.2 Agency Note; Agency Deed of Trust.................................................................... 6
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4.3 Termination of Agreement.................................................................................... 6
4.4 Physical Condition of Site.................................................................................... 7
5.0 PARTICIPANT REPRESENTATIONS AND WARRANTIES......................................7
5.1 Effective Date of Representations and Warranties ............................................... 7
5.2 Representations and Warranties............................................................................8
6.0 PROJECT DEVELOPMENT...........................................................................................9
6.1
Construction of the Project...................................................................................
9
6.2
Indemnification...................................................................................................11
6.3
Applicable Laws.................................................................................................11
6.4
Release of Construction Covenants....................................................................12
7.0 TRANSFER AND ASSIGNMENT................................................................................12
7.1 Sale or Transfer of the Project............................................................................12
7.2 Transfer Defined.................................................................................................12
7.3 Agency Approval of Transfer Required.............................................................13
7.4 Assignment and Assumption Agreement............................................................14
7.5 Permitted Transferee...........................................................................................14
8.0 INSURANCE..................................................................................................................14
9.0 RIGHTS OF HOLDERS OF APPROVED SECURITY INTERESTS IN SITE ........... 15
9.1 Definitions...........................................................................................................15
9.2 Limitation on Encumbrances..............................................................................15
9.3 Participant's Breach Does Not Defeat Mortgage Lien.......................................15
9.4 Notice of Default to Mortgagee, Deed of Trust or Other Security
InterestHolders...................................................................................................15
9.5 Right of the Agency to Satisfy Other Liens on the Property After
Conveyanceof Title............................................................................................15
10.0 USE OF THE SITE.........................................................................................................16
10.1 Use of the Site.....................................................................................................16
10.2 No Inconsistent Uses...........................................................................................16
10.3 Obligation to Refrain from Discrimination.........................................................16
10.4 Effect of Covenants.............................................................................................16
11.0 DEFAULT; ENFORCEMENT.......................................................................................17
11.1 Defaults, Right to Cure and Waivers..................................................................17
11.2 Legal Actions......................................................................................................18
11.3 Rights and Remedies are Cumulative.................................................................18
11.4 Attorneys' Fees...................................................................................................18
12.0 MISCELLANEOUS.......................................................................................................19
12.1 Notices................................................................................................................19
12.2 Nonliability of Agency Officials and Employees ............................................... 20
12.3 Time of Essence.................................................................................................. 20
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12.4 Enforced Delay: Extension of Times of Performance.......................................20
12.5
Books and Records.............................................................................................20
12.6
Ownership of Documents...................................................................................21
12.7
Modifications......................................................................................................21
12.8
Binding Effect of Agreement
..............................................................................21
12.9
Severability.........................................................................................................21
12.10
Interpretation.......................................................................................................
21
12.11
Entire Agreement................................................................................................
21
12.12
Waiver; Amendments.........................................................................................21
12.13
Counterparts........................................................................................................
22
12.14
Authority.............................................................................................................22
12.15
Exhibits...............................................................................................................
22
12.16
Effective Date.....................................................................................................22
LIST OF EXHIBITS
Exhibit "A"
Legal Description of Site
Exhibit `B"
Site Map
Exhibit "C"
Scope of Development
Exhibit "D"
Schedule of Performance
Exhibit "E"
Form of Agency Note
Exhibit "F"
Form of Agency Deed of Trust
Exhibit "G"
Form of Agency Regulatory Agreement
Exhibit "H"
Form of Release of Construction Covenants
Exhibit "I"
Form of Subordination Agreement
Exhibit "J"
Form of Assignment and Assumption Agreement
Exhibit "K"
Title Commitment
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AFFORDABLE HOUSING AGREEMENT
THIS AFFORDABLE HOUSING AGREEMENT ("Agreement") is entered into as of
3�,3 (the "Effective Date") by and between the LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and
APARTMENTS AT LA QUINTA VILLAGE L.P., a California limited partnership
("Participant").
RECITALS
A. Agency is a public body, corporate and politic, exercising governmental functions
and powers and organized and existing under the Community Redevelopment Law of the State
of California (California Health and Safety Code Section 33000 et sea.).
B. Participant has recently acquired fee title to that certain unimproved real property
located approximately 630 feet north of Calle Tampico and 150 feet east of Eisenhower Drive, in
the City of La Quinta (as further defined below, the "Site").
C. Agency desires to meet its affordable housing goals by assisting Participant in the
development of an affordable rental housing complex on the Site with not less than two hundred
(200) units, of which seventy-five (75) units shall be the "Restricted Units" (as defined below)
and related interior and exterior improvements, by making certain financial assistance available
to Participant for the Project from the Agency's Low and Moderate Income Housing Fund
(Health & Safety Code § § 33334.2 et se
D. Agency has determined that providing assistance to Participant for the Project is
in the best interests of the City of La Quinta ("City") and the welfare of its citizens. Therefore,
the parties desire to execute this Agreement for the Project on the terms and conditions set forth
below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants and
promises hereinafter contained, and for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, Agency and Participant hereby agree as follows:
1.0 DEFINITIONS.
1.1 Agency Deed of Trust. The term "Agency Deed of Trust" shall mean that certain
Deed of Trust With Assignment of Rents to secure the Agency Note and Participant's
performance of its obligations under the Agency Regulatory Agreement, in the form attached
hereto and incorporated herein as Exhibit "P.
1.2 Agency Loan. The term "Agency Loan" shall mean the loan by Agency to
Participant from Agency's Low and Moderate Income Housing Fund in the amount set forth in
Section 4.1, as evidenced by the Agency Loan Documents, for the purposes of acquiring the Site
and constructing the Project on the Site.
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1.3 Agency Loan Documents. The term "Agency Loan Documents" shall mean,
collectively, the Agency Note, Agency Deed of Trust and Agency Regulatory Agreement.
1.4 AgencNote. The term "Agency Note" shall mean that certain promissory note,
in the form attached hereto and incorporated herein as Exhibit "E", in favor of Agency,
evidencing the loan by Agency to Participant.
1.5 Agency Reguulatoly Agreement. The term "Agency Regulatory Agreement" shall
mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions, in the
form attached hereto and incorporated herein as Exhibit "G".
1.6 Approved Project Plans and Permits. The term "Approved Project Plans and
Permits" shall mean, collectively, the Scope of Development attached hereto and incorporated
herein as Exhibit "C", and all of the plans and permits approved by the Agency and the City for
the Project, including any changes thereto as may be subsequently approved in writing by
Participant, Agency, and City.
1.7 Assignment and Assumption Agreement. The term "Assignment and Assumption
Agreement" shall mean that certain Assignment and Assumption Agreement in the form attached
hereto and incorporated herein as Exhibit "J".
1.8 CEQA. The term "CEQA" shall mean the California Environmental Quality Act,
Public Resources Code Section 21000 et seg., as amended.
1.9 City. The term "City" shall mean the City of La Quinta, a municipal corporation,
having its offices at 78-495 Calle Tampico, La Quinta, CA 92253. The City is not a party to this
Agreement and shall have no obligations hereunder.
1.10 Days. The term "days" shall mean calendar days and the statement of any time
period herein shall be calendar days, and not business days, unless otherwise specified.
1.11 Effective Date. The Effective Date of this Agreement shall mean the later of the
dates this Agreement is executed on behalf of Agency and Participant.
1.12 Enforced Delay. The term "Enforced Delay" shall have the meaning set forth in
Section 12.4.
1.13 Executive Director. The term "Executive Director" shall mean the individual
duly appointed to the position of Executive Director of Agency, or his or her authorized
designee. Whenever an administrative action is required by Agency to implement the terms of
this Agreement, the Agency Executive Director, or his or her authorized designee, shall have
authority to act on behalf of Agency, except with respect to matters reserved for Agency Board
determination.
1.14 Hazardous Materials. The term "Hazardous Materials" shall mean (i) any
hazardous or toxic substance, material or waste which is or becomes regulated by any local or
regional governmental authority, the State of California, or the United States Government and/or
(ii) any substance or material identified by the United States Government, the State of California,
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County of Riverside, or any local or regional governmental authority as hazardous or toxic and
which is included on any list of such substances published by any such governmental entity and
shall specifically include petroleum, petroleum -based products, asbestos and PCBs.
1.15 Landaq. The term "Landaq" shall mean Landaq, Inc., a Delaware corporation,
which is the entity from which Participant acquired the Site.
1.16 Landaq Restrictions. The term "Landaq Restrictions" shall mean, collectively, (i)
the covenants and restrictions contained in the grant deed pursuant to which Landaq conveyed
the Site to Participant ("Grant Deed"), which Grant Deed was recorded on October 24, 2002, as
Instrument No. 2002-600846, in the Official Records of the County of Riverside ("Official
Records"); (ii) that certain Declaration of Development Covenants, Conditions and Restrictions
entered into and recorded on October 24, 2002, as Instrument No. 2002-600848, in the Official
Records, by and between Landaq, as the "Company," and Participant, as the "Builder," which
sets forth certain development and use restrictions with which Participant is required to comply;
and (iii) that certain Option Agreement and Escrow Instructions entered into on or about October
24, 2002, by and between Landaq, as the "Company," and Participant, as the "Builder," which
provides for Participant's grant to Landaq of an option to repurchase the Site in accordance with
the terms thereof, as memorialized by that certain Memorandum of Option entered into by those
parties and recorded on October 24, 2002, as Instrument No. 2002-600849, in the Official
Records.
1.17 Participant. The term "Participant" shall mean Apartments at La Quinta Village
L.P., a California limited partnership, and any permitted assignees and successors of same as set
forth in Section 7.0.
1.18 Project. The term "Project" shall mean the construction on the Site of an
affordable rental housing complex with not less than two hundred (200) units, of which seventy-
five (75) units shall be the Restricted Units, and related interior and exterior improvements,
including, but not limited to, a private recreation center. The Project is more particularly
described in the Scope of Development attached hereto and incorporated herein as Exhibit "C".
1.19 Project Area. The term "Project Area" shall mean Redevelopment Project Area
No. 1 which is located in the City of La Quinta, California. The exact boundaries of the Project
Area are specifically described in the Redevelopment Plan.
1.20 Redevelopment Plan. The term "Redevelopment Plan" shall mean the
Redevelopment Plan for the Project Area, as the same has been amended prior to the Effective
Date and as it may be further amended from time to time. A copy of the Redevelopment Plan in
effect on the Effective Date is on file in the Office of the City Clerk of the City. The
Redevelopment Plan is incorporated herein by this reference as though fully set forth herein.
1.21 Release of Construction Covenants. The term "Release of Construction
Covenants" shall mean that certain Release of Construction Covenants, in the form attached
hereto and incorporated herein as Exhibit "H".
1.22 Restricted Units. The term "Restricted Units" shall mean the seventy-five (75)
rental apartment dwelling units in the Project that are covenanted for affordability, occupancy,
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and with respect to other matters pursuant to this Agreement and the Agency Regulatory
Agreement. Any individual such unit shall be referred to as a "Restricted Unit."
1.23 Schedule of Performance. The term "Schedule of Performance" shall mean that
certain Schedule attached hereto and incorporated herein as Exhibit "D".
1.24 Site. The term "Site" shall mean that certain undeveloped real property, located
approximately 630 feet north of Calle Tampico and 150 feet east of Eisenhower Drive, in the
City of La Quinta. The Site is legally described as Exhibit "A", and is shown on the Site Map
attached hereto and incorporated herein as Exhibit "B".
1.25 Subordination Agreement. The term "Subordination Agreement" shall mean that
certain Subordination Agreement in the form attached hereto and incorporated herein as Exhibit
66
I-1 ", with respect to construction financing, and in the form attached hereto and incorporated
herein as Exhibit I-2, with respect to takeout or permanent financing, with such reasonable
changes thereto as may be requested by the construction, takeout or permanent lender.
1.26 Title Commitment. The term "Title Commitment" shall mean that certain
Commitment for Title Insurance attached hereto and incorporated herein as Exhibit "K".
1.27 Title Company. The term "Title Company" shall mean the title company
approved by Agency and Participant responsible for issuing a lender's policy of title insurance to
the Agency insuring the priority of the Agency Deed of Trust and Agency Regulatory
Agreement.
1.28 Unrestricted Units. The term "Unrestricted Units" shall mean the one hundred
twenty-five (125) rental apartment dwelling units in the Project that are not restricted for
affordability. Any individual such unit shall be referred to herein as an "Unrestricted Unit."
2.0 PURPOSE OF AGREEMENT.
The purpose of this Agreement is to effectuate the Redevelopment Plan for the Project
Area by providing for Participant's construction of the Project on the Site and thereby assisting
in the provision of adequate housing affordable to moderate income households within the City.
The development of the Project on the Site and the fulfillment generally of this Agreement are in
the best interests of the City and the welfare of its residents and are in accordance with the public
purposes and provisions of applicable federal, state, and local laws and regulations, pursuant to
which the Project is being undertaken.
The term of this Agreement shall be fifty-five (55) years, commencing on the date the
Agency issues (or is required to issue, if earlier) the Release of Construction Covenants.
3.0 CURRENT OWNERSHIP OF THE SITE; PARTICIPANT ACQUISITION OF
THE ,SITE.
3.1 Ownership of the Site. Participant is the owner of fee title to the Site. Prior to the
execution of this Agreement, Participant has delivered to Agency true and correct and fully
executed copies of the documents setting forth the Landaq Restrictions, including a copy of the
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Grant Deed. Participant represents that Participant's purchase price for the Site and certain real
property adjacent to the Site was equal to Two Million Dollars ($2,000,000). Participant further
represents to Agency that the portion of said purchase price that represents the purchase price of
the Site is One Million Seven Hundred Thirty -Eight Thousand Three Hundred Fourteen Dollars
($1,738,314). Based on the foregoing, Participant qualifies as an "owner -participant" within the
meaning of the California Community Redevelopment Law (Health & Safety Code § 33000 et
M.). Participant shall indemnify, defend, and hold Agency harmless from and against all
liability, loss, damage, cost, and expense (including expert witness fees, attorney's fees, and
defense costs) arising from or related to any dispute related to any of the Landaq Restrictions,
except that Agency shall be obligated to reimburse Participant for all of the costs Participant
incurs in indemnifying and defending Agency under this Section 3.1 if, and to the extent that, a
court of competent jurisdiction determines that the dispute is proximately caused by Agency's
uncured material breach of its obligations under that certain subordination agreement to be
executed by and between Agency and Landaq and recorded on or about the date the Agency
Regulatory Agreement is recorded, for which breach Agency has received notice.
3.2 Agency Title Policy. On February 26, 2003, the Title Company delivered to
Agency an updated commitment for title insurance dated January 14, 2003, as Order No.
2197891 (Update 4/Amended 1) (the "Title Commitment"). Participant shall, at no cost to
Agency, cause the Title Company to issue and deliver to Agency an ALTA lender's policy of
title insurance, together with such endorsements as may be reasonably requested by Agency,
with liability in the amount of the Agency Note, covering the Site, showing title vested in
Participant and insuring the validity and priority of, respectively, the Agency Deed of Trust and
Agency Regulatory Agreement (the "Agency Title Policy") subject only to:
3.2.1 those exceptions to title set forth in the Title Commitment;
3.2.1 all nondelinquent general and special real property taxes and assessments;
3.2.2 the Grant Deed; and
3.2.3 such other matters as may be approved in writing by the Executive
Director.
3.3 Conditions to Agency's Performance. As a further condition precedent to
Agency's performance of its obligations set forth in this Agreement, all of the following shall
have been performed or completed by the date set forth in the Schedule of Performance):
3.3.1 Participant shall have executed (and acknowledged where required) and
submitted to Agency the Agency Note, Agency Deed of Trust and Agency Regulatory
Agreement, and all other agreements and documents reasonably required to be signed by
Participant pursuant to this Agreement and the agreements and documents referenced in this
Agreement.
3.3.2 The Title Company shall have committed to issue the Agency Title Policy
with only those exceptions pre -approved in this Agreement and such additional exceptions, if
any, as may be approved by the Executive Director in his/her sole and absolute discretion.
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3.3.3 Participant shall have submitted to the Executive Director the evidence of
insurance required by the Agency Regulatory Agreement, with such insurance coverages to be
effective as of the Effective Date.
3.3.4 Participant shall have obtained all necessary land use entitlements to
construct the Project.
3.3.5 Participant is not in material default of (i) any of the terms of this
Agreement; or (ii) any of the Landaq Restrictions.
3.4 Brokerage Commissions. Participant and Agency shall each indemnify, defend,
and hold harmless the other from and against all liabilities, costs, damages, and expenses,
including, without limitation, attorneys' fees, resulting from any claims for fees or commissions,
based upon agreements by the other or any person or entity affiliated with the other, if any, to
pay a broker's commission and/or finder's fee pertaining to Participant's acquisition of the Site.
No such fee(s), if any, shall be paid out of the Agency Loan.
3.5 Taxes and Assessments and Liens. Participant shall pay, when due, all real estate
taxes and assessments assessed or levied against all or any portion of the Site subsequent to
conveyance of title.
4.0 AGENCY LOAN; PHYSICAL CONDITION OF SITE.
4.1 Agency Loan; Disbursement. Subject to the terms and conditions of this
Agreement, including, but not limited to, the conditions to disbursement set forth in the Agency
Note, Agency shall assist in the financing of the construction of the Project by providing
Participant with the Agency Loan from the Agency's Low and Moderate Income Housing Fund
in the amount of THREE MILLION DOLLARS ($3,000,000.00). The Agency Loan shall be
disbursed in accordance with the terms of the Agency Note.
The Agency Loan shall be evidenced by the Agency Note and Agency Deed of Trust.
Interest, in the amount of seven percent (7%) per annum, shall accrue on each portion of the
Agency Loan commencing on the date such portion is disbursed.
4.2 Agency Note; Agency Deed of Trust. Repayment of the Agency Loan shall be in
accordance with the terms of the Agency Note, attached hereto and incorporated herein as
Exhibit "E." Repayment of the Agency Note shall be partially secured by the Agency Deed of
Trust up until such time when the Agency has issued (or is required to issue, if earlier) a Release
of Construction Covenants for the Project, and thereafter, the Agency Deed of Trust shall no
longer secure (i) the Agency Note (which shall be canceled at such time) or (ii) the obligations
that are required to be released pursuant to the Release of Construction Covenants.
4.3 Termination of Agreement. Notwithstanding anything herein to the contrary, in
the event that (i) any or all of the conditions to Agency's disbursement of the Agency Loan have
not been met within the applicable times required therefor, and (ii) no portion of the Agency
Loan has been disbursed to Participant, either party may terminate this Agreement and any
agreements executed pursuant hereto without any further liability to either Agency or Participant.
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Upon such termination, all agreements executed pursuant hereto shall become void and
unenforceable.
4.4 Physical Condition of Site.
4.4.1 Disclaimer of Warranties. Participant acknowledges that neither the
Agency nor any of its officials, employees, agents, contractors, or representatives have made any
representations, warranties or agreements to or with Participant on behalf of Agency as to any
matters concerning the Site, the present use thereof, or the suitability of Participant's intended or
contemplated use of the Site. The foregoing disclaimer includes, without limitation, topography,
climate, air, water rights, utilities, present and future zoning, soil, subsoil, Hazardous Materials,
patent and latent physical conditions or defects, the purposes to which the Site is suited,
drainage, access to public roads, and the availability of governmental permits or approvals of any
kind. Participant represents and warrants to Agency that it has investigated the Site, and has
knowledge of the operative governmental laws and regulations (including, but not limited to,
zoning, environmental, hazardous waste and land use laws and regulations) to which the Site
may be subject, and has acquired the Site on the basis of its review and determination of the
application and effect of such laws and regulations. Participant has neither received nor relied
upon any representations concerning such laws and regulations made by Agency or its
employees, agents, contractors, or representatives, or any other person acting on the behalf of
Agency except as set forth in this Agreement. Any agreements, warranties, or representations
not expressly contained in this Agreement shall in no way bind Agency. Participant
acknowledges that it is fully responsible for obtaining any and all permits from the City and
other governmental entities as may be required for the Project. Nothing in this paragraph is
intended to defeat or declare void any permits, approvals, or entitlements that Participant has
obtained with respect to the Site prior to the date of this Agreement.
4.4.2 Participant Indemnity Regarding Physical Condition of the Site. From and
after the Effective Date, Participant shall indemnify, defend, and hold Agency harmless from and
against any and all claims, suits, penalties, expenses, losses, damages, attorney's fees, judgments,
or any other action or damage of any kind or nature arising out of or related to any of the matters
described in Section 4.4.1, relating to acts or omissions prior to foreclosure by Agency. Subject
to the foregoing limitation, notwithstanding any other provision of this Agreement to the
contrary, Participant's indemnification as set forth in this Section 4.4.2 shall survive the
termination of this Agreement and shall continue in perpetuity; provided, however, that Agency
shall cooperate, at no cost to Agency, in Participant's defense under this Section 4.4.2.
4.4.3 Provisions of Section 4.4.2 Not Binding on Holder of Mortgage.
Notwithstanding anything to the contrary contained herein, the indemnity obligations set forth
under Section 4.4.2 shall not be binding upon any holder of record of a mortgage on the Site,
whether before or after such holder's acquisition of the Site by foreclosure of such mortgage, or
deed -in -lieu thereof.
5.0 PARTICIPANT REPRESENTATIONS AND WARRANTIES.
5.1 Effective Date of Representations and Warranties. All of the representations and
warranties set forth in this Section 5.0 are valid as of Effective Date and shall remain valid, true,
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and correct unless Participant discloses to Agency in writing a change in any of the
representations or warranties set forth herein.
5.2 Representations and Warranties. In addition to other representations and
warranties of Participant set forth in this Agreement, Participant hereby makes the following
representations, covenants, and warranties for the benefit of Agency and Agency's successors
and assigns, and acknowledges that the execution of this Agreement by Agency has been made
in material reliance by Agency on such representations and warranties:
5.2.1 No Default. Other than the consents obtained as set forth in this
Agreement, the execution and delivery of this Agreement and all other documents to be executed
by Participant pursuant to this Agreement will not constitute or result in any default or event that
with notice or the lapse of time, or both, would be a default, breach, or violation of any other
agreement, instrument, or arrangement by which Participant is bound.
5.2.2 No Violation. The execution and delivery of this Agreement and all other
documents to be executed by Participant pursuant to this Agreement and the consummation of
the transactions contemplated herein will not violate any provision of or require any consent,
authorization, or approval under any law or administrative regulation or any other order, award,
judgment, writ, injunction or decree applicable to, or any governmental permit or license issued
to Participant.
5.2.3 No Bankruptcy. Participant has not filed or been the subject of any filing
of a petition under the Federal Bankruptcy Law or any insolvency laws, or any laws for the
discharge of indebtedness or for the reorganization of debtors.
5.2.4 No Misrepresentation. No representation, warranty, or covenant of
Participant in this Agreement, or in any document or certificate furnished or to be furnished to
Agency pursuant to this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
5.2.5 Due Execution. This Agreement and all other documents to be executed
by Participant pursuant to this Agreement have been or will be duly executed by Participant and
constitute valid, binding, and enforceable obligations of Participant. If other than an individual,
Participant has complied with all laws and regulations concerning its organization, existence, and
transaction of business.
5.2.6 No Extraneous Consideration. Participant has not paid or given to, and
will not pay or give to, Agency or any official or agent of Agency any money or other
consideration for obtaining this Agreement, except as may be expressly provided herein.
5.2.7 Financial Information. All financial information delivered to Agency,
including, without limitation, information relating to the financial condition of Participant, the
Site, and the Project accurately represents such financial condition and has been prepared in
accordance with accepted accounting principles consistently applied, unless otherwise noted in
such information. Participant shall notify Agency in writing of any material changes to such
information delivered to the Agency.
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6.0 PROJECT DEVELOPMENT.
6.1 Construction of the Project.
6.1.1 Development In Accordance With Plans. Participant shall develop the
Project in accordance with this Agreement and the Approved Plans and Permits. As completed,
the Project: (a) shall comply with all applicable laws and ordinances of all governmental
authorities, including, without limitation, all laws and ordinances necessary to permit
rehabilitation of the Site as permitted by this Agreement; and (b) will be wholly in compliance
with any enforceable building restriction laws, however established, and will not violate any
enforceable use, easement, license, covenant, condition, or other restriction affecting the Site.
6.1.2 Evolution of Development Plans. Within the times set forth in the
Schedule of Performance, Participant shall submit to the City preliminary and final drawings and
specifications for development of the Project in accordance with the Scope of Development, the
concept drawings, and in accordance with the City's requirements. The term preliminary and
final drawings shall be deemed to include, unless otherwise waived by City, site plans, building
plans and elevations, landscaping plans, parking plans, and all other plans, drawings, and
specifications required to obtain site plan approval and, with respect to final drawings, to obtain
a building permit. Said plans, drawings and specifications shall be consistent with the Scope of
Development and the various development approvals referenced hereinabove, except as such
items may be amended by City (if applicable) and by mutual consent of City, Agency, and
Participant. Plans, (concept, preliminary and construction) shall be progressively more detailed.
6.1.3 Other Governmental Permits. Before commencement of construction or
development of any buildings, structures, or other work of improvement upon the Site,
Participant shall secure or cause to be secured any and all permits and approvals which may be
required by City or any other governmental agency affected by such construction, development,
or work to be performed by Participant pursuant to the Scope of Development, including, but not
limited to, necessary building permits and all approvals required under CEQA. Not by way of
limiting the foregoing, in constructing the Project, Participant shall comply with all applicable
development standards in City's Municipal Code and shall comply with all building code,
landscaping, signage, and parking requirements except as may be permitted through approved
variances and modifications. Agency agrees, at no cost to Agency, to reasonably assist
Participant in its efforts to obtain permits and approvals for the Project; provided, however, that
Agency does not represent, warrant, or guarantee that any permit or approval will be granted or
issued or that any such permit or approval will be granted or issued with or without any
particular conditions.
6.1.4 Cost of Construction; Subordination. Except for the Agency Loan,
Participant shall bear all costs of preparing and developing the Project and constructing and
rehabilitating all improvements on the Site, including, but not limited to, any and all costs for
construction, architectural and engineering plans, preparation of the Site, costs associated with
meeting applicable seismic standards, interim and permanent financing, and fees or charges for
development and building.
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The Agency agrees to subordinate the Agency Deed of Trust, Regulatory
Agreement, and the rights of Agency under this Agreement to Participant's construction loan and
subsequent permanent and/or construction loans, provided that (i) the maximum cumulative
principal amount of the construction or permanent loan(s) (as applicable) shall not exceed the
greater of (A) ninety percent (90%) of the proposed lender's appraised value of the Site upon
completion of the Project (based upon stabilized value), which amount shall be verified in
writing to Agency Executive Director's reasonable satisfaction, and (B) with respect to takeout
or permanent financing, the outstanding indebtedness under the prior loan to which the Agency
subordinated; (ii) the loan(s) shall obligate Participant to expend loan proceeds for no other
purpose than construction of the Project or refinance, from time to time, of a loan secured by the
Project that was previously subordinated to by the Agency; and (iii) the loan(s) shall be entered
into in connection with execution by Agency of a subordination agreement, substantially in the
form attached hereto and incorporated herein as Exhibit "I-1", with respect to the construction
loan, and Exhibit "I-2", with respect to the takeout or permanent financing, or such other form
that shall be reasonably requested by Participant's lender and reasonably approved by Agency's
Executive Director (which form Agency agrees to promptly execute and deliver upon
Participant's request therefor) ("Subordination Agreement"). Notwithstanding clause (ii) above,
to the extent that the amount of a refinance loan authorized by this Section, and obtained after the
time Agency issues (or is required to issue) a Release of Construction Covenants for the Project,
exceeds the amount of the loan it replaces, the additional proceeds of such refinance loan may be
distributed to Participant.
Agency agrees that the lender may, during the period of default, proceed with its
rights and remedies against Participant as a result of such default (including, without limitation,
foreclosure), subject only to the cure rights set forth in a Subordination Agreement executed
pursuant to this Section. In agreeing to provide the subordination referred to in this Section,
Agency hereby incorporates the finding required to be made in accordance with Health and
Safety Code Section 33334.14.
Agency shall provide an estoppel to Participant and/or its lender or a transferee,
upon written request therefor, as to the status of this Agreement, the Agency Regulatory
Agreement, and the Agency Deed of Trust, any default thereunder, and such other matters as
may be reasonably requested.
6.1.5 Construction Schedule; Reports. Participant shall commence and
complete construction of the Project within the times set forth in the Schedule of Performance.
Once construction is commenced, Participant shall diligently pursue such construction to
completion and, subject to Section 12.4 hereof, Participant shall not abandon such construction
for more than ten (10) consecutive business days. Participant shall keep Agency informed of the
progress of construction and submit to the Executive Director written reports of the progress of
construction when and in the form requested; provided, however, that the same shall not be
required to be made more frequently than monthly, except during the continuance of a default.
6.1.6 Drawings and Specifications. Participant shall construct the Project upon
the Site in accordance with the construction drawings, working specifications, and related
documents that shall be submitted to and approved by the Agency and City in advance and in
writing.
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6.1.7 Nondiscrimination During Construction. Participant, for itself and its
successors and assigns, agrees that during the construction of the Project, Participant shall not
discriminate against any employee or applicant for employment because of race, color, creed,
religion, sex, marital status, national origin, or ancestry.
6.1.8 Rights of Access. Representatives of Agency shall have the reasonable
right of access to the Site without charges or fees, at any time during normal construction hours
during the period of construction, upon not less than 48 hours notice provided telephonically or
by facsimile, for the purpose of assuring compliance with this Agreement, including but not
limited to the inspection of the construction work being performed by or on behalf of Participant.
Each such representative(s) of Agency shall identify himself or herself at the job site office upon
his or her entrance to the Site, and shall provide Participant, or the construction superintendent or
similar person in charge on the Site, a reasonable opportunity to have a representative
accompany him or her during the observation. Agency shall indemnify, defend, and hold
Participant harmless from any injury or property damage caused or liability arising out of
Agency's exercise of this right of access, except and to the extent that such injury, damage, or
liability is caused by the negligence or willful misconduct of Participant and/or Participant's
agents, servants, employees or contractors. Any observation, examination, or inspection
occurring by Agency during its/their access pursuant to this Section shall not be construed or
deemed as an inspection pursuant to any building codes or the Municipal Codes or any other
inspection that may be performed by City or any other public entity.
6.1.9 Construction Contract. The Agency acknowledges and agrees that
Participant shall act as the party that hires the general contractor for the improvements required
to be constructed by Participant for the Project. Participant shall comply with all applicable laws
and regulations pertaining to the contracting of work for construction of the improvements,
including but not limited to the payment of wages for services engaged and bills for materials,
supplies, and equipment. Participant shall not permit any mechanics' or materialmens' liens to
be recorded against the Site, except to the extent the same are bonded over in accordance with
California law.
6.2 Indemnification. During the period of any construction of the improvements
pursuant to this Agreement and until such time as the Agency is required to issue its Release of
Construction Covenants for the Project, Participant agrees to and shall indemnify and hold
Agency and City and their respective agents, servants, employees, or contractors harmless from
and against all liability, loss, damage, cost, or expense (including expert witness fees and
reasonable attorneys' fees and court costs) arising from or as a result of the death of any person
or any accident, injury, loss, or damage whatsoever caused to any person or to the property of
any person which shall occur on the Site and which shall be directly or indirectly caused by the
acts done thereon or any errors or omissions of Participant or its agents, servants, employees,
invitees, or contractors except and to the extent such liability, loss, damage, costs, or expense is
caused by the active negligence or willful misconduct of Agency. The provisions of this Section
shall survive the termination of this Agreement.
6.3 Applicable Laws. Participant shall construct the Project in conformity with all
applicable federal, state, and local laws, rules, and regulations, including, but not limited to,
applicable wage and labor laws. Participant agrees to indemnify, defend, and hold Agency and
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City harmless from and against all liability, loss, damage, cost, or expense (including expert
witness fees and reasonable attorney's fees and costs) arising from or as a result of any violation
of any applicable law, ordinance, statute, rule or regulation, including, but not limited to,
applicable wage and labor laws, except to the extent such violation arises from the active
negligence of Agency.
6.4 Release of Construction Covenants. Upon written request by Participant, and
upon satisfactory completion of the Project, as evidenced by City's issuance of a certificate of
occupancy (excluding a temporary certificate of occupancy issued by City), Agency shall issue
to Participant a Release of Construction Covenants as long as Participant is not in default under
this Agreement or any documents related hereto. The Release of Construction Covenants shall
be, and shall so state, a conclusive determination of satisfactory completion of construction of
the Project. After the date Participant is entitled to issuance of the Release of Construction
Covenants, and notwithstanding any other provision of this Agreement to the contrary, any party
then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site shall
not (because of any such ownership, purchase, lease, or acquisition) incur any obligation or
liability under this Agreement, except that such party shall be bound by the covenants that
survive the issuance of the Release of Construction Covenants, including as set forth in the
Regulatory Agreement. The Release of Construction Covenants is not a notice of completion as
referred to in California Civil Code section 3093.
If Agency refuses or fails to furnish a Release of Construction Covenants after written
request from Participant, Agency shall, within fifteen (15) days after the written request, provide
the Participant a written statement of the reasons Agency refused or failed to furnish a Release of
Construction Covenants. The statement shall also contain the Agency's opinion of the action
Participant must take to obtain a Release of Construction Covenants. If Agency shall have failed
to provide such written statement within said fifteen (15) day period, Participant shall be deemed
entitled to the Release of Construction Covenants. If Agency refuses or fails to furnish the
Release of Construction Covenants for the reason that specific minor non -life safety items or
materials are not available or landscaping or other punch -list items are not complete and the cost
thereof is less than two percent (2%) of the Agency Loan amount, as set forth in the Project
Budget, Agency shall issue the Release of Construction Covenants upon the posting by
Participant with Agency of a cash deposit, bond, or irrevocable letter of credit (in a form
acceptable to Agency), at Participant's option, in an amount representing one hundred percent
(100%) of the fair value of the work not yet completed.
7.0 TRANSFER AND ASSIGNMENT.
7.1 Sale or Transfer of the Project. Participant covenants that during the term of this
Agreement and the Agency Regulatory Agreement Participant shall not assign this Agreement or
transfer the Site or any of its interests therein except as provided in this Section 7.0.
7.2 Transfer Defined. As used in this Section 7.0, the term "Transfer" shall include
any assignment, hypothecation, mortgage, pledge, conveyance, or encumbrance of this
Agreement, the Site, or the improvements thereon. A Transfer shall also include the transfer to
any person, entity, or group of persons or entities acting in concert of more than fifty percent
(50%) (in the aggregate) of the present ownership and/or control of any person or entity
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constituting Participant, taking all transfers into account on a cumulative basis. In the event any
entity constituting Participant, its successor or the constituent partners or members of Participant
or any successor of Participant, is a corporation or trust, such transfer shall refer to the transfer of
the issued and outstanding capital stock of such corporation, or of beneficial interests of such
trust; in the event that any entity constituting Participant, its successor or the constituent partners
of Participant or any successor of Participant is a limited or general partnership, such transfer
shall refer to the transfer of more than fifty percent (50%) of such limited or general partnership
interest; in the event that any entity constituting Participant, its successor or the constituent
members of Participant or any successor of Participant is a limited liability company, such
transfer shall refer to the transfer of more than fifty percent (50%) of such membership interest;
in the event that any entity constituting Participant, its successor or the constituent partners of
Participant or any successor of Participant is a joint venture, such transfer shall refer to the
transfer of more than fifty percent (50%) of the ownership and/or control of any such joint
venture partner, taking all transfers into account on a cumulative basis.
7.3 Agency Approval of Transfer Required. Except as set forth below, Participant
shall not Transfer this Agreement or any of Participant's rights hereunder, or any interest in the
Site or in the improvements thereon, directly or indirectly, voluntarily or by operation of law,
without the prior written approval of Agency, which approval shall not be unreasonably
withheld, conditioned, or delayed, and any such purported Transfer without such approval shall
be null and void. Notwithstanding the foregoing, the following types of transfers shall not
require Agency approval but as with all Transfers shall be subject to Section 7.4:
(i) Transfers to any entity or entities owned or controlled directly or
indirectly by Participant or any of its respective shareholders, partners, or
members, to any limited liability company in which Participant is the
managing member, or to any parent corporation or subsidiary corporation
of any partners of Participant, or to any entity or entities controlled by any
such shareholders or partners, or to any members of any entity which is a
partner of Participant, or to any of its constituent members or partners;
(ii) The leasing of individual rental units on the Site provided that such leasing
is in accordance with the terms of this Agreement and of the Agency
Regulatory Agreement;
(iii) Transfers resulting from the death or mental or physical incapacity of an
individual;
(iv) Transfers in trust for the benefit of a spouse, children, grandchildren, or
other family member, or for charitable purposes;
(v) Transfers of stock in a publicly -held corporation or of the beneficial
interest in any publicly -held partnership or real estate investment trust;
(vi) Any mortgage, deed of trust, sale and leaseback, or other form of
conveyance required for any reasonable method of financing or
refinancing the acquisition of the Site and development of the Project
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thereon, including all direct and indirect costs related thereto, and any
transfer to a lender or a third party (or a wholly owned subsidiary of such
lender) (by foreclosure or otherwise upon default by Participant) in
connection with such financing; or
(vii) The conveyance or dedication or portions of the Site to the City or other
governmental entity, or the granting of easements or permits to facilitate
the development of the Site.
Agency shall reasonably consider approving a transfer to an entity not owned or
controlled by Participant provided such entity has both of the following: (A) the financial
strength and capability, equal to or greater than the financial strength and capability of
Participant, to perform Participant's obligations hereunder; and (B) the experience and expertise,
at levels equal to or greater than the experience and expertise of Participant, in the planning,
financing, development, ownership and operation of similar projects. Upon a Transfer by
Participant that has been approved by Agency, and for which Participant has delivered to Agency
a fully executed Assignment and Assumption Agreement that has been approved by Agency, in
accordance with Section 7.4 below, Participant shall be released from liability hereunder from
and after the date thereof.
7.4 Assignment and Assumption Agreement. In the absence of specific written
agreement by Agency, no Transfer by Participant of all or any portion of its interest in the Site or
this Agreement, whether or not requiring the approval by Agency, shall be deemed to relieve
Participant or any successor party from the obligation to timely complete construction of the
Project. In addition, no attempted Transfer of any of Participant's obligations hereunder shall be
effective unless and until Participant and the transferee or successor party execute and deliver to
Agency a binding assignment and assumption agreement substantially in the form of Exhibit "J"
attached hereto and incorporated herein by this reference, or upon request of Participant, another
form to be reasonably approved by Agency's legal counsel, to accommodate the reasonable
requests of the assuming party ("Assignment and Assumption Agreement").
7.5 Permitted Transferee. A "Permitted Transferee" under this Agreement shall be a
transferee or assignee that either (i), has been approved by the Executive Director, or (ii) is a
transferee of a Transfer not requiring the approval of the Executive Director pursuant to the
terms of this Agreement, and both the cases described in the foregoing clauses (i) and (ii) has
executed and delivered to the Executive Director an Assignment and Assumption Agreement
pursuant to Section 7.4.
8.0 INSURANCE.
From and after the Effective Date, and for the term of the Agency Regulatory Agreement,
Participant shall procure and maintain, at its sole cost and expense, the insurance set forth in the
Agency Regulatory Agreement. Not later than the Effective Date of this Agreement, Participant
shall provide the Executive Director with Certificates of Insurance or appropriate insurance
binders evidencing said insurance coverages and said Certificates of Insurance or binders shall
be subject to the reasonable approval of the Executive Director. Notwithstanding the above,
Participant shall not be required to procure and maintain, and to provide the Executive Director
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with Certificates of Insurance or binders evidencing, all risk insurance, until such time as
Participant commences construction of the Project on the Site (as the term "commencement of
construction of the Project" is defined in the Agency Regulatory Agreement).
Participant agrees that the provisions of this Section shall not be construed as limiting in
any way the extent to which Participant may be held responsible for the payment of damages to
any persons or property resulting from the Participant's activities or the activities of any person
or persons for which the Participant is otherwise responsible.
9.0 RIGIfTS OF HOLDERS OF APPROVED SECURITY INTERESTS IN SITE.
9.1 Definitions. As used in this Section 9.0, the term "mortgage" shall include any
mortgage, whether a leasehold mortgage or otherwise, deed of trust, or other security interest, or
sale and lease -back, or any other form of conveyance for financing. The term "holder" shall
include the holder of any such mortgage, deed of trust, or other security interest, or the lessor
under a lease -back, or the grantee under any other conveyance for financing.
9.2 Limitation on Encumbrances. Except as otherwise permitted by this Agreement,
including but not limited to clause (vi) of Section 7.3, Participant shall not mortgage the Site or
any portion thereof or any interest therein, any other mortgages or conveyances for financing that
encumber the Site or any portion thereof, without the prior written approval of the Executive
Director, which approval shall not be unreasonably withheld.
9.3 Participant's Breach Does Not Defeat Mortgage Lien. Participant's breach of any
of the covenants or restrictions contained in this Agreement or in the Agency Regulatory
Agreement shall not defeat or render invalid the lien of any mortgage permitted pursuant to this
Agreement, made in good faith and for value as to the Site, or any part thereof or interest therein,
but unless otherwise provided herein, the terms, conditions, covenants, restrictions, easements,
and reservations of this Agreement shall be binding and effective against the owner of the Site,
from and after such time said owner, including any lender, acquires the Site by foreclosure,
trustee's sale, or otherwise (except to the extent Agency has subordinated its rights pursuant to
section 6.1.4 above, in which event, upon foreclosure by the holder of such senior lien, the
covenants, restrictions, and obligations contained in this Agreement shall be deemed eliminated
following such sale).
9.4 Notice of Default to Mortgagee, Deed of Trust or Other Security Interest Holders.
Whenever Agency shall deliver any notice or demand to Participant with respect to any breach or
default by Participant hereunder, Agency shall at the same time deliver a copy of such notice or
demand to each holder of record of any mortgage who has previously made a written request to
Agency therefor, or to the representative of such lender as may be identified in such a written
request by the lender. No notice of default shall be effective as to the holder unless such notice
is given. Agency shall permit the holder of such mortgage to cure any such breach or default in
accordance with the Subordination Agreement entered into by and between the lender and
Agency.
9.5 Right of the Agency to Satisfy Other Liens on the Property After Conveyance of
Title. Prior to the recordation of the Release of Construction Covenants for the Project (or the
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date Agency is required to issue the Release of Construction Covenants, if earlier), and after
Participant has had a reasonable time to challenge, cure, or satisfy any liens or encumbrances on
the Site or any portion thereof which have not been approved by Agency, Agency shall have the
right to satisfy any such liens or encumbrances; provided, however, that (i) Agency shall notify
Participant at least ten (10) days prior to satisfying any liens or encumbrances pursuant to this
Section 9.5, and (ii) nothing in this Agreement shall require Participant to pay or make provision
for the payment of any tax, assessment, lien or charge so long as Participant in good faith shall
contest the validity or amount thereof, and so long as such delay in payment shall not subject the
Site or any portion thereof to forfeiture or sale. Agency shall have the right to reimbursement
from Participant for any amount expended pursuant to this Section, which right of
reimbursement shall be secured by a lien on the Site, with power of sale; provided, however, that
any such lien shall be subordinate to those lien(s) or encumbrance(s) of Participant's
construction and/or takeout/permanent lender(s).
10.0 USE OF THE SITE.
10.1 Use of the Site.
10.1.1 Dwelliniz Units. Participant hereby covenants and agrees, for itself and its
successors and assigns, to use and maintain the Site only as a rental apartment housing project
with two hundred (200) apartment dwelling units ("Units"), with not fewer than seventy-five
(75) of the Units to be rented to persons and families whose income does not exceed 120% of the
median income for Riverside County, adjusted for family size, as determined by the California
Department of Housing and Community Development ("Restricted Units"), all as more fully
described in the Agency Regulatory Agreement. The balance of the Units shall be available for
rent without restriction and are referred to herein as the "Unrestricted Units."
10.2 No Inconsistent Uses. Participant covenants and agrees that it shall not devote the
Site to uses inconsistent with the Redevelopment Plan, the applicable zoning restrictions, this
Agreement, the Agency Regulatory Agreement, or the Agency Loan Documents. Agency
hereby confirms that multifamily residential use (and associated parking) is a use permitted by
the Redevelopment Plan.
10.3 Obligation to Refrain from Discrimination. There shall be no discrimination
against, or segregation of, any persons, or group of persons, on account of race, color, creed,
religion, sex, marital status, ancestry, or national origin in the rental, sale, lease, sublease,
transfer, use, occupancy, or enjoyment of the Site, or any portion thereof, nor shall Participant, or
any person claiming under or through Participant, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use,
or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site or any portion
thereof. The nondiscrimination and nonsegregation covenants contained herein shall remain in
effect until the earlier of (i) foreclosure with respect to the Property, and (ii) termination of the
Agency Regulatory Agreement.
10.4 Effect of Covenants. Agency is deemed a beneficiary of the terms and provisions
of this Agreement and of the restrictions and covenants running with the land, whether or not
appearing in the Agency Regulatory Agreement, for and in its own right and for the purposes of
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protecting the interests of the community in whose favor and for whose benefit the covenants
running with the land have been provided. The covenants in favor of Agency shall run with the
land without regard to whether Agency has been, remains, or is an owner of any land or interest
therein in the Site, or in the Redevelopment Project Area, and shall be effective as both
covenants and equitable servitudes against the Site. Agency shall have the right, if any of the
covenants set forth in this Agreement which are provided for its benefit are breached, to exercise
all rights and remedies and to maintain any actions or suits at law or in equity or other proper
proceedings to enforce the curing of such breaches to which it may be entitled. The covenants
running with the land and their duration are set forth in the Agency Regulatory Agreement.
11.0 DEFAULT; ENFORCEMENT.
11.1 Defaults, Right to Cure and Waivers.
11.1.1 Subject to any Enforced Delay, and unless otherwise more specifically
provided in this Agreement, failure or delay by either party to timely perform any covenant of
this Agreement constitutes a default under this Agreement, but only if the party who so fails or
delays does not commence to cure, correct or remedy such failure or delay within thirty (30)
days after receipt of a written notice specifying such failure or delay, and does not thereafter
prosecute such cure, correction or remedy with diligence to completion.
11.1.2 Any default by Participant under this Agreement, or of the Agency Note,
or of the Agency Deed of Trust, or of the Agency Regulatory Agreement, or of any of the
Landaq Restrictions, shall constitute a default of all of the foregoing agreements entitling
Agency to pursue whatever remedies to which it is entitled under such agreements; provided that
the required notice of default under Section 11.1.1 has been given and the time period to
commence and complete a cure, correction, or remedy of such noticed default has expired
without such default having been cured, corrected, or remedied.
11.1.3 The injured party shall give written notice of default to the party in
default, specifying the default complained of by the injured party. Except as required to protect
against further damages, the injured party may not institute proceedings against the party in
default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall
not constitute a waiver of any default, nor shall it change the time of default.
11.1.4 Except as otherwise provided in this Agreement, waiver by either party of
the performance of any covenant, condition, or promise, shall not invalidate this Agreement, nor
shall it be considered a waiver of any other covenant, condition, or promise. Waiver by either
party of the time for performing any act shall not constitute a waiver of time for performing any
other act or an identical act required to be performed at a later time. The delay or forbearance by
either party in exercising any remedy or right as to any default shall not operate as a waiver of
any default or of any rights or remedies or to deprive 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.
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11.2 Legal Actions.
11.2.1 Institution of Legal Actions. In addition to any other rights or remedies,
and subject to the requirements of Section 11.1, either party may institute legal or equitable
action to cure, correct or remedy any default, to recover damages for any default, or to obtain any
other remedy consistent with the purpose of this Agreement; provided, however, that
notwithstanding the foregoing, (i) in no event shall Participant be entitled to damages of any kind
from Agency, except (A) for damages for out-of-pocket losses resulting from non-performance
by Agency of its covenants under this Agreement, (B) Participant may institute an action to
specifically enforce the terms of this Agreement, including Agency's obligation to provide to
Participant the Agency Loan, but excluding economic loss, lost profits, or any other damages of
like or similar kind or nature, and (C) notwithstanding clause (i)(B) above, Participant may
institute an action for lost rents if Agency wrongfully and intentionally takes possession of the
Site and/or appoints a receiver, pursuant to the Agency Deed of Trust, or otherwise wrongfully
and intentionally prevents Participant from renting units in the Project; and (ii) Agency may not
pursue an action for specific performance if Participant seeks to terminate this Agreement
pursuant to Section 4.3 hereof. Actions must be instituted and maintained in the Superior Court
of the County of Riverside, State of California, in any other appropriate court in that county, or
in the appropriate federal district court.
11.2.2 Applicable Law. The laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
11.2.3 Acceptance of Service of Process. In the event that any legal action is
commenced by Participant against Agency, or by Agency against Participant, service of process
shall be made in such manner as may be provided by California law for service on such entity.
11.3 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 its 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.
11.4 Attorneys' Fees. If either party to this Agreement is required to initiate or defend
any action or proceeding in any way arising out of the parties' agreement to, or performance of,
this Agreement, or is made a party to any such action or proceeding by a third party, such that
the parties hereto are adversarial, the prevailing party, as between the Participant and Agency, in
such action or proceeding, in addition to any other relief which may be granted, whether legal or
equitable, shall be entitled to its/their expert witness fees and reasonable attorneys' fees from the
other. Attorneys' fees shall include attorneys' fees on any appeal, and in addition a party entitled
to attorneys' fees shall be entitled to all other reasonable costs for investigating such action,
taking depositions and discovery and all other necessary costs the court allows which are
incurred in such litigation. All such fees shall be deemed to have accrued on commencement of
such action and shall be enforceable whether or not such action is prosecuted to judgment.
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12.0 MISCELLANEOUS.
12.1 Notices. Formal notices, demands, and communications between Agency and
Participant shall be sufficiently given if (i) personally delivered, (ii) delivered by a reputable
same -day or overnight courier service that provides a receipt showing date and time of delivery,
(iii) delivered by United States mail, registered or certified, postage prepaid, return receipt
requested, or (iv) delivered by facsimile transmission, provided the original of the faxed
communication is delivered within twenty-four (24) hours by one of methods described in
clauses (i), (ii), or (iii) of the foregoing. Delivery shall be made to the following addresses:
If to Agency: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Fax: (760) 777-7101
With a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: M. Katherine Jenson, Esq.
Fax: (714) 546-9035
If to Participant: Apartments at La Quinta Village L.P.
1105 Quail Street
Newport Beach, CA 92655
Attn: Victor Mahoney
Fax: (949) 250-8574
With copies to: Palmieri, Tyler, Wiener, Wilhelm
& Waldron, LLP
2603 Main Street, Ste. 1300
P.O. Box 19712
Irvine, CA, 92014-0220
Attn: Robert Ihrke
Fax: (949) 851-1554
and Croudace & Dietrich
5 Park Place, Suite 1150
Irvine, CA 92614-8591
Attn: Debra M. Dietrich
Fax: (949) 794-9909
Notices that are personally delivered, delivered by messenger/courier, or by fax (provided
there is compliance with the terms of clause (iv) above) shall be deemed effective upon receipt.
Notices delivered by mail shall be deemed effective upon the earlier of actual receipt by the
addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States
Postal System in the manner described in this Section. Such written notices, demands, and
882/015610-0063 19
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communications may be sent in the same manner to such other addresses as a party may from
time to time designate by mail.
12.2 Nonliability of Agency Officials and Employees. No member, official, employee,
or consultant of Agency shall be personally liable to Participant, or any successor in interest of
Participant, in the event of any default or breach by Agency or for any amount which may
become due to Participant or to its successor, or on any obligations under the terms of this
Agreement.
12.3 Time of Essence. Time is of the essence in the performance of this Agreement.
12.4 Enforced Delay: Extension of Times of Performance. Notwithstanding the
foregoing, in addition to specific provisions of this Agreement, performance by either party
hereunder shall not be deemed to be in default where delays or defaults are due to war;
insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; supernatural causes;
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; acts of the other party; acts or the failure to act of a
public or governmental agency or entity (except that acts or the failure to act of Agency shall not
excuse performance by Agency unless the act or failure is caused by the acts or omissions of
Participant); or any other causes beyond the reasonable control or without the fault of the party
claiming an extension of time to perform. In the event of such a delay (herein "Enforced
Delay"), the party delayed shall continue to exercise commercially reasonable efforts to
minimize the period of the delay. An extension of time for any such cause shall be limited to the
period of the Enforced Delay, and shall commence to run from the time of the commencement of
the cause, provided notice by the party claiming such extension is sent to the other party within
fifteen (15) days following the receipt of knowledge of commencement of the cause. The
following shall not be considered as events or causes beyond the control of Participant, and shall
not entitle Participant to an extension of time to perform, except to the extent that they relate to
neglect of Agency: (i) Participant's failure to obtain financing for the Project, (ii) Participant's
failure to negotiate agreements with prospective tenants or users for the Project, (iii) interest
rates or (iv) economic or market conditions. Times of performance under this Agreement may
also be extended by mutual written agreement by Agency and Participant. The Executive
Director shall also have the authority on behalf of Agency to administratively approve extensions
of time not to exceed a cumulative total of one (1) year.
12.5 Books and Records.
12.5.1 Maintenance of Books and Records. Participant shall prepare and
maintain all books, records, and reports necessary to substantiate Participant's compliance with
the terms of this Agreement.
12.5.2 Right to Inspect. Agency shall have the right, upon not less than seventy-
two (72) hours' notice, at all reasonable times during business hours, to inspect the books and
records of the Participant pertinent to the purposes of this Agreement. Said right of inspection
shall not extend to documents privileged under attorney -client or other such privileges.
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12.6 Ownership of Documents. Copies of all drawings, specifications, reports,
records, documents and other materials prepared by Participant, its employees, agents and
subcontractors, in the performance of this Agreement, which documents are in the possession of
Participant and are not confidential or to which other persons have rights, shall be delivered to
Agency upon request in the event of a termination of this Agreement, and Participant shall have
no claim for additional compensation as a result of the exercise by Agency of their respective
rights hereunder. Agency shall have an unrestricted right to use such documents and materials as
if it were in all respects the owner of the same. Participant makes no warranty or representation
regarding the accuracy or sufficiency of such documents for any future use by Agency, and
Participant shall have no liability therefor.
12.7 Modifications. Any alteration, change or modification of or to this Agreement, in
order to become effective, shall be made by written instrument or endorsement thereon and in
each such instance executed on behalf of each party hereto. Modifications may be made in the
sole discretion of Agency and Participant, and no third parties shall have any right to consent or
object thereto.
12.8 Binding Effect of Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their legal representatives, successors, and assigns. This
Agreement shall likewise be binding upon and obligate the Site and the successors in interest,
owner or owners thereof, and all of the tenants, lessees, sublessees, and occupants of such Site.
12.9 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law. If, however, any
provision of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
12.10 Interpretation. 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 which might otherwise
apply. The Section headings are for purposes of convenience only, and shall not be construed to
limit or extend the meaning of this Agreement.
12.11 Entire Agreement. This Agreement and all documents incorporated herein
contain the entire understanding among the parties hereto relating to the transactions
contemplated herein and all prior or contemporaneous agreements, understandings,
representations, and statements, oral or written, are merged herein and shall be of no further
force or effect.
12.12 Waiver; Amendments. All waivers of the provisions of this Agreement, unless
specified otherwise herein, must be in writing and signed by the appropriate authorities of
Agency or Participant, as applicable. No delay or omission by either party hereto in exercising
any right or power accruing upon the compliance or failure of performance by the other party
hereto under the provisions of this Agreement shall impair any such right or power or be
construed to be a waiver thereof. A waiver by either party hereto of a breach of any of the
covenants, conditions or agreements hereof to be performed by the other party shall not be
882/015610-0063 21
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construed as a waiver of any succeeding breach of the same or other covenants, agreements,
restrictions or conditions hereof. All amendments hereto must be in writing and signed by the
appropriate authorities of Agency and Participant.
12.13 Counterparts. This Agreement may be executed in counterparts, each of which,
when this Agreement shall have been signed by all the parties hereto, shall be deemed to be an
original, and such counterparts shall constitute one and the same instrument.
12.14 Authority. Agency represents and warrants that: (i) it is a redevelopment agency
duly organized and existing under the laws of the State of California; (ii) by proper action of
Agency, Agency has been duly authorized to execute and deliver this Agreement, acting by and
through its duly authorized officers; and (iii) the entering into this Agreement by Agency does
not violate any provision of any other agreement to which Agency is a party. Participant
represents and warrants that: (i) it is duly organized and existing under the laws of the State of
California; (ii) by proper action of Participant, Participant has been duly authorized to execute
and deliver this Agreement, acting by and through its duly authorized principals or officers; and
(iii) the entering into this Agreement by Participant does not violate any provision of any other
agreement to which Participant is a party to which consent has not been obtained.
12.15 Exhibits. This Agreement includes all exhibits and attachments attached hereto,
which by this reference are incorporated in this Agreement in their entirety. This Agreement
also includes the Redevelopment Plan and any other documents incorporated herein by
reference, as though fully set forth herein.
12.16 Effective Date. The effective date of this Agreement shall be the latest of the
dates set next to the signatures of the parties hereto after all the parties hereto have signed this
Agreement, which latest date shall be inserted into the preamble to this Agreement.
[END - SIGNATURE PAGE AND EXHIBITS FOLLOW]
882/015610-0063 22
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IN WITNESS WHEREOF, Agency and Participant have executed this Agreement as of
the Effective Date.
ATTEST:
By: (;:-- 1 9
gency Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
By: •
Attorneys for La Winta
Redevelopment Agency
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public bo y, corporate and politic
By: .f. o
Thomas Genovese, Executive Director
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing M mber
By:
J.C. Gianulias
Its: President
882/015610-0063 23
325173.13 a05/23/03
EXHIBIT "A"
LEGAL DESCRIPTION OF THE SITE:
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
882/015610-0063
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EXHIBIT "B"
SITE MAP
[SEE FOLLOWING PAGE]
882/015610-0063
325173.13 a05/23/03
JTIC,CI L K t .au..r
IN THE CITY OF LA OUINTA, COUNTY OF RNERSIDE, STATE OF UNORNIA
PARCEL MAP J6 3'NO. 30721
�- M4' vBEING A SUBONISION OF PARCELS 1, 2 AND 4 OF PARCEL MAP — — — — — — — — —
a 99'AyENUI 50 _ N0• 29W6, AS FEED IN BOOK 199. AT PAGES 29 AND 30 OF 1
PARCEL MAPS, RECORDS RNERSIDE COUNTY. CAUFORAk I
x4o r LP., TAGGED
O.F. 21775. FUISH, F1DS CONSULTING AUGUST 2002 GARY W. DOKICH LS.4693 I
PER P.M.B. 109/29-31 I
NORTHEAST CORNER SECTION 1
FJIAHD RIYISEf NA0. IN TOP OF WALL '
PER PPIL 169/29-31
- PJA 28334
P.M.S. 180120-'31 I
(
FOUND 1-I/f I.P. TAOCED R.C.E. $62. I
MPER P.M.B. 169/29-31 7I
OMSE COR GOV. LOT 1
=�--------------0189'SO'33'V 132---------------
( R rm v 1272A2'] ~
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05, 1137.97E
1W � I
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W 12.740 AC.+ I I
PARCEL 3 I I
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PARCEL 2 —
w — 70 IN M4.43'%
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N4Y K jN 34' 4 & OW [7L44 j
sy 41'E La � N is 124'b'r
[N 69•S4'0'V 5mgwrj, D 9- tra'34• R�
3OL4r_ , = — — — [6BZ%j—
' 161326 R.rjr2.r !g; O1 69'S4'45'V LV6,241 FOIND i' LP, WAGGED I
CALLE TAMPICa' e• 2CA r _
I 1' LP.. N WELL L•270.1' I°� 32740. FU SHL PER E I
TAGGED CRY EN(2NEER - zl P.M.B. 1E9/29-31
R.C.E 32740, PER
PAA 169/29_31
SURVEYOR'S NOTES
• _ INOIGI= FOUND r Lp. TMM Ls. 4W. RUSK PER P,M,B, 192/29-30. BASIS OF BEARINGS
LN m oTHETRWTSF NOTED. THE Won SHOWN HEREON ARE MM ON THE WQERLNE OF AVOW 6ERH I"S
O — NDICATES SET 1' tP. TAOOED LS. 403. RUSK UNLESS OTHERWISE NOTED. OF SHOWN ON PARCEL CA N0. 26334, Wo FILED WW4d�WNEST PAGES 29-31, RT7:ORDS
OF RIVERSIDE CORIITY. CAl1FORNA, BEING
1' NON PPE TAOOED L.S. 401 FLUS t OR LEAD TACK TAGGED R.S. 4693
N CONMTE TO BE SET AT ALL LOT CORNER51 OR IF LOT CORNER FADS EASEMENTS
L.S. 4593 IN TOP OF CIM ON
A p 2��. To 6�� no TALL FRONT PARCEL CORNERS. DICEPT AT Q - EASEMENT FOR A WATER PPE UME AIO APPURIQIWICES, R RDm
LC.'S, E.C.S, P.R.C.'S THAT AWF A STREEI WHICH ARE NOT LOT CORNERS MAY 12. 1953 AS NSfRUMEM/FIF N0 23174, Of OFFICIAL RECORDS
MNbO)US SIDE LOT LINES: UNLESS OTHERWISE NOTED.
AL MONUMENTS SHOWN'SET 9M11 BE SET N ACCORDANCE WITH THE CURVE TABLE
MONUMFJITATION AGREEMENT FOR THIS MAP. tKM OTHERWISE NOTED. N0 DELTA Ow ANC LET
) — INDICATES RECORD 04M PER PAL 169/29-31. SCALE 1' �100' 1 137'S7W ININ NIVV J
[ J — INDICATES RECORD DATA PER P.M.L 199/29-30 2 28'26.16• 4609E MV
7 2B'34'?!' 74b1' 3696E
WrA7FS ACCESS MOM REIRICTEO HEREON
THIS PARCEL .MAP WaANS 4 WASERED PARCELS 100 50 0 100 200 300
PARCEL 3
10.266 AC..
PARCEL 1
PARCEL J\jJAP NO. 29686
PARCEL. 4
PARCEL 2
&M At
EXHIBIT "C"
SCOPE OF DEVELOPMENT
PROJECT LOCATION: The Project will be constructed on a 10.31-acre site near the
intersection of Eisenhower Drive and Calle Tampico.
PROJECT DESCRIPTION: The Project will consist of (i) 32 two-story, architecturally
distinctive buildings, containing 200 one, two and three -bedroom for -lease units, ranging from
670 to 1,117 square feet, and (ii) a private recreation center, with a community room, fitness
center, billiards room, resident business center, swimming pool and spa, and other recreational
amenities, in a gated setting. Seventy-five of the units will be provided for moderate -income
households (those earning between 80% and 120% of the median income for Riverside County).
ARCHITECTURAL THEME: The architectural context of the Project will be predominated
by an earth -tone color palette of whitewashed stucco over adobe brick with red tile roofs,
consistent with the architectural expression of the historic La Quinta Resort and adjacent
grounds.
The home entries will be articulated as a focal point of a building's front elevation through the
use of roof elements, columns, porticos, recesses, window treatments and other architectural
features.
LANDSCAPING: Indigenous, naturalized and drought -resistant plants have been selected for
their appropriateness to the neighborhood architectural theme, climatic and soil conditions, and
to facilitate ease of plant maintenance. '
CONSTRUCTION AND MANAGEMENT ENTITIES: The Project will be constructed by
Apartments at La Quinta Village LLC. The dwelling units will be managed by Apartments at La
Quinta Village LLC, whose sole member and manager is Cameo Homes, a Southern California
Corporation that has been in the development business for more than 30 years.
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EXHIBIT "D"
SCHEDULE OF PERFORMANCE
ITEM
TIME FOR
NO.
ITEM OF PERFORMANCE
PERFORMANCE
REFERENCE
1.
Participant submits evidence of
Concurrent with or prior to
§ 8.0, Agency
insurance required by Agency
Effective Date of Agreement.
Regulatory
Regulatory Agreement.
Agreement, § 7.0
2.
Participant submits complete
Not later than one hundred
§ 6.1.2, 6.1.3
application on Project to City,
twenty (120) days after
including all required preliminary
Effective Date.
and final drawings and permit
applications, and has taken all other
actions necessary to obtain City's
approval of the same.
3.
Participant delivers to Agency for
Not later than five (5) days
§ 3.2-3.3
recordation (as applicable) executed
after the Effective Date.
Agency Note, Agency Deed of
Trust, and Agency Regulatory
A eement.
4.
Agency disburses Agency Loan.
Per terms of the Agreement.
§ 4.1
5.
Participant commences construction
Thirty (30) days after issuance
§ 6.2.5.
of the Project.
of building permits.
6.
Participant completes construction
Within twenty-four (24)
§ 6.1.5, 6.4.
of the Project, obtains a certificate
months after performance of
of occupancy from the City (if
Item No. 5.
applicable), and requests Agency
issuance of the Release of
Construction Covenants.
7.
Agency issues Release of
Within fifteen (15) business
§ 6.4
Construction Covenants.
days after Participant's
request, if Participant is
entitled thereto.
8.
Agency cancels Agency Note.
Within ten (10) business days
§ 4.2
after Participant's completion
of Item No. 7.
882/015610-0063
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ITEM
TIME FOR
NO.
ITEM OF PERFORMANCE
PERFORMANCE
REFERENCE
9.
Participant submits annual report
Not later than the September 1
Agency
pursuant to Health and Safety Code
following the June 30 end of
Regulatory
Section 33418 to Agency.
each fiscal year for term of the
Agreement, § 3.7
Regulatory Agreement.
It is understood that this Schedule of Performance is subject to all of the terms and
conditions of the text of the Agreement, including, but not limited to, the enforced delay
provisions contained in Section 12.4. The summary of the items performance in this Schedule of
Performance is not intended to supersede or modify the more complete description in the text; in
the event of any conflict or inconsistency between this Schedule of Performance and the text of
the Agreement, the text shall govern.
882/015610-0063 2
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EXHIBIT "E"
AGENCY NOTE
[SEE FOLLOWING PAGES]
882/015610-0063
325173.13 a05/23/03
NOTE
2003 ("Note Date") $3,000,000 ("Loan Amount")
FOR VALUE RECEIVED, the undersigned (herein, the "Maker") hereby promises to
pay to the order of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate
and politic ("Holder" or "Agency"), at a place designated by Holder, the principal sum of
THREE MILLION DOLLARS ($3,000,000) ("Note Amount"), plus accrued interest, or such
lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof.
The principal sum hereof shall be disbursed pursuant to the terms and conditions set forth herein
and in that certain Affordable Housing Agreement by and among Maker and Holder, dated
("AHA"), pertaining to Maker's redevelopment of certain real property
defined in the AHA as the "Site."
Reference is also made to the following additional agreements and documents, of even
date herewith, involving Maker and Holder and/or pertaining to the Site:
(i) Deed of Trust with Assignment of Rents by and between Maker as Trustor,
Holder as beneficiary, and First American Title Insurance Company as Trustee,
and recorded in the Office of the Riverside County Recorder ("Agency Deed of
Trust"). The Agency Deed of Trust secures, in part, repayment of this Note.
(ii) Regulatory Agreement and Declaration of Covenants and Restrictions, by and
between Maker and Holder, for the benefit of Holder, and recorded in the Office
of the Riverside County Recorder ("Agency Regulatory Agreement").
The AHA, Agency Deed of Trust, and Agency Regulatory Agreement are referred to
herein collectively as the "Agency Agreements." The Agency Agreements are incorporated
herein as though fully set forth. Except as otherwise provided herein, the defined terms used in
this Note shall have the same meaning as set forth in the AHA.
1. Purpose of Loan. The loan evidenced by this Note is a loan for the purpose of
reimbursing Maker for a portion of Maker's Site acquisition costs and for assisting Maker with
Maker's costs for constructing the Project on the Site in accordance with the AHA.
2. Principal Amount. The principal amount of this loan shall be THREE MILLION
DOLLARS ($3,000,000) ("Loan Amount"). Simple interest shall accrue on the outstanding
principal amount at seven percent (7%) per annum, compounded annually. Interest shall accrue
as set forth in Section 4 in the event of a Maker default.
3. Disbursement of Agency Loan.
3.1 The Agency Loan shall be disbursed in three disbursements, in accordance with
this Section 3.
3.2 A portion of the Agency Loan in the amount of Six Hundred Fifty Thousand
Dollars ($650,000) ("Agency Acquisition Assistance") shall be disbursed to Maker within fifteen
882/015610-0063
325173.13 a05/23/03
(15) business days after Maker's satisfaction of all of the conditions to disbursement set forth in
Section 3.6 below (except the conditions set forth in Sections 3.6(K) through 3.6(0)) to
reimburse Maker for a portion of Maker's purchase price for the Site.
3.3 [Intentionally Omitted].
3.4 A portion of the Agency Loan in the amount of One Million Nine Hundred Fifty
Thousand Dollars ($1,950,000) shall be disbursed to Maker within fifteen (15) business days
after Maker's satisfaction of all of the conditions precedent to disbursement of the Agency Loan
set forth in Section 3.6 below (except that Maker's requirement to obtain unconditional waiver
and releases, as set forth in Section 3.6(0) below, shall pertain only to the grading work and any
other work that, at the time of disbursement, has been completed on the Site).
3.5 A portion of the Agency Loan in the amount of Four Hundred Thousand Dollars
($400,000) ("Agency Completion Assistance") shall be disbursed, by check, to Maker within
fifteen (15) business days after Maker (i) satisfies of all of the conditions precedent to
disbursement of the Agency Loan set forth in Section 3.6 below; and (ii) completes construction
of the Project, as evidenced by Holder's issuance to Maker of a Release of Construction
Covenants.
3.6 The following shall be conditions precedent to Holder's disbursement of any
portions of the Agency Loan (provided, however, that Maker may obtain disbursement of the
Agency Acquisition Assistance prior to the time it satisfies, or without satisfying, (i) the
conditions set forth in paragraph 3.6(C) [with respect to all risk, but not liability insurance, which
liability insurance must be in place from and after the Effective Date of the AHA], and (ii) the
conditions set forth in paragraphs 3.6(K) — 3.6(0) below):
(A) Holder shall have executed the AHA;
(B) The Title Company shall have provided to Holder an acknowledgement
that it will issue to Agency, within ten (10) days thereafter, the Agency Title Policy for the Site
with only those exceptions pre -approved in the AHA and such additional exceptions, if any, as
may be approved by Holder's Executive Director in his/her sole and absolute discretion.
(C) Maker shall have timely submitted to the Executive Director of Holder
and obtained approval from same, of Maker's evidence of insurance;
(D) Maker shall have signed the Agency Regulatory Agreement and delivered
same to Holder for recordation;
(E) Maker shall have signed this Note and delivered same to Holder;
(F) Maker shall have signed the Agency Deed of Trust and delivered same to
Holder for recordation and filing;
(G) Maker shall not be in default of its obligations under the AHA, this Note,
or under the Agency Regulatory Agreement;
882/015610-0063 2
325173.13 a05/23/03
(H) Maker shall not be in default of any of the Landaq Restrictions;
(I) Owner shall have executed, and Maker shall have recorded, a
subordination agreement, subordinating the Landaq Restrictions to the Agency Deed of Trust
and Agency Regulatory Agreement;
Q) Maker shall have obtained all of the necessary land use entitlements to
construct the Project; and
(K) Maker shall have provided evidence to Agency that it has timely obtained
all of the Approved Plans and Permits, including, but not limited to, building permits to construct
the Project (except that Maker may obtain disbursement of the Agency Acquisition Assistance
prior to the time it satisfies this condition); and
(L) Maker shall have provided Holder with supporting documentation
showing (i) that at least ninety percent (90%) of the architectural and engineering plan work for
the Project has been performed, including the preparation and submittal to the City of at least
ninety percent (90%) of the construction drawings necessary to secure all necessary permits for
the Project, and (ii) the actual costs thereof; and
(M) Maker shall have provided Holder with supporting documentation
showing that Maker has graded the Site, and the actual costs thereof, and that City has issued its
final pad certification for the Site; and
(N) Maker shall have (i) installed all of the wet utility infrastructure necessary
for the Project, as evidenced by a letter issued from each utility company that has required or will
require such infrastructure, and (ii) presented supporting documentation of the actual costs of
such utility infrastructure installation; and
(0) Maker shall have provided Holder with unconditional waiver and releases
in the form set forth in Civil Code Section 3262.
4. Term of Note; Repayment. Repayment of the Loan Amount, as adjusted and redefined as
the "Adjusted Loan Amount" pursuant to this Section 4, shall be through monthly installment
repayment amounts.
4.1 Subject to the provisions of (a) Section 5 herein which provide for acceleration of
the then outstanding principal and accrued interest and immediate payment thereof in the event
of a default by Maker and (b) Sections 4.2 through 4.4 below, which provide for the cancellation
of this Note in the event certain specified conditions are met:
(A) Maker shall not be required to make any payments of principal or interest
on this Note for a period of twenty-eight (28) months following the Note Date ("Grace Period").
(B) Maker agrees that interest shall accrue on any amounts of the Agency
Loan that have been disbursed prior to the expiration of the Grace Period, and that as a result
thereof, as of the first day of the next calendar month following expiration of the Grace Period
(the "Repayment Commencement Date"), the outstanding principal and accrued interest to date
882/015610-0063 3
325173.13 a05/23/03
due Holder on which payments are to be made shall be adjusted to reflect said accrual ("Adjusted
Loan Amount"), and interest shall continue to accrue, on the Adjusted Loan Amount, at the rate
of seven percent (7%) per annum, compounded annually.
(C) Maker shall commence repayment of the Adjusted Loan Amount and
interest thereon (at the rate specified in Paragraph 1) in sixty (60) equal monthly installments of
an amount set forth in a repayment schedule to be prepared by Holder within sixty (60) days
after the Holder's disbursement to Maker of the Agency Completion Assistance.
4.2 Notwithstanding the foregoing, this Note shall be deemed paid in full when
Maker, through monthly payments, has repaid the Holder an amount equal to the Adjusted Loan
Amount plus interest, as set forth in this Note.
4.3 Notwithstanding anything to the contrary in this Note, this Note shall be
automatically cancelled, as evidenced by Holder's return to Maker of the original of this Note
marked "cancelled," and the Agency Deed of Trust shall no longer secure the obligations under
it, at such time that Holder has issued (or is required to issue, if earlier), a Release of
Construction Covenants for the Project. In the event of such cancellation, if Maker has
commenced repayment of this Note pursuant to Section 4.1(C), above, any outstanding amounts
due under this Note shall automatically be forgiven. In furtherance of the foregoing, it is
understood and agreed that, following the date Agency issues (or is required to issue, if earlier),
the Release of Construction Covenants, the Agency Deed of Trust shall no longer secure the
obligations under this Note (which shall be canceled) or the obligations under the AHA and
Agency Regulatory Agreement which are required to be released pursuant to the Release of
Construction Covenants for the Project.
4.4 Maker shall have the right to prepay all or any portion of this Note at any time
without penalty.
4.5 Any payments made by Maker in payment of this Note shall be applied in the
following order: (i) first to the interest then accrued and due on the unpaid principal balance
under this Note, (ii) second to reduction of the principal balance of this Note.
5. Default; Acceleration; Cross -Default. In the event:
5.1 Maker fails to timely make a payment required by this Note within ten (10) days
following the due date of any payment due hereunder; or
5.1 Maker fails to timely make any other payment due hereunder within ten (10) days
after notice thereof from Holder; or
5.2 Maker is in material default of any of the covenants, terms, or provisions of this
Note, any of the Agency Agreements, or any of the Landaq Restrictions and Maker fails to
timely cure such default under the terms of the applicable agreement, it being understood and
agreed by Maker that a default of this Note, or of any of the Agency Agreements or of the
Landaq Restrictions (beyond any applicable cure period) shall be a default of all of the foregoing
listed documents;
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then Maker shall be in default of this Note, and all portions of the Loan Amount that have been
disbursed to Maker and all accrued interest thereon shall become immediately due and payable.
The rate of interest applicable to periods of default for the defaults set forth in this Section 5 shall
be calculated at the lesser of ten percent (10%) per annum or the maximum legal rate, and shall
accrue as of the date such payment was originally due.
6. Collection Costs, Attorneys' Fees. If, because of any event of default under this Note or
any of the Agency Agreements, any attorney is engaged by Holder to enforce or defend any
provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon
demand reasonable attorneys' fees, expert witness fees and all costs so incurred by Holder
together with interest thereon until paid at the applicable rate of interest payable hereunder, as if
such fees and costs had been added to the principal owing hereunder.
7. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become
liable on this Note waive presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note and any and all other notices or matters of a like nature,
and consent to any and all renewals and extensions near the time of payment hereof and agree
further that at any time and from time to time without notice, the terms of payment herein may
be modified or the security described in any documents securing this Note released in whole or
in part, or increased, changed or exchanged by agreement between Holder and any owner of the
premises affected by said documents securing this Note, without in any way affecting the
liability of any party to this Note or any persons liable or to become liable with respect to any
indebtedness evidenced hereby.
7. Severability. The unenforceability or invalidity of any provision or provisions of this
Note as to any persons or circumstances shall not render that provision or those provisions
unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in
all other respects, shall remain valid and enforceable.
8. Modifications. Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof
be effective except by an instrument in writing signed by Maker and Holder. No delay or
omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note.
9. No Waiver by Holder. No waiver of any breach, default or failure of condition under the
terms of this Note shall be implied from any failure of the Holder of this Note to take, or any
delay be implied from any failure by the Holder in taking action with respect to such breach,
default or failure from any prior waiver of any similar or unrelated breach, default or failure.
10. Us u Notwithstanding any provision in this Note, the total liability for payment in the
nature of interest shall not exceed the limit imposed by applicable laws of the State of California.
11. Nonassignability. Maker may only Transfer (as that term is defined in the AHA) this
Note in accordance with provisions and restrictions pertaining to a transfer of the AHA as set
forth in the AHA. Holder may freely Transfer Holder's interest in this Note in any manner, at
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325173.13 a05/23/03
Holder's sole discretion; provided, that at the time of such Transfer Holder also transfers the
AHA to such transferee.
12. Governing Law. This Note has been executed and delivered by Maker in the State of
California and is to be governed and construed in accordance with the laws thereof.
13. Time of Essence. Time is of the essence in the performance of the obligations and
provisions set forth in this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the Note Date.
"MAKER"
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing Member
By:
J.C. Gianulias
Its: President
882/015610-0063 6
325173.13 a05/23/03
EXHIBIT "F"
AGENCY DEED OF TRUST
[SEE FOLLOWING PAGES]
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Recording Requested By And
When Recorded Return to:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER'S USE
EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103
DEED OF TRUST WITH ASSIGNMENT OF RENTS
AND RIDER ATTACHED HERETO
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS INCLUDING SECURITY
AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO ("Deed of
Trust"), is made , between APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership, herein called TRUSTOR, whose address is 1105 Quail Street, Newport Beach, CA,
926589 , a California corporation, herein called TRUSTEE, and LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic, herein called BENEFICIARY.
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor's estate, dated on or about the
date hereof, in that property in the City of La Quinta, County of Riverside, State of California, described as:
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203 PAGES 30 AND 31 OF PARCEL MAPS,
RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC UTILITY PURPOSES AS SHOWN ON PARCEL
MAP NO. 30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter
given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of
securing (1) payment of the sum of THREE MILLION DOLLARS ($3,000,000), with interest thereon according to
the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and
extensions or renewals thereof; (2) the performance of Trustor's obligations set forth in each agreement of Trustor
incorporated by reference or contained herein; and (3) the payment of any sum expended by Beneficiary to cure any
default of Trustor under Trustor's construction, takeout, or permanent loan(s); and (4) payment of additional sums
and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a
promissory note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the Property above described, Trustor expressly
makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms
and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set
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forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other
counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the
county where said property is located, noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and
provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are
by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as
if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby,
provided the charge therefor does not exceed the maximum allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to
him at his address hereinbefore set forth.
SEE RIDER ATTACHED TO THIS DEED OF TRUST
STATE OF CALIFORNIA
COUNTY OF
On
before me,
personally appeared JAMES GIANULIAS, personally
.known to me
o be the person
,W whose
namesp�,s'�'afe-subscribed to the within instrument and
acknowledged to me thaMMeAey executed the
same authorized capacity, and that
by ii /hen'dreir signature s�4 on the instrument the
person
(,8'j or the entity upon behalf of which the
perso Y acted, executed the instrument.
WITNESS my hand and
Signature
(This area for official notarial seal)
Signature of Trustor
APARTMENTS AT LA QUINTA VILLAGE L.P., a
California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California corporation
Its: Managing M 7,
er
By:
J.C. Gianulias
Its: President
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing
Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore
promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all
claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation
of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably
necessary, the specific enumerations herein not excluding the general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The
amount collected under any fire or other insurance policy maybe applied by Beneficiary upon any indebtedness secured hereby and in such order
as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such
application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments
on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be
prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to
do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such
manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said
property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.
5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of
expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof
regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when
said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is
hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same
effect as above provided for disposition of proceeds of fire or other insurance.
2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to
require prompt payment when due of all other sums so secured or to declare default for failure so to pay.
3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting
any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon written requ st of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this
Deed and said note to Trustee for cancellation nd retention or other disposition as Trustee in its sole discretion may choose and upon payment of
its fees, Trustee shall reconvey, without wa nty, the property then held hereunder. The recitals in such reconveyance of any matters or facts
shall be conclusive proof of the truthfulness hereof. The Grantee in such reconveyance may be described as "the person or persons legally
entitled thereto."
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the
continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by
Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues
and profits as they become due and payable. Upon any such default (beyond any applicable cure period, and during the continuance of such
default), Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to
the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own
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name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may
determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as
aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement
hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default
and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed
for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale
having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said
notice of sale, either as a whole or in separate parcels, 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 time of sale. Trustee may postpone sale of all or any portion of said property by public
announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed
by the preceding postponement. Trustee shall deliver to such purchaser its deed 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 Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale,
Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the
amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in
writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed is recorded and the name and address of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby,
whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by
law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
DO NOT RECORD REQUEST FOR FULL RECONVEYANCE
TO ,TRUSTEE:
The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust.
Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby
requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above
mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust,
and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated
Please mail Deed of Trust,
Note and Reconveyance to
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before
reconveyance will be made.
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RIDER TO SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS
THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is
executed this day of , by APARTMENTS
AT LA QUINTA VILLAGE L.P., a California limited partnership, herein "Trustor," in favor of
the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein
"Beneficiary," the same parties to that certain form Deed of Trust With Assignment of Rents, of
even date hereto, to which this Rider is attached. This Rider is made a part of and is
incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or
provision of the form Deed of Trust to which it is attached.
Reference is made to (i) that certain Note by and between Trustor and Beneficiary, dated
on or about the date set forth above, the repayment of which by Trustor is secured by this Deed
of Trust ("Note"), and (ii) to the Agency Agreements which are described in the Note.
The parties hereto agree:
I . Propert . The estate subject to this Deed of Trust is Trustor's fee estate in the real
property legally described in the foregoing Deed of Trust to which this Rider is attached (the
"Property").
2. Obligations Secured. Trustor makes this grant and assignment for the purpose of
securing the following obligations ("Secured Obligations"):
a. Payment to Beneficiary of all indebtedness at any time owing under the
terms of the Note prior to the time that Agency issues or is required to
issue, if earlier) a Release of Construction Covenants (as defined in the
Agency Agreements);
b. Payment and performance of all obligations of Trustor under this Deed of
Trust;
C. Payment and performance of all obligations of Trustor under the Agency
Agreements; provided, however, that (i) from and after the date Agency
issues or is required to issue (if earlier) a Release of Construction
Covenants, obligations released or required to be released pursuant to the
Release of Construction Covenants shall no longer be secured by this
Deed of Trust; and (ii) from and after the date the covenants set forth in
the Agency Regulatory Agreement (as defined in the Note) terminate, as
described more fully therein, this Deed of Trust shall be reconveyed.
d. Payment and performance of all future advances by Beneficiary to
Trustor, and other obligations of Trustor, with the approval of Trustor, that
Trustor may agree to pay and/or perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary, when the obligation is evidenced
by a writing which recites that it is secured by this Deed of Trust; and
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e. All modifications, extensions and renewals of any of the obligations
secured hereby, however evidenced.
3. Obligations. The term "obligations" is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and charges,
prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured
Obligations.
4. Subordination. Beneficiary agrees to subordinate this Deed of Trust to Trustor's
construction loan and subsequent permanent and/or construction loans, provided that (i) the
maximum cumulative principal amount of the construction and/or permanent loan shall not
exceed the greater of (A) ninety percent (90%) of the proposed lender's appraised value of the
Property upon completion of the affordable housing project described in the Agency Agreements
(with stablized occupancy) (the "Project"), which amount shall be verified in writing to
Beneficiary's Executive Director's reasonable satisfaction, and (B) the total outstanding
indebtedness under the prior loan to which Agency has subordinated; (ii) the loan(s) shall
obligate Trustor to expend loan proceeds for no other purpose than the Project or refinance of a
loan secured by the Project that was previously subordinated to by the Beneficiary; and (iii) the
loan(s) shall be entered into in connection with execution by Agency of a subordination
agreement, substantially in the form attached to and incorporated in the Affordable Housing
Agreement (as defined in the Agency Agreements) as Exhibit "I-1 ", with respect to a
construction loan, and Exhibit "I-2", with respect to takeout or permanent financing, or such
other form that shall be reasonably requested by Trustor's lender and reasonably approved by
Beneficiary's Executive Director (which form Beneficiary agrees to promptly execute and deliver
upon Trustor's request therefor) ("Subordination Agreement"). Notwithstanding clause (ii)
above, to the extent that the amount of a refinance loan authorized by this Section, and obtained
after the time Beneficiary issues (or is required to issue) a Release of Construction Covenants for
the Project, exceeds the amount of the loan it replaces, the additional proceeds of such refinance
loan may be distributed to Trustor.
Beneficiary agrees that the lender may, during the period of default, proceed with its
rights and remedies against Trustor as a result of such default, subject only to the cure rights
provided in the Subordination Agreement. In agreeing to provide the subordination referred to in
the preceding sentence, Beneficiary hereby incorporates the finding required to be made in
accordance with Health and Safety Code Section 33334.14.
5. Incorporation. All terms of the Note, Agency Agreements, and the Secured
Obligations are incorporated herein by this reference. All persons who may have or acquire an
interest in the Property shall be deemed to have notice of thel terms of all of the foregoing
documents.
6. Mortgagee -in -Possession. Neither the assignment of rents set forth in the Deed of
Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed
to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect
to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof.
Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or
by agreement with Trustor, or the entering into possession of the Property by such receiver, be
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deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with
respect to the Property.
7. No Cure. In the event Beneficiary collects and receives any rents under the Deed
of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of
the default, except if and to the extent the same are sufficient to cure all monetary defaults and
no other defaults then exist.
8. Possession Upon Default. Upon the occurrence of and during the continuation of
a default, Beneficiary, after having given notice and the applicable cure periods having expired
with the default having not been cured (hereinafter, a "default"), may, at its option, without any
action on its part being required and without in any way waiving such default, take possession of
the Property in accordance with applicable law and have, hold, manage, lease and operate the
same, on such terms and for such period of time as Beneficiary may deem proper, and may
collect and receive all rents and profits, with full power to make, from time to time, all
commercially reasonable alterations, renovations, repairs or replacements thereto as may seem
proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all
such alterations, renovations, repairs and replacements, and all costs and expenses incident to
taking and retaining possession of the Property, and the management and operation thereof, and
keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other
liens which may be prior in lien or payment of the Note, and premiums for insurance, with
interest on all such items; and (c) the indebtedness secured hereby, together with all costs and
attorney's fees, in such order or priority as to any of such items as Beneficiary in its sole
discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any
amounts received by Beneficiary or its agents in the performance of any acts prohibited by the
terms of this assignment, including, but not limited to, any amounts received in connection with
any cancellation, modification or amendment of any lease prohibited by the terms of this
assignment and any rents and profits received by Trustor after the occurrence of a default shall
be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to
Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving
any portion of such trust funds shall receive the same in trust for Beneficiary as if such person
had actual or constructive notice that such funds were impressed with a trust in accordance
therewith.
9. Receiver. In addition to any and all other remedies of Beneficiary set forth under
this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have
been cured within any applicable cure period, Beneficiary, to the extent permitted by law and
without regard to the value, adequacy or occupancy of the security for the Note and other sums
secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver
to enter upon and take possession of the Property and to collect all rents and profits and apply the
same as the court may direct, and such receiver may be appointed by any court of competent
jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly
waived. The expenses, including receiver's fees, attorneys' fees, costs and agent's
compensation, incurred pursuant to the power herein contained shall be secured by this Deed of
Trust.
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325173.13 a05/23/03
10.
addressed to:
Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92263
Attn: Executive Director
[SIGNATURE ON NEXT PAGE]
882/015610-0063
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IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor's
acknowledgment hereinbelow, to be effective for all purposes as of the day and year first set
forth above.
TRUSTOR:
APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing Member
By:
J.C. Gianulias
Its: President
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STATE OF CALIFORNIA )
ss.
COUNTY OF ')
On , before me, f)1nJAQ personally
appeared � personally known to me {rn-
to be the personW whose narnF s^ ii
subscribed to the within instrument and acknowledged to me thjq!N)/sheAh y executed the same
in erAheauthorized capacity( o, and that b i ignaturpO on the instrument
the perso�Wor the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
DIANE BAESMAN
C&wbdon # 1290"2
[SEAL] Notcsy Pubft - Coft
O=W Couch►
MyComm. F�lnaR.lan 1��8
Notary Public
882/015610-0063
325173.13 a05/23/03
EXHIBIT "G"
AGENCY REGULATORY AGREEMENT
[SEE FOLLOWING PAGES]
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
(Space Above This Line for Recorder's Office Use Only)
(Exempt from Recording Fee per Gov. Code 6103)
REGULATORY AGREEMENT AND
DECLARATION OF COVENANTS AND RESTRICTIONS
THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement") is made and entered into this day of ,
("Effective Date"), by and between LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic ("Agency") and APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership ("Participant").
RECITALS:
A. Participant is the owner of fee title to that certain real property more particularly
described in Attachment No. 1, attached hereto and incorporated by reference herein (the "Site").
B. Pursuant to an Affordable Housing Agreement, by and between Participant and
Agency, dated (the "AHA"), Agency has agreed to provide financial
assistance to Participant in the sum of Three Million Dollars ($3,000,000) (the "Agency Loan")
for the purpose of (i) reimbursing Participant for a portion of Participant's purchase price for the
Site and (ii) Participant's subsequent construction thereon of a rental apartment complex (the
"Project"). The AHA requires Participant to enter into this Agreement, which provides, among
other requirements, that the rental and occupancy of not fewer than seventy-five (75) of the
apartment units within the Project be rented to and occupied by persons and families whose
household income does not exceed 120% of the median income for Riverside County, in effect
from time to time.
C. Reference is also made to the following documents, of even date herewith:
(i) Note, by Participant as Maker and borrower in favor of the Agency as
lender, ("Agency Note"). The Agency Note evidences the Agency Loan.
(ii) Deed of Trust with Assignment of Rents, by and between Participant as
borrower and Agency as beneficiary, and recorded in the Office of the Riverside County
Recorder ("Agency Deed of Trust"). The Agency Deed of Trust secures (a) repayment of the
Agency Note, and (b) performance of Participant's obligations hereunder.
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The AHA and both of the foregoing listed documents are referred to herein collectively
as the "Agency Agreements." The Agency Agreements are incorporated herein as if fully set
forth.
D. Pursuant to the AHA and the Agency Agreements, Participant has agreed to
rehabilitate the Site and develop thereon, and thereafter maintain, a rental housing project with
not fewer than seventy-five (75) units restricted to rental and occupancy to persons and families
whose household income does not exceed 120% of the median income for Riverside County.
E. Agency and Participant now desire to place restrictions upon the use and
operation of the Site, in order to ensure that the Site shall be operated continuously, for a period
of fifty-five (55) years from the date the Agency issues (or is required to issue, if earlier) a
Release of Construction Covenants evidencing Participant's completion of the Project in
accordance with the AHA ("Term Commencement Date"), as a rental apartment complex in
accordance with the terms hereof.
AGREEMENT:
NOW, THEREFORE, the Participant and Agency declare, covenant and agree, by and for
themselves, their heirs, executors, administrators, successors and assigns, and all persons
claiming under or through them, that, for a term equal to fifty-five (55) years commencing upon
the Term Commencement Date, as follows:
1.0 DEFINITIONS.
1.1 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall
mean an annual rent amount that does not exceed the maximum percentage of income that can be
devoted to rent by a Moderate Income Tenant as set by California law.
1.2 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall refer
to a Moderate Income Tenant.
1.3 Moderate Income. As used in this Agreement, the term "Moderate Income" shall
mean household income, adjusted for family size, which does not exceed one hundred twenty
percent (120%) of the Riverside County Median Income.
1.4 Moderate Income Tenant. As used in this Agreement, the term "Moderate
Income Tenant" shall mean a tenant whose household income does not exceed Moderate Income
and who is otherwise eligible to rent, and does rent, a Restricted Unit and thus is an Eligible
Tenant for a Restricted Unit.
1.5 Restricted Unit. As used in this Agreement, the term "Restricted Unit" shall
mean not fewer than seventy-five (75) Units to be rented to and occupied by Eligible Tenants.
A chart showing the mix of the Restricted Units is attached hereto and incorporated herein as
Attachment No. 6 ("Restricted Unit Mix").
1.6 Riverside County Median Income. For purposes of this Agreement, the
"Riverside County Median Income" as of any date shall be determined by reference to the
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regulations published by the California Department of Housing and Community Development
pursuant to Health and Safety Code Section 50093, or its successor, as of such date.
1.7 Unit. As used in this Agreement, the term "Unit" or "unit" shall mean a rental
apartment dwelling unit on the Site.
1.8 Unrestricted Unit. As used in this Agreement, the term "Unrestricted Unit" shall
mean a Unit that is not a Restricted Unit, i.e., a Unit that is not subject to the affordability
covenants that apply to the Restricted Units.
2.0 RESIDENTIAL RENTAL PROPERTY.
2.1 Construction of the Project on the Site. Participant shall construct the Project on
the Site in accordance with the Agency Agreements, including the Schedule of Performance set
forth in the AHA, for the purpose of providing the Restricted Units described herein and in the
Agency Agreements. The Project shall be owned, managed, and operated as a rental apartment
project, with not fewer than seventy-five (75) Units rented and occupied as Restricted Units as
provided in this Agreement.
2.2 Facilities. All of the dwelling units in the Project shall contain facilities for
living, sleeping, eating, cooking and sanitation in accordance with the this Agreement, the AHA,
the Agency Agreements, and all of the permits and approvals for the Project.
2.3 Residential Use. Without the Agency's prior written consent, which consent may
be given or withheld in its sole and absolute discretion, none of the dwelling units in the Project
will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory,
fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer
court or park, nor shall the Units be used for day care facilities or as a place of business except as
may otherwise be allowed by applicable law.
2.4 Conversion of Units. No part of the Project will at any time be owned by a
cooperative housing corporation, nor shall the Participant take any steps in connection with the
conversion to such ownership or uses to condominiums, or to any other form of ownership,
without the prior written approval of Agency which approval may be given or withheld in its sole
and absolute discretion.
2.5 Preference to Eligible Tenants. All of the dwelling units will be available for
rental in accordance with the terms of this Agreement, and the Participant shall not give
preference to any particular class or group in renting the dwelling units in the Project, except to
the extent that the Restricted Units are required to be leased or rented to Eligible Tenants and
except as provided in Section 3.5 below.
2.6 Resident Manager and Staff Units. A resident manager or staff unit or units may
be counted as a Restricted Unit only if the tenants of such Unit(s) are Eligible Tenants.
2.7 Liability of Participant. Participant and any manager it employs shall not incur
any liability under this Agreement as a result of fraud or intentional misrepresentation by a
tenant.
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3.0 OCCUPANCY OF RESTRICTED UNITS BY ELIGIBLE TENANTS.
Participant hereby represents, warrants, and covenants as follows:
3.1 Occupancy Levels. Except as expressly provided herein, throughout the term of
this Agreement, the Restricted Units shall be continuously occupied or held vacant and available
for occupancy by Eligible Tenants in accordance with the Restricted Unit Mix.
3.2 Rental Rates. Participant hereby agrees to and shall rent Restricted Units
occupied by Eligible Tenants at no greater than Affordable Rent.
3.3 Occupancy By Eligible Tenant. A Restricted Unit occupied by an Eligible Tenant
who qualified as a Moderate Income Tenant at the commencement of the occupancy shall be
treated as occupied by an Eligible Tenant at such income level until a recertification of such
Eligible Tenant's income in accordance with Section 3.6 below demonstrates that such tenant no
longer qualifies as an Eligible Tenant at that income level. A Restricted Unit previously
occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible
Tenant until the Restricted Unit is reoccupied, provided Participant uses its commercially
reasonable efforts to re -lease the vacant Restricted Unit to an Eligible Tenant. Any vacated
Restricted Unit shall be held vacant until re -leased to an Eligible Tenant, unless there are
sufficient numbers of Eligible Tenants then leasing and occupying Units; provided, however, that
after attempting, for a period of not less than sixty (60) days, to lease a vacated Restricted Unit to
an Eligible Tenant, Participant may lease the same on a month -to -month basis to other tenants
(subject to termination on thirty (30) days notice if an Eligible Tenant applies for the occupancy
of the leased Restricted Unit), and Participant shall not be in default hereunder for entering such
lease so long as Participant continues its attempts to lease the Restricted Unit to an Eligible
Tenant. Any such lease shall disclose that the Restricted Unit has been set aside for lease to an
Eligible Tenant, that the tenant is not an Eligible Tenant, and that the lease is subject to
termination by Participant in the event an Eligible Tenant wishing to rent the Restricted Unit is
located. For purposes of this Agreement, attempting to lease a Restricted Unit shall mean
Participant's performance at its cost, and provision to Agency of evidence of Participant's
performance, of all of the following with respect to such Restricted Unit: (i) notification to the
City of the available Restricted Unit; (ii) advertisement of the available Restricted Unit in a
newspaper of general circulation in the City; (iii) contacting and notifying the Riverside County
Housing Authority in writing of the available Restricted Unit. Participant agrees to pay for any
and all relocation costs that are required to be paid as a result of Participant's termination of a
tenancy pursuant to this Section and shall indemnify, defend, and hold harmless Agency and
City, and their respective officers, officials, members, employees, agents and representatives,
from any and all claims, demands and liabilities for relocation benefits that arise therefrom.
3.4 Income Computation and Certification. Immediately prior to an Eligible Tenant's
occupancy of a Restricted Unit, Participant shall obtain an Income Computation and
Certification Form in the form attached hereto and incorporated herein as Attachment No. 2
from each such Eligible Tenant dated immediately prior to the date of initial occupancy in the
Project by such Eligible Tenant. In addition, Participant shall provide such further information
as may be reasonably required in the future by the Agency for purposes of verifying a tenant's
status as an Eligible Tenant, provided the same is reasonably available to Participant without
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unreasonable expense in connection with obtaining the same. Participant shall use good faith
efforts to verify that the income provided by an applicant is accurate by taking the following
steps as a part of the verification process: (i) obtain three (3) pay stubs for the most recent pay
periods; (ii) obtain a written verification of income and employment from the applicant's current
employer; (iii) obtain an income verification form from the Social Security Administration,
California Department of Social Services, and/or California Employment Development
Department if the applicant receives assistance from any of said agencies; (iv) if an applicant is
unemployed or did not file a tax return for the previous calendar year, obtain other evidence
and/or verification of such applicant's total income received during the calendar year from any
source, taxable or nontaxable, or such other information as is satisfactory to the Agency.
Participant shall maintain in its records each Income Computation and Certification Form
obtained pursuant to this section for a minimum of five (5) years.
3.5 Rental Priority. During the term of this Agreement, Participant shall use its
reasonable commercial efforts to lease Restricted Units to credit -worthy Eligible Tenants in the
following order of priority: (i) displaced persons entitled to a preference pursuant to California
Health and Safety Code Section 33411.3 or successor statute; and (ii) other persons meeting the
eligibility requirements of this Agreement. Participant shall, and Agency may, maintain a list
(the "Housing List") of persons who have notified Participant and/or Agency of their desire to
rent a Restricted Unit in the Project and who have incomes which would qualify them as an
Eligible Tenant, and Participant shall offer to rent units on the above -referenced priority basis;
provided, however, that Participant shall not be required to prequalify persons on the Housing
List. Should multiple tenants be equally eligible (as to income, credit history, and other
nondiscriminatory criteria) and qualified to rent a unit, Participant shall rent available Restricted
Units to Eligible Tenants on a first -come, first -served basis.
3.6 Recertification. Within sixty (60) days prior to the first anniversary date of the
occupancy of a Restricted Unit by an Eligible Tenant, and on each anniversary date thereafter,
Participant shall attempt to recertify the income of such Eligible Tenant by using good faith
efforts to obtain a completed Income Recertification Form, in the form attached hereto and
incorporated herein as Attachment No. 3, based upon the current income of each known
occupant of the Restricted Unit. If, upon recertification, the occupants do not qualify as an
Eligible Tenant (or the occupants fail to provide a completed Income Recertification Form to
Participant) such occupants may be allowed to remain but their Unit shall be redesignated as an
Unrestricted Unit. In that event, Participant shall redesignate the next vacant Unrestricted Unit
that has an equivalent or greater number of bedrooms than the redesignated Unit as a Restricted
Unit and thereafter use good faith efforts to rent such redesignated unit to an Eligible Tenant;
provided, however, that Participant shall not be required to redesignate the next vacant
Unrestricted Unit as a Restricted Unit if, prior to the time an Unrestricted Unit becomes vacant,
Participant identifies an occupant of an Unrestricted Unit as qualifying as an Eligible Tenant,
completes an Income Recertification Form and any other required documentation to confirm that
such occupant(s) is an Eligible Tenant, redesignates that unit as a Restricted Unit, and notifies
the Agency in writing of such redesignation. Each lease agreement with an Eligible Tenant shall
include the lease rider attached hereto and incorporated herein as Attachment No. 4, and shall
reference this Section and inform such Eligible Tenant of the recertification requirements herein
and the ramifications for failing to comply therewith.
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3.7 Certification of Continuing Program Compliance. During the term of this
Agreement, on or before each September 1 following the Term Commencement Date, Participant
shall annually advise the Agency of the occupancy of the Project during the preceding fiscal year
(July 1 — June 30) by delivering a Certification of Continuing Program Compliance in the form
attached hereto and incorporated herein as Attachment No. 5, stating (i) the dwelling units of the
Project which were Restricted Units during such period (including an explanation for any of the
Units which were redesignated during such period) and (ii) that to the knowledge of Participant
either (a) no unremedied default has occurred under this Agreement, or (b) a default has
occurred, in which event the Certification shall describe the nature of the default and set forth the
measures being taken by the Participant to remedy such default. Participant shall pay to Agency
an annual fee pursuant to Health and Safety Code Section 33418(c) which shall not exceed FIVE
HUNDRED DOLLARS ($500) as such amount shall be permitted to increase by the Consumer
Price Index ("CPI") published by the United States Department of Labor, Bureau of Labor
Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles -Long Beach -Anaheim
Average, All Items (1984=100), from and after the date of this Agreement, or, if the CPI is
discontinued, such official index as may then be in existence and which is most nearly equivalent
to the CPI.
3.8 Maintenance of Records. Participant shall maintain complete and accurate
records pertaining to the Units, and shall permit any duly authorized representative of the
Agency, upon seventy-two (72) hours prior notice and during business hours, to inspect the
books and records of Participant pertaining to the affordable housing component of the Project
including, but not limited to, those records pertaining to the occupancy of the Restricted Units.
3.9 Reliance on Tenant Representations. Each tenant lease shall contain a provision
to the effect that Participant has relied on the income certification and supporting information
supplied by the tenant in determining qualification for occupancy of the unit, and that any
material misstatement in such certification (whether or' not intentional) will be cause for
immediate termination of such lease.
3.10 Remedy For Excessive Rent Charge.
3.10.1 It shall constitute a default for Participant to charge or accept for a
Restricted Unit rent amounts in excess of the amount provided for in Section 3.2 of this
Agreement. In the event that Participant charges or receives such higher rental amounts, in
addition to any other remedy Agency shall have for such default, Participant shall be required to
pay to Agency an amount equal to two (2) times the entire amount of rent received in excess of
the amount permitted pursuant to this Agreement.
3.10.2 Except as otherwise provided in this Agreement, it shall constitute a
default for Participant to knowingly (or without investigation as required herein) initially rent (or
continue to rent, at recertification) any Restricted Unit to a tenant who is not an Eligible Tenant.
In the event Participant violates this Section, in addition to any other equitable remedy Agency
shall have for such default, Participant, for each separate violation, shall be required to pay to
Agency an amount equal to (i) two times the greater of (A) the total rent Participant received
from such ineligible tenant, or (B) the total rent Participant was entitled to receive for renting
that Restricted Unit, plus (ii) any relocation expenses incurred by Agency or the City of La
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Quinta as a result of Participant having rented to such ineligible person; provided, however, that
no such fees shall be due and payable in the event Participant permits the ineligible tenant to
remain in the Restricted Unit and Participant redesignates an Unrestricted Unit as a Restricted
Unit, in accordance with the process described in Section 3.6 hereof.
3.10.3 It shall constitute a default for Participant to knowingly (or without
investigation as required herein) rent any of the Restricted Units in violation of the leasing
preference requirements of Sections 3.5 of this Agreement. In the event Participant violates this
Section, in addition to any other equitable remedy Agency shall have for such default,
Participant, for each separate violation, shall be required to pay Agency an amount equal to two
(2) months of rental charges. The terms of this Section shall not apply if Participant rents to an
ineligible person as a result of such person's fraud or misrepresentation.
3.10.4 Notwithstanding anything herein to the contrary, in the event Participant
violates more than one provision of this Section 3.10 in the rental of a specific unit to a specific
individual, Participant shall be required to pay to Agency for each such violation the amount
listed under the subsection above (e.g., either 3.10.1, 3.10.2, or 3.10.3) that results in the largest
payment amount by Participant to the Agency under this Section 3.10, but not the amounts
required pursuant to the other subsections, and upon Participant's payment thereof, the default
under this Section 3.10 shall be deemed cured with respect to the default for which such penalty
is assessed, except to the extent such violation continues after Participant's payment hereunder,
in which event the amounts required to be paid pursuant to this Section 3.10 shall apply.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN
SECTION 3.10 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASON-
ABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT AGENCY
WOULD SUFFER DUE TO THE DEFAULTS BY PARTICIPANT SET
FORTH IN SECTIONS 3.10.1 THROUGH 3.10.3, CONSIDERING ALL OF
THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS
AGREEMENT, INCLUDING THE RELATIONSHIP OF THE DAMAGE
AMOUNTS TO THE RANGE OF HARM TO AGENCY AND ACCOMPLISH-
MENT OF AGENCY'S PURPOSE OF ASSISTING IN THE PROVISION OF
AFFORDABLE HOUSING TO ELIGIBLE TENANTS THAT REASONABLY
COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF
ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE
AMOUNTS SET FORTH IN THIS SECTION 3.10 SHALL BE THE SOLE
MONETARY DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN
THIS SECTION 3.10, BUT NOTHING IN THIS SECTION 3.10 SHALL BE
INTERPRETED TO LIMIT AGENCY'S REMEDY FOR SUCH DEFAULT TO
SUCH A DAMAGES REMEDY AND IN THAT REGARD AGENCY MAY
DECLARE A DEFAULT UNDER THE TERMS OF THE AGENCY NOTE OR
OTHER OF THE AGENCY AGREEMENTS. IN PLACING ITS INITIAL AT
THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND
THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL
WHO HAS EXPLAINED THE CONSEQUENCES OF THE LIQUIDATED
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DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED
THIS AGREEMENT.
PARTICIPANT'S INITIALS: AGENCY'S INITIALS:
W -
4.0 TENANCE.
4.1 Maintenance Obli a� tion. Participant agrees to and shall maintain all interior and
exterior improvements, including landscaping, on the Site in good condition and repair (and, as
to landscaping, in a healthy condition) and in accordance with all of the permits and approvals
for the Project, and all other applicable laws, rules, ordinances, orders, and regulations of all
federal, state, county, municipal, and other governmental agencies and bodies having or claiming
jurisdiction and all their respective departments, bureaus, and officials. Agency places prime
importance on quality maintenance to protect its investment and to ensure that all Agency -
assisted affordable housing projects within the City are not allowed to deteriorate due to below -
average maintenance. Normal wear and tear of the Site improvements will be acceptable to
Agency assuming Participant agrees to perform all necessary Site improvements to assure the
Site is maintained in good condition. Maintenance requirements shall include that: (a) no
improperly maintained landscaping shall be visible from public rights -of -way, including (i) no
lawns with grasses in excess of six (6) inches in height, (ii) no trees, shrubbery, lawns, and other
plant life dying from lack of water or other necessary maintenance, (iii) no trees, hedges, or
shrubbery grown uncontrolled without proper pruning, (iv) no vegetation so overgrown as to be
likely to harbor rats or vermin, and (v) no dead, decayed, or diseased trees, weeds, and/or other
vegetation; (b) no yard areas shall be left unmaintained, including (i) no broken or discarded
furniture, appliances, or other household equipment stored in yard areas for periods exceeding
one (1) week, (ii) no packing boxes, lumber, trash, dirt, or other debris stored in yards for periods
exceeding one (1) week in areas visible from public property or neighboring properties, (iii) no
unscreened trash cans, bins, or containers stored for unreasonable periods in areas visible from
public property or neighboring properties, and (iv) no vehicles parked or stored in areas other
than approved parking areas; (c) no buildings may be left in an unmaintained condition,
including (i) no violations of state law, Uniform Codes, or City ordinances, (ii) no condition that
constitutes an unsightly appearance that detracts from the aesthetics or property value of the
subj ect property or constitutes a private or public nuisance, (iii) no broken windows or chipped,
cracked, or peeling paint, (iv) no conditions constituting hazards and/or inviting trespassers or
malicious mischief, and (v) no graffiti or accumulation of waste or debris. Participant shall make
all repairs and replacements necessary to keep the improvements in good condition and repair
and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping
with comparable approved materials. In the event that Participant breaches any of the covenants
contained in this Section and Participant does not commence to cure such breach within five (5)
days after written notice from Agency (with respect to graffiti, debris, waste material,
landscaping, and general maintenance) or thirty (30) days after written notice from Agency (with
respect to building improvements), and after commencing the cure to diligently prosecute such
cure to completion, then Agency, in addition to whatever other remedy it may have at law or in
equity, shall have the right, but not the obligation, to enter upon the Site and perform all acts and
work necessary to protect, maintain, and preserve the improvements and landscaped areas on the
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Site, and to attach a lien on the Site, or to assess the Site, in the amount of the expenditures
arising from such acts and work of protection, maintenance, and preservation by Agency and/or
costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall
be promptly paid by Participant to Agency upon demand.
4.2 Lien. If the costs incurred pursuant to Section 4.1 are not reimbursed within thirty
(30) days after Participant's receipt of notice thereof, or if Participant fails to timely pay other
sums required to be paid to Agency under this Agreement when due (after notice and an
opportunity to cure, as set forth in Section 10 or Section 11 (as applicable)), the same shall be
deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of ten percent
(10%) per annum until paid. Any and all delinquent amounts, together with said interest, costs
and reasonable attorney's fees, shall be a lien and charge, with power of sale (subordinate to any
lien to which Agency is required to subordinate pursuant to Section 4 of the Agency Deed of
Trust), upon the property interests of Participant, and the rents, issues and profits of such
property. Agency may bring an action at law against Participant to pay any such sums or
foreclose the lien against Participant's property interests. Any such lien may be enforced by sale
by the Agency following recordation of a Notice of Default of Sale given in the manner and time
required by law as in the case of a deed of trust; such sale to be conducted in accordance with the
provisions of Section 2924, et seg., of the California Civil Code, applicable to the exercise of
powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. No lien
recorded by Agency pursuant to this Section 4.2 shall defeat or render invalid the lien of any
senior mortgage or deed of trust.
5.0 MANAGEMENT.
5.1 Gross Mismanagement. In the event of "Gross Mismanagement" (as that term is
defined below) of the Project, Agency shall have the authority to require that such Gross
Mismanagement cease immediately, and further to require the immediate replacement of the
manager. Agency shall provide written notice to Participant of the event(s) of Gross
Mismanagement occurring and Participant shall have five (5) business days after receipt of such
notice to commence to cure, correct, or remedy the event(s) of Gross Mismanagement identified
in the Agency's notice and to notify the Agency's Executive Director of the steps taken to effect
such cure, correction, or remedy, and upon commencing such cure, correction, or remedy to
thereafter diligently prosecute such cure, correction, or remedy to completion. For purposes of
this Agreement the term "Gross Mismanagement" shall mean management of the Project in a
manner which materially violates the terms and/or intention of this Agreement to operate an
affordable rental housing complex of the highest standard, and shall include, but is not limited to,
the following:
5.1.1 Knowingly leasing Restricted Units to ineligible tenants or tenants whose
income exceeds the prescribed levels (except in the event (i) the Restricted Unit has been
redesignated as an Unrestricted Unit, in accordance with Section 3.6; or (ii) Participant is
authorized to lease the Restricted Unit to an ineligible tenant, pursuant to Section 3.3);
5.1.2 Knowingly allowing the tenants to exceed permitted occupancy levels
without taking immediate steps to stop such overcrowding;
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5.1.3 Failing to timely maintain the Project and the Site in the manner required
by this Agreement or failing to submit materially complete reports;
5.1.4 Failing to timely submit the reports as required by this Agreement;
5.1.5 Fraud in connection with any document or representation relating to this
Agreement or embezzlement of Project monies; and
5.1.6 Failing to fully cooperate with law enforcement in its attempts to maintain
a crime -free environment on the Site.
5.2 Lease Approval. The initial form lease agreement to be used by Participant for
the rental of any of the Units ("Lease Agreement"), and any changes to such form Lease
Agreement regarding the provisions required by Section 3.6 and Section 3.9 to be included in the
form Lease Agreement shall be reasonably approved in advance by Agency's Executive Director
prior to the initial use of the lease form and prior to the first use of the changed form.
6.0 COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
6.1 Compliance With Laws. Participant shall comply with (i) all ordinances,
regulations and standards of the City, Agency, County of Riverside, any regional governmental
entity, State of California, and federal government applicable to the Property; (ii) all rules and
regulations of any assessment district of the City with jurisdiction over the Property; and (iii) all
applicable labor standards of California law and federal law; and (iv) the requirements of
California law and federal law with respect to the employment of undocumented workers or
illegal aliens.
6.2 Environmental Matters.
6.2.1 Definitions. For the purposes of this Agreement, unless the context
otherwise specifies or requires, the following terms shall have the meanings herein specified:
6.2.1.1 The term "Hazardous Materials" shall mean any substance,
material, or waste which is or becomes regulated by any local governmental authority, the
County of Riverside, the State of California, a regional governmental authority, or the United
States Government, including, but not limited to, any material or substance which is (i) defined
as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under
Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health
and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a
"hazardous substance" under Section 25316 of the California Health and Safety Code, Division
20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a
"hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of
the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
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designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
.1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C., 6901 et se . (42 U.S.C., 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C.. 9601 et se .
6.2.1.2 The term "Hazardous Materials Contamination" shall mean the
contamination (whether presently existing or hereafter occurring) of the improvements, facilities,
soil, groundwater, air or other elements on, in or of the Site by Hazardous Materials, or the
contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any
other property as a result of Hazardous Materials at any time emanating from the Site.
6.2.1.3 The term "Governmental Requirements" shall mean all past,
present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the
United States, the state, the county, the city, or any other political subdivision in which the Site is
located, and any other state, county city, political subdivision, agency, instrumentality or other
entity exercising jurisdiction over the Site.
6.2.2 Indemnity. Participant shall save, protect, defend, indemnify and hold
harmless Agency and the City and their respective officers, officials, members. employees,
agents, and representatives from and against any and all liabilities, suits, actions, claims,
demands, penalties, damages (including, without limitation, penalties, fines and monetary
sanctions), losses, costs or expenses (including, without limitation, consultants' fees,
investigation and laboratory fees, reasonable attorneys' fees and remedial and response costs)
(the foregoing are hereinafter collectively referred to as "Liabilities") which may now or in the
future be incurred or suffered by Agency or City or their respective officers, officials, members,
employees, agents, or representatives by reason of, resulting from, in connection with, or existing
in any manner whatsoever as a direct or indirect result of (i) Participant's placement on or under
the Site of any Hazardous Materials or Hazardous Materials Contamination on or after the date
of this Agreement, (ii) the escape, seepage, leakage, spillage, discharge, emission or release from
the Site of any Hazardous Materials or Hazardous Materials Contamination on or after the date
of this Agreement, or (iii) any Liabilities incurred under any Governmental Requirements
relating to the acts described in the foregoing clauses (i) and (ii); provided, however, that the
same shall not apply to acts or omissions following Agency's or City's conduct of a foreclosure
sale or acceptance of a deed in lieu thereof.
6.3 Duty to Prevent Hazardous Material Contamination. Participant shall take
commercially reasonable action to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements
with respect to Hazardous Materials. In addition, Participant shall install and utilize such
equipment and implement and adhere to such procedures as are consistent with the standards
generally applied by apartment complexes in Riverside County, California as respects the
disclosure, storage, use, removal, and disposal of Hazardous Materials.
6.4 Obligation of Participant to Remediate Premises. Notwithstanding the obligation
of Participant to indemnify Agency, City, and their respective officers, officials, members,
employees, agents, and representatives pursuant to Section 6.2.2, Participant shall, at its sole cost
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and expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all
actions necessary to make full economic use of the Site for the purposes contemplated by this
Agreement and the AHA, which requirements or necessity arise from the presence upon, about
or beneath the Site, prior to Agency's or City's conduct of a foreclosure sale or acceptance of a
deed in lieu thereof, of any Hazardous Materials or Hazardous Materials Contamination for
which Participant is responsible. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the Site, the preparation of any feasibility studies
or reports and the performance of any cleanup, remedial, removal or restoration work.
6.5 Environmental Inquiries. Participant, when it has received any notices of
violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease and
desist orders related to Hazardous Materials or Hazardous Materials Contamination, or when
Participant is required to report to any governmental agency any violation or potential violation
of any Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials
Contamination, shall concurrently notify Agency's Executive Director, and provide to him/her a
copy or copies, of the environmental permits, disclosures, applications, entitlements or inquiries
relating to the Site, the notices of violation, notices to comply, citations, inquiries, clean-up or
abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements,
and reports filed or applications made pursuant to any Governmental Requirement relating to
Hazardous Materials and underground tanks, and Participant shall report to the Executive
Director, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Participant shall, as soon as possible after it becomes aware of the release, furnish to the
Executive Director a copy of any and all reports relating thereto and copies of all correspondence
with governmental agencies relating to the release. Upon request of the Executive Director,
Participant shall furnish to the Executive Director a copy or copies of any and all other
environmental entitlements or inquiries relating to or affecting the Site including, but not limited
to, all permit applications, permits and reports including, without limitation, those reports and
other matters which may be characterized as confidential.
7.0 INSURANCE.
7.1 Duty to Procure Insurance. Participant, for the term of this Agreement, shall
procure and keep in full force and effect or cause to be procured and kept in full force and effect
for the mutual benefit of Participant and Agency, and shall provide Agency evidence reasonably
acceptable to Agency's Executive Director, insurance policies meeting the minimum
requirements set forth below:
7.1.1 Commercial General Liability insurance with respect to the Site and the
operations of or on behalf of Participant, in an amount not less than One Million Dollars
($1,000,000) per occurrence combined single limit including products, completed operations,
contractual, bodily injury, personal injury, death and property damage liability per occurrence,
subject to such increases in amount as Agency may reasonably require from time to time;
provided, that the percentage increase in coverage shall not be required to exceed the percentage
increase in the Consumer Price Index published by the United States Department of Labor,
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Bureau of Labor Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles -Long
Beach -Anaheim Average, All Items (1984 = 100) (the "Index"), from and after the date of this
Agreement, or, if said Index is discontinued, such official index as may then be in existence and
which is most nearly equivalent to said Index (the "CPI Adjustment"). Unless otherwise
approved in advance by the Agency Executive Director, the insurance to be provided by
Participant may provide for a deductible or self -insured retention of not more than Ten Thousand
Dollars ($10,000), with such maximum amount to increase at the same rate as the periodic
increases in the minimum amount of total insurance coverage set forth above.
7.1.2 With respect to the improvements and any fixtures and furnishings to be
owned by Participant on the Site, insurance against fire, extended coverage, vandalism, and
malicious mischief, and such other additional perils, hazards, and risks as now are or may be
included in the standard "all risk" form in general use in Riverside County, California, with the
standard form fire insurance coverage in an amount equal to full actual replacement cost thereof,
as the same may change from time to time. The above insurance policy or policies shall include
coverage for earthquakes to the extent generally and commercially available at commercially
reasonable rates, if such insurance is generally obtained for rental apartment projects of this size
and type in the counties of Los Angeles, Orange County, Riverside, and San Bernardino.
Agency shall be a loss payee under such policy or policies and such insurance shall contain a
replacement cost endorsement. Participant shall provide Agency, not later than ten (10) days
prior to the date Participant intends to commence construction of the Project on the Site, a
written notice stating the date Participant shall commence construction of the Project
("Participant's Notice of Commencement of Construction"). Participant shall not be required to
procure, and to provide Agency evidence of, the all risk insurance described in this Section 7.1.2
until the date of Participant's Notice of Commencement of Construction, and Participant shall
include with the delivery of Participant's Notice of Commencement of Construction to Agency
evidence that Participant has procured and has in place the all risk insurance required by this
Section 7.1.2. For purposes of this Agreement, the phrase "commences construction of the
Project on the Site" shall mean the date Participant commences any work on the Site, other than
grading or excavation, which would be covered by the all risk insurance described by this
Section 7.1.2. Notwithstanding the foregoing, commencing on the first day of the first calendar
month following the Effective Date of this Agreement and on the first day of each successive
calendar month thereafter until Participant provides to Agency Participant's Notice of
Commencement of Construction, Participant shall provide the Agency Executive Director with a
written notice stating that Participant has not commenced construction of the Project on the Site
(as defined above), and indicating the date Participant anticipates delivering to Agency
Participant's Notice of Commencement of Construction.
7.2 Policy Requirements. All policies of insurance required to be carried by
Participant shall meet the following requirements and contain the following endorsements,
provisions, or clauses (as applicable):
7.2.1 The policies shall be written by responsible and solvent insurance
companies licensed in the State of California and having policyholders' rating of A or better, in
the most recent addition of "Best's Key Rating Guide -- Property and Casualty." A copy of each
paid -up policy evidencing such insurance (appropriately authenticated by the insurer) or a
certificate of the insurer, certifying that such policy has been issued, providing the coverage
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required herein, and containing the provisions specified herein, shall be delivered to Agency on
or prior to the date of this Agreement, and thereafter, upon renewals, not less than thirty (30)
days prior to the expiration of coverage. Agency may, at any time, and from time to time,
inspect and/or copy any and all insurance policies required to be procured by Participant
hereunder. In no event shall the limits of any policy be considered as limiting the liability of
Participant hereunder.
7.2.2 The insurer shall not cancel or materially alter the coverage provided by
such policy in a manner adverse to the interest of the insured without first giving Agency a
minimum of thirty (30) days prior written notice by certified mail, return receipt requested; and
7.2.3 A waiver by the insurer of any right to subrogation against Agency and
City, and their respective officers, officials, members, employees, agents, and representatives,
which arises or might arise by reason of any payment under such policy or policies or by reason
of any act or omission of Agency or City or their respective officers, officials, members,
employees, agents, or representatives.
7.2.4 The Agency and the City and their respective officers, officials, members,
employees, agents, and representatives shall be named as additional insureds on the Commercial
General Liability policies.
7.2.5 Coverage provided by these policies shall be primary and non-
contributory to any insurance carried by the Agency or City or their respective officers, officials,
members, employees, agents, or representatives.
7.2.6 Failure to comply with reporting provisions shall not affect coverage
provided to Agency and its officers, officials, members, employees, agents, or representatives.
7.3 Failure to Procure Insurance. If Participant fails to procure and maintain the
above -required insurance despite its availability, then Agency, in addition to any other remedy
which Agency may have hereunder for Participant's failure to procure, maintain, and/or pay for
the insurance required herein, may (but without any obligation to do so) at any time or from time
to time, after thirty (30) days written notice to Participant, procure such insurance and pay the
premiums therefor, in which event Participant shall immediately repay Agency all sums so paid
by Agency together with interest thereon at the maximum legal rate.
8.0 OBLIGATION TO REPAIR.
8.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance.
Subject to Section 8.3 below, if the Project shall be totally or partially destroyed or rendered
wholly or partly uninhabitable by fire or other casualty required to be insured against by
Participant, Participant shall promptly proceed to obtain insurance proceeds to the extent made
available by the senior lender, if any, and take all steps necessary to begin reconstruction and,
immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair
or replacement of the Project to substantially the same condition as the Project is required to be
maintained in pursuant to this Agreement, whether or not the insurance proceeds are sufficient to
cover the actual cost of repair, replacement, or restoration, and Participant shall complete the
same as soon as possible thereafter so that the Project can continue to be operated and occupied
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as an affordable housing project in accordance with this Agreement. Subject to extensions of
time for "Enforced Delay" events (as defined in Section 22 of this Agreement) occurring after
the casualty event, in no event shall the repair, replacement, or restoration period exceed (i) one
(1) year from the date Participant obtains insurance proceeds, if the damage or destruction is fifty
percent (50%) or less of the replacement cost of the improvements comprising the Project; or (ii)
two (2) years from the date Participant obtains insurance proceeds, if the damage or destruction
is greater than fifty percent (50%) of the replacement cost of the improvements comprising the
Project, unless the Agency Executive Director, in his or her sole and absolute discretion,
approves a longer period of time. Agency shall cooperate with Participant, at no expense to
Agency, in obtaining any governmental permits required for the repair, replacement, or
restoration and, upon issuance of such permits Agency shall promptly release control of any
insurance proceeds within Agency's control. If, however, the then -existing laws of any other
governmental agencies with jurisdiction over the Property do not permit the repair, replacement,
or restoration, Participant may elect not to repair, replace, or restore the Project by giving notice
to Agency (in which event Participant shall be entitled to all insurance proceeds but Participant
shall be required to remove all debris from the Property) or Participant may reconstruct such
other improvements on the Property as are consistent with applicable land use regulations and
approved by the City, Agency, and the other governmental agency or agencies with jurisdiction.
In such event, the Agency Agreements, including this Agreement, shall automatically terminate
and Agency shall cooperate to remove the Agency Agreements from title.
If Participant fails to obtain insurance as required by this Agreement (and Agency has not
procured such insurance and charged Participant for the cost), Participant shall be obligated to
reconstruct and repair any partial or total damage to the Project and improvements located on the
site in accordance with this Section 8.1.
8.2 Continued Operations. During any period of repair, Participant shall continue, or
cause the continuation of, the operation of the apartment complex on the Site to the extent
reasonably practicable from the standpoint of prudent business management. The number of
Restricted Units shall be reduced in proportion to the number of Units not habitable as a result of
the casualty during such period of repair.
8.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance.
If the improvements comprising the Project are completely destroyed or substantially damaged
by a casualty for which Participant is not required to (and has not) insured against, then
Participant shall not be required to repair, replace, or restore such improvements and may elect
not to do so by providing Agency with written notice of election not to repair, replace, or restore
within ninety (90) days after such substantial damage or destruction. In such event, (i)
Participant shall remove all debris from the Property, and (ii) the Agency Agreements, including
this Agreement, shall automatically terminate and Agency shall cooperate to remove the Agency
Agreements from title. As used in this Section 8.3, "substantial damage" caused by a casualty
not required to be (and not) covered by insurance shall mean damage or destruction which is (A)
fifty percent (50%) or more of the replacement cost of the improvements comprising the Project,
if the damage or destruction occurs during the first fifty (50) years following the Term
Commencement Date, or (B) twenty-five percent (25%) or more of the replacement cost of the
improvements comprising the Project, if the damage or destruction occurs after the first fifty (50)
years following the Term Commencement Date. In the event Participant does not timely elect
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not to repair, replace, or restore the improvements as set forth in the first sentence of this Section
8.3, Participant shall be conclusively deemed to have waived its right not to repair, replace, or
restore the improvements and thereafter Participant shall promptly commence and complete the
repair, replacement, or restoration of the damaged or destroyed improvements in accordance with
Section 8.1 above and continue operation of the apartment complex during the period of repair
(if practicable) in accordance with Section 8.2 above.
9.0 LIMITATION ON TRANSFERS.
9.1 Sale or Transfer of the Project. Participant covenants that during the term of this
Agreement Participant shall not assign this Agreement or transfer the Site or any of its interests
therein except as provided in this Section 9.0.
9.2 Transfer Defined. As used in this Article 9.0, the term "Transfer" shall include
any assignment, hypothecation, mortgage, pledge, conveyance, or encumbrance of this
Agreement, the Site, or the improvements thereon. A Transfer shall also include the transfer to
any person, entity, or group of persons or entities acting in concert of more than fifty percent
(50%) (in the aggregate) of the present ownership and/or control of any person or entity
constituting Participant, taking all transfers into account on a cumulative basis. In the event any
entity constituting Participant, or the constituent partners or members of Participant or any
successor of Participant, is a corporation or trust, such transfer shall refer to the transfer of the
issued and outstanding capital stock of such corporation, or of beneficial interests of such trust;
in the event that any entity constituting Participant, or the constituent partners of Participant or
any successor of Participant is a limited or general partnership, such transfer shall refer to the
transfer of more than fifty percent (50%) of such limited or general partnership interest; in the
event that any entity constituting Participant, or the constituent members of Participant or any
successor of Participant is a limited liability company, such transfer shall refer to the transfer of
more than fifty percent (50%) of such membership interest; in the event that any entity
constituting Participant, or the constituent partners of Participant or any successor of Participant
is a joint venture, such transfer shall refer to the transfer of more than fifty percent (50%) of the
ownership and/or control of any such joint venture partner, taking all transfers into account on a
cumulative basis.
9.3 Agency Approval of Transfer Required. Except as set forth below, Participant
shall not Transfer this Agreement or any of Participant's rights hereunder, or any interest in the
Site or in the improvements thereon, directly or indirectly, voluntarily or by operation of law,
without the prior written approval of Agency, which approval shall not be unreasonably
withheld, conditioned, or delayed, and any such purported Transfer without such approval shall
be null and void. In addition to the foregoing and notwithstanding anything in this Section to the
contrary, so long as the Project is encumbered by a deed of trust (other than a deed of trust the
beneficiary of which is the Agency), any proposed transferee or assignee must also receive the
prior written consent of the beneficiary of such deed of trust, if required by such deed of trust,
before Agency shall approve such transfer or assignment; provided, however, that such consent
of beneficiary shall not obligate Agency to approve such Transfer. Notwithstanding the
foregoing, the following types of transfers shall not require Agency approval but as with all
Transfers shall be subject to Section 9.4:
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(a) transfers to any entity or entities owned or controlled directly or indirectly
by Participant or any of its respective shareholders, partners, or members,
to any limited liability company in which Participant is the managing
member, or to any parent corporation or subsidiary corporation of any
partners of Participant, or to any entity or entities controlled by any such
shareholders or partners, or to any members of any entity which is a
partner of Participant, or to any of its constituent members or partners;
(b) any mortgage, deed of trust, sale and leaseback, or other form of
conveyance required for any reasonable method of financing or
refinancing the acquisition of the Site and development of the Project
thereon, including all direct and indirect costs related thereto; or
(c) the leasing of individual rental units on the Site provided that such leasing
is in accordance with the terms of this Agreement;
(d) Transfers resulting from the death or mental or physical incapacity of an
individual;
(e) Transfers in trust for the benefit of a spouse, children, grandchildren, or
other family member, or for charitable purposes;
(f) Transfers of stock in a publicly -held corporation or of the beneficial
interest in ay publicly -held partnership or real estate investment trust; or
(g) the conveyance or dedication of portions of the Site to the City or other
governmental entity, or the granting of easements or permits to facilitate
the development of the Site.
Agency shall reasonably consider approving a transfer to an entity not owned or
controlled by Participant provided such entity has both of the following: (A) the financial
strength and capability, equal to or greater than the financial strength and capability of
Participant, to perform Participant's obligations hereunder; and (B) the experience and expertise,
at levels equal to or greater than the experience and expertise of Participant, in the planning,
financing, development, ownership and operation of similar projects. Upon a Transfer by
Participant that has been approved by Agency, and for which Participant has delivered to Agency
a fully executed Assignment and Assumption Agreement that has been approved by Agency, in
accordance with Section 9.4 below, Participant shall be released from liability hereunder from
and after the date thereof.
9.4 Assignment and Assumption Agreement. In the absence of specific written
agreement by Agency, no Transfer by Participant of all or any portion of its interest in the Site or
this Agreement, whether or not requiring the approval by Agency, shall be deemed to relieve
Participant or any successor party from the obligation to timely complete construction of the
Project. In addition, no attempted Transfer of any of Participant's obligations hereunder shall be
effective unless and until Participant and the transferee or successor party execute and deliver to
Agency a binding assignment and assumption agreement substantially in the form of Exhibit "J"
to the AHA, or upon request of Participant, another form to be reasonably approved by Agency's
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legal counsel, to accommodate the reasonable requests of the assuming party ("Assignment and
Assumption Agreement").
9.5 Permitted Transferee. A "Permitted Transferee" under this Agreement shall be a
transferee or assignee that either, (i) has been approved by the Agency Executive Director or (ii)
is a transferee of a Transfer not requiring the approval of the Agency Executive Director
pursuant to the terms of this Agreement, and in both the cases described in the foregoing clauses
(i) and (ii) has executed and delivered to the Agency Executive Director an assignment and
assumption agreement pursuant to Section 9.4.
10.0 EVENTS OF DEFAULT BY PARTICIPANT.
Subject to extensions of time pursuant to the terms of Section 22, the occurrence of one
or more of any of the following events shall constitute an "Event of Default" by Participant
hereunder if Participant shall have not cured, corrected, or remedied such failure within, unless a
shorter or longer cure period is provided for specific defaults elsewhere in this Agreement, thirty
(30) days following the service on Participant of a written notice from Agency specifying the
failure complained of, or if it is not practicable to cure or remedy such failure within such thirty
(30) day period (which impracticality shall not apply to monetary defaults), within such longer
period as shall be reasonable under the circumstances provided that Participant has commenced
to cure within the same thirty (30) day period and has diligently prosecuted such cure to
completion:
10.1 Construction of the Project on the Site has not commenced within the time set
forth in the AHA; or
10.2 Construction of the Project on the Site is not completed within the time set forth
in the AHA; or
10.3 Participant shall abandon or surrender the Site; or
10.4 Participant is in default of the Agency Note and has not cured such default within
the cure period applicable to such default as set forth in the Agency Note; or
10.5 Participant is in material default of any of the covenants, terms or provisions of
this Agreement or any of the Agency Agreements; or
10.6 Participant voluntarily files or has involuntarily filed against it any petition under
any bankruptcy or insolvency act or law and the same has not been dismissed within sixty (60)
days thereafter; or
10.7 Participant is adjudicated a bankrupt; or
10.8 Participant makes a general assignment for the benefit of creditors in violation of
the terms of this Agreement or any of the Agency Agreements.
1
10.9 Participant is in 'default, beyond any applicable cure period, of any of the
following: (i) any senior indebtedness encumbering the Site, (ii) the covenants and restrictions
i
i
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contained in the grant deed pursuant to which Landaq Inc., a Delaware corporation ("Landaq")
as "Seller" conveyed the Site to Participant ("Grant Deed"), which Grant Deed was recorded on
October 24, 2002, as Instrument No. 2002-600846, in the Official Records of the County of
Riverside ("Official Records"); (iii) that certain Declaration of Development Covenants,
Conditions and Restrictions entered into and recorded on October 24, 2002, as Instrument No.
2002-600848, in the Official Records, b and between Landaq, as the "Company," and
Participant, as the "Builder," which sets %rth certain development and use restrictions with
which Participant is required to comply; or (iv) that certain Option Agreement and Escrow
Instructions entered into on or about October 24, 2002, by and between Landaq, as the
"Company," and Participant, as the "Builder," which provides for Participant's grant to Landaq
of an option to repurchase the Site in accordance with the terms thereof, as memorialized by that
certain Memorandum of Option entered into' by those parties and recorded on October 24, 2002,
as Instrument No. 2002-600849, in the Offic�al Records.
11.0 REMEDIES OF AGENCY.
In the event Participant defaults in the performance or observance of any covenant,
agreement or obligation of Participant pursuant to this Agreement, and if such default remains
uncured for a period of thirty (30) days after written notice thereof shall have been given by
Agency (or such lesser period as may apply under Section 4.1), or, in the event said default
cannot be cured within said time period, Participant has failed to commence to cure such default
within the applicable time period and diligently prosecute said cure to completion, then Agency
shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one
or more of the following steps:
11.1 With respect to (i) the physical condition of the Site, or (ii) Participant's Gross
Mismanagement of the Project, enter the Site and correct or cause to be corrected said default
and charge the costs thereof (including costs incurred by Agency in enforcing this provision) to
the account of Participant, which charge shall be due and payable within thirty (30) days after
presentation by Agency of a statement of all or part of said costs, and if such bill is not timely
paid then to (A) place a lien on the Site for said amount due plus interest at the maximum legal
rate, or (B) foreclose with respect to Agency's lien on the Site for said amount due plus interest
at the maximum legal rate;
11.2 Correct or cause to be corrected said default and pay the costs thereof (including
costs incurred by Agency in enforcing this provision) from the proceeds of any insurance;
11.3 Exercise its right to maintain any and all actions or proceedings at law or suits in
equity to compel Participant to correct or cause to be corrected said default, or to foreclose as a
result thereof, including without limitation exercise of Agency's rights under the Agency Deed
of Trust;
11.4 Have a receiver appointed to take possession of Participant's interest in the Site,
with power in said receiver to administer Participant's interest in the Site, to collect all funds
available to Participant in connection with its operation and maintenance of the Site, and to
perform all other actions consistent with Participant's obligations under this Agreement as the
court deems proper;
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11.5 Terminate this Agreement by written notice to Participant and seek repayments of
any remaining principal and accrued interest then owing on the Agency Note;
11.6 With respect to a default for which foreclosure would be an available remedy,
exercise the right to foreclose, or, during the period which is five (5) days prior to the foreclosure
sale date, exercise the right to purchase the Project from Participant, for a purchase price equal to
the appraised value of the Site less (i) the outstanding amount due under any senior indebtedness,
(ii) the amount due under the Agency Note, (iii) any delinquent taxes and assessments owing on
the Site, and (iv) any reasonable costs incurred by Agency to effect the curing of a default and
purchase of the Project, including but not limited to escrow fees and attorney's fees.
Except as otherwise expressly stated in this Agreement, the rights and remedies of the
parties are cumulative, and the exercise by any party of one or more of its 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 another party.
12.0 NONDISCRIMINATION.
12.1 Antidiscrimination. 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, or any part thereof, nor shall Participant, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees of the Site, or any part thereof (except as permitted by this
Agreement).
12.2 Anti -Discrimination Clauses in Agreements. Participant agrees for itself and any
successor in interest that Participant shall refrain from restricting the rental, sale, or lease of any
portion of the Site, or contracts relating to the Site, on the basis of race, color, creed, religion,
sex, marital status, ancestry, or national origin of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
12.2.1 In deeds: "The grantee herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of any person or group of persons on account of
race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall
the grantee itself, or any persons claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land
herein conveyed. The foregoing covenants shall run with the land."
12.2.2 In leases: "The lessee herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through them, and this
lease is made and accepted upon and subject to the following conditions:
882/015610-0063 20
325173.13 a05/23/03
"That there shall be no discrimination against or segregation of any person or
group of persons on account of status, race, color, creed, religion, sex, marital
status, ancestry, or national origin in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee
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, sublessees,
subtenants, or vendees in the land herein leased."
12.2.3 In contracts: "There shall be no discrimination against or segregation of
any persons or group of persons on account of status, race, color, creed, religion, sex, marital
status, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or
enjoyment of land, nor shall the transferee itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees,
or vendees of land."
13.0 COVENANTS TO RUN WITH THE LAND.
Participant hereby subjects the Site to the covenants, reservations, and restrictions set
forth in this Agreement. Agency and Participant hereby declare their express intent that all such
covenants, reservations, and restrictions shall be deemed covenants running with the land, and
shall pass to and be binding upon the Participant's successors in title to the Site; provided,
however, that on the termination of this Agreement said covenants, reservations and restrictions
shall automatically expire. All covenants established in this Agreement shall, without regard to
technical classification or designation, be binding for the benefit of the Agency, and such
covenants shall run in favor of the Agency for the entire term of this Agreement, without regard
to whether the Agency is or remains an owner of any land or interest therein to which such
covenants relate. Each and every contract, deed or other instrument hereafter executed covering
or conveying the Site or any portion thereof shall conclusively be held to have been executed,
delivered and accepted subject to such covenants, reservations, and restrictions, regardless of
whether such covenants, reservations, and restrictions are set forth in such contract, deed or other
instrument.
Agency and Participant hereby declare their understanding and intent that the burden of
the covenants set forth herein touch and concern the land in that Participant's legal interest in the
Site is rendered less valuable thereby. Agency and Participant further hereby declare their
understanding and intent that the benefit of such covenants touch and concern the land by
enhancing and increasing the enjoyment and use of the Project by Eligible Tenants, the intended
beneficiaries of such covenants, reservations, and restrictions, and by furthering the public
purposes for which the Agency was formed.
Participant, in exchange for the Agency entering into the AHA, hereby agrees to hold,
sell, and convey the Site subject to the terms of this Agreement. Participant also grants to the
Agency the right and power to enforce the terms of this Agreement against the Participant and all
persons having any right, title or interest in the Site or any part thereof, their heirs, successive
owners and assigns.
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The covenants set forth in this Agreement shall remain in effect for a period terminating
on the earlier of (i) fifty-five (55) years following the Term Commencement Date; (ii)
foreclosure by Agency with respect to the Site; and (iii) foreclosure by a senior lender.
14.0 INDEMNIFICATION.
Participant agrees for itself and its successors and assigns to indemnify, defend, and hold
harmless Agency, City, and their respective officers, officials, members, employees, agents, and
representatives from and against any loss, liability, claim, or judgment relating in any manner to
the Project excepting only any such loss, liability, claim, or judgment arising out of the
intentional wrongdoing or gross negligence of Agency, City, or their respective officers,
officials, members, employees, agents, or representatives.
15.0 UTILITIES AND TAXES.
Participant, while in possession of the Property, and each successor or assign of
Participant while in possession of the Property, shall remain fully obligated for the payment of (i)
real and personal property taxes and assessments in connection with the Property, and (ii) all
charges for all utilities serving the Property for which Participant is responsible.
16.0 ATTORNEYS' FEES.
In the event that a party to this Agreement brings an action against the other party hereto
by reason of the breach of any condition, covenant, representation or warranty in this Agreement,
or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to
recover from the other expert witness fees, and its reasonable attorney's fees and costs.
Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to
attorney's fees shall be entitled to all other reasonable costs for investigating such action,
including the conducting of discovery.
17.0 AMENDMENTS.
This Agreement shall be amended only by a written instrument executed by the parties
hereto or their successors in title, and duly recorded in the real property records of the County of
Riverside.
18.0 NOTICE.
Formal notices, demands, and communications between Agency and Participant shall be
sufficiently given if (i) personally delivered, (ii) delivered by a reputable same -day or overnight
courier services that provides a receipt showing date and time of delivery, (iii) delivered by
United States mail, registered or certified, postage prepaid, return receipt requested, or (iv)
delivered by facsimile transmission, provided the original of the faxed communication is
delivered within twenty-four (24) hours by one of methods described in clauses (i), (ii), or (iii) of
the foregoing. Delivery shall be made to the following addresses:
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325173.13 a05/23/03
If to Agency: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Fax: (760) 777-7101
With a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: M. Katherine Jenson, Esq.
Fax: (714) 546-9035
If to Participant: Apartments at La Quinta Village L.P.
1105 Quail Street
Newport Beach, CA 92658
Attn: Victor Mahoney
Fax: (949) 250-8574
With a copy to: Palmieri, Tyler, Wiener, Wilhelm
& Waldron, LLP
2603 Main Street, Ste. 1300
P.O. Box 19712
Irvine, CA, 92014-0220
Attn: Robert Ihrke
Fax: (949) 851-1554
Notices that are personally delivered, delivered by messenger/courier, or by fax (provided
there is compliance with the terms of clause (iv) above) shall be deemed effective upon receipt.
Notices delivered by mail shall be deemed effective upon the earlier of actual receipt by the
addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States
Postal System in the manner described in this Section. Such written notices, demands, and
communications may be sent in the same manner to such other addresses as a party may from
time to time designate by mail.
19.0 NONLIABILITY OF AGENCY OFFICIALS.
No officer, official, member, employee, agent, or representative of Agency shall be
personally liable to Participant, or any successor in interest, in the event of any default or breach
by Agency or for any amount which may become due to Participant or successor or on any
obligations under the terms of this Agreement or any of the Agency Agreements.
20.0 TRANSACTIONS WITH AFFILIATES.
Participant shall have the right to enter into contracts with subsidiaries, affiliates and
other related entities for the purpose of providing cleaning, maintenance and repair services,
insurance policies and other purposes related to the operation of the Site, provided that all such
costs and charges are competitive with the costs, charges, rent and other sums which would be
882/015610-0063 23
325173.13 a05/23/03
paid by or to, as the case may be, an unrelated third party. Agency acknowledges and agrees that
Participant may act as its own general contractor or may engage a third party licensed contractor
for the constructions of any improvements on the Site and that will be entitled in so doing to earn
a commercially reasonable fee.
21.0 SEVERABILITY/WAIVER/INTEGRATION.
21.1 Severability. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not
in any way be affected or impaired thereby.
21.2 Waiver. All waivers of the provisions of this Agreement, unless specified
otherwise herein, must be in writing and signed by the appropriate authorities of Agency or
Participant, as applicable. No delay or omission by either party hereto in exercising any right or
power accruing upon the compliance or failure of performance by the other party hereto under
the provisions of this Agreement shall impair any such right or power or be construed to be a
waiver thereof. A waiver by either party hereto of a breach of any of the covenants, conditions
or agreements hereof to be performed by the other party shall not invalidate this Agreement nor
shall it be construed as a waiver of any succeeding breach of the same or other covenants,
agreements, restrictions or conditions hereof.
21.3 Integration. This Agreement contains the entire Agreement between the parties
concerning the subject matter hereof and neither party relies on any warranty or representation
not contained in this Agreement.
22.0 ENFORCED DELAY; EXTENSIONS OF TIME.
Performance by a party hereunder shall not be deemed to be in default where delays or
defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires;
casualties; supernatural causes; 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; acts of the other
party; acts or the failure to act of a public or governmental agency or entity (except that acts or
the failure to act of Agency or City shall not excuse performance by Agency or City unless the
act or failure is caused by the acts or omissions of Participant); or any other causes beyond the
reasonable control or without the fault of the party claiming an extension of time to perform. In
the event of such a delay (herein "Enforced Delay"), the party delayed shall continue to exercise
reasonable diligence to minimize the period of the delay. An extension of time for any such
cause shall be limited to the period of the Enforced Delay, and shall commence to run from the
time of the commencement of the cause, provided notice by the party claiming such extension is
sent to the other party within fifteen (15) days after the sending party has knowledge, or should
have obtained knowledge, of the commencement of the cause. The following shall not be
considered as events or causes beyond the control of Participant, and shall not entitle Participant
to an extension of time to perform: (i) Participant's failure to obtain financing for the Project
(except as a result of an omission or breach by Agency), (ii) Participant's failure to negotiate
agreements with prospective tenants or users for the Project, or (iii) interest rates or economic or
market conditions. Times of performance under this Agreement may also be extended by mutual
882/015610-0063 24
325173.13 a05/23/03
written agreement by Agency and Participant. The Agency Executive Director shall also have
the authority on behalf of Agency to administratively approve extensions of time not to exceed a
cumulative total of one (1) year.
23.0 THIRD PARTY BENEFICIARY.
The City of La Quinta is deemed a third party beneficiary of the terms and covenants
contained in this Agreement and has the right, but not the obligation, to enforce the terms and
covenants contained herein.
24.0 FUTURE ENFORCEMENT.
The parties hereby agree that should the Agency cease to exist as an entity at any time
during the term of this Agreement, the City of La Quinta shall have the right to enforce all of the
terms and conditions herein, unless the Agency had previously specified another entity to enforce
this Agreement.
25.0 GOVERNING LAW.
This Agreement shall be governed by the laws of the State of California.
26.0 NO MERGER.
The covenants, terms, and provisions of this Agreement shall not merge with any grant
deed or other instrument pertaining to the conveyance of any interest in real property.
27. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which shall
constitute one original and all of which shall be one and the same instrument.
[end - signature page follows]
882/015610-0063 25
325173.13 a05/23/03
IN WITNESS WHEREOF, the Agency and Participant have executed this Regulatory
Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on
the date first written hereinabove.
ATTEST:
Lo
Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
0
Attorneys for the La Quinta
Redevelopment Agency
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
M
Thomas Genovese
Executive Director
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing mber
By:
J.C. Gianulias
Its: President
882/015610-0063 26
325173.13 a05/23/03
STATE OF CALIFORNIA )
ss.
COUNTY OF /� )
On 2 2 � before me,Da&akn-�, personally
appeared personally known to me (vrl rewd
+� -- e the b2r%i � ��+_�--+-- � �,i,�o ) to be the persork whose namef sure subscribed
uWYlY W
to the within instrument and acknowledged to me tha< /sheAhry executed the same in
authorized capacity, and that by is air signature,4 on the instrument the
person/V or the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
DIANE BAESMAN
Ct>ANad abn f 12MM
"°t°O c calMorNo f*C9onMeipi 1 jm>&coos
[SEALL . -- - - I - -
STATE OF CALIFORNIA
ss.
COUNTY OF
Notary Public
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.
Notary Public
[SEAL]
882/015610-0063 27
325173.13 a05/23/03
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO.600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
882/015610-0063
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ATTACHMENT NO. 2
INCOME COMPUTATION AND CERTIFICATION FORM
[See following pages]
882/015610-0063
325173.13 a05/23/03
CITY OF LA QUINTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Property Address:
PART II. TENANT HOUSEHOLD INFORMATION
Date of Birth Soc. Sec. # Relationship
TOTAL NUMBER OF PERSONS IN HOUSEHOLD: (Please list information on other household members below)
Mailing Address:
Telephone Numbers: Work
Home
PART III. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required verification as specified
below. Attach a note explaining any significant changes in household income between the previous year and the current year.
INFORMATION IS REQUIRED FOR ALL MEMBERS OF THE HOUSEHOLD AGE 18 OR OLDER REGARDLESS OF
WHETHER THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a tax return, please
indicate this in Part V by your signature.
ANN INCOME
ANN INCOME
INCOME SOURCES
for owner
others in hshld
VERIFICATIONS (needed for file)
A. Employment earnings
Last tax return & last 3 pay stubs,
employer verification
B. Self-employment earnings
Last 2 tax returns & current financial stmt
C. Social Security (OASDI)
Annual award letter
D. Supplemental Security Income (SSI)
Annual award letter
E. Public assistance (AFDC, general
Current benefit statement
assistance, unemployment, etc.)
F. Pension (s)
Annual award letter, year end stmt, W-2
G. Interest income
Last 2 statements for all accounts
H. Investment income (stocks, bonds,
real estate, etc.)
Last 2 statements for all accounts
I. Room rental
Rental agreement, copies of checks, etc.
J. Other income (list type/source)
K. TOTAL INCOME (sum of A thru J)
/ 12 months = mo. income
882/015610-0063
325173.13 a05/23/03
PART IV. PROPERTY STATUS
Will this property be your primary residence?
Will someone other than the individuals listed above be occupying this property?
If yes - Name of occupants:
Telephone Number:
My/our housing expenses are as follows:
1. Monthly tenant rent
2. Average monthly utilities _
Mailing Address:
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determination, completion of monitoring forms is required on an annual basis.
I/We certify that Uwe have disclosed all information pertaining to my/our application and that the information presented in the
foregoing Sections I through IV is true and accurate to the best of my (our) knowledge.
Tenant
Date
Tenant
For more information regarding this application, please contact management staff at (760)
Comments:
FOR OFFICE USE ONLY
Information verified
Income category
Maximum allowable annual income ( % of median)
Applicant's annual income gross monthly _
Management Staff
Date
max housing costs
Date
882/015610-0063 2
325173.13 a05/23/03
ATTACHMENT NO.3
INCOME RECERTIFICATION FORM
[See following pages]
882/015610-0063
325173.13 a05/23/03
LA QUINTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
PART I. GENERAL INFORMATION
1. Property Owner Name
2. Renter Name
3. Property Address
La Quinta, CA 92253 (Please include P.O. Box No. if applicable)
4. Has there been a change in ownership of this property during the preceding 12 month
period?
Yes ( ) No ( )
(If yes, please explain)
PART II. UNIT INFORMATION
5. Number of Bedrooms
6. Number of Occupants
Names:
PART III. AFFIDAVIT OF RENTER
I, , and I, , as renters of units assisted pursuant to
the La Quinta Redevelopment Agency's (the "Agency") Affordable Housing
Program (the "Program"), do hereby represent and warrant as follows:
A. (My/Our) adjusted income (anticipated total annual income) does not exceed moderate income
which is one hundred twenty percent (120%) of the median gross income for the Riverside/San
Bernardino Primary Metropolitan Statistical Area as such income levels are established and
amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and
published by the State Department of Housing and Community Development in the California
Administrative Code. Based upon this median income which has been adjusted for family size,
the following table depicts the maximum eligible income levels for the Program.
Income Category 1 Person 2 Persons 3 Persons 4 Persons
Moderate Income xxx xxx xxx xxx
Income Categ 5 Persons 6 Persons 7 Persons 8 Persons
Moderate Income xxx xxx xxx xxx
As an example, the gross income of a household of 4 persons could not exceed $
annually. (I/We) understand that the applicable median gross income for our household size is
882/015610-0063 1
325173.13 a05/23/03
1. The following computation includes all income (Uwe) anticipate receiving for the 12-
month period commencing on January 1, 20 For the renter and all family members
include:
(a) amount of wages, salaries, overtime pay, commissions, fees,
tips and bonuses, and payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation
and severance pay (before payroll deduction)
(b) net income from business or profession or rental of property
(without deduction for repayment of debts or expansion of business)
(c) interest and dividends
(d) periodic receipts such as social security, annuities, pensions,
retirement funds, insurance policies, disability or death benefits,
alimony, child support, regular contributions or gifts
from persons not occupying unit
(e) public assistance allowance or grant plus excess of maximum
allowable for shelter or utilities over the actual allowance for
such purposes
(f) regular and special pay and allowances of a member of
armed services (whether or not living in the dwelling)
who is head of the family or spouse
Subtotal (a) through (f)
LESS: Portion of above items which are income of a family member
who is less than 18 years old or a full-time student ( _
TOTAL ELIGIBLE INCOME
NOTE: The following items are not considered income: casual or sporadic gifts; amounts
specifically for or in reimbursement of medical expenses; lump sum payment such as inheritances,
insurance payments, capital gains and settlement for personal or property losses; educational
scholarships paid directly to the student or educational institution; government benefits to a
veteran for education; special pay to a serviceman head of family away from home and under
hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food
Stamp Act of 1964 which is in excess of amount actually charged the eligible household;
relocation payments under Title II of Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970; payments received pursuant to participation in the following
programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE,
Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community
Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the Landlord and
the Agency to determine maximum income for eligibility and (Uwe) warrant that all
information set forth in this Part III is true, correct and complete and based upon
information (Uwe) deem reliable and that the estimate contained in paragraph 1 is
reasonable and based upon such investigation as the undersigned deemed necessary.
3. (I/We) will assist the Landlord and the Agency in obtaining any information or documents
required to verify the statements made in this Part III and have attached hereto a copy of
our federal income tax return for the last year (20__).
4. (I/We) acknowledge that (Uwe) have been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material breach of
(my/our) agreement with the Landlord to rent the unit and will additionally enable the
882/015610-0063 2
325173.13 a05/23/03
Agency to initiate and pursue all applicable legal and equitable remedies with respect to
the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
1. Base rent
2. Average Monthly Utilities
3. Other (explain)
(I/We) understand that completion of monitoring forms is required on an annual basis and agree to notify
the La Quinta Redevelopment Agency in writing of any change in ownership or rental of the unit. (I/We)
do hereby swear under penalty of pe&ry that the foregoing statements are true and correct.
Date
Renter(s)
882/015610-0063 3
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ATTACHMENT NO.4
LEASE RIDER
[See following page]
882/015610-0063
325173.13 a05/23/03
(Project Name) AFFORDABLE HOUSING PROJECT
Moderate Income Lease Rider
RESIDENT:
(if there is more than one adult occupant, each person must sign the rider)
LEASE DATE:
UNIT NO.:
The undersigned tenant(s) hereby certify and agree as follows:
1. Income Certification. The attached income certification is true, correct and complete. Uwe
agree to provide a similar certification annually upon request during the term of my
occupancy.
2. Employer Verification. The landlord or property manager has my permission to verify
my/our income from any sources of income Uwe receive.
3. False Statements. If the income certification and/or lease application submitted by me/us is
false, or if Uwe fail to provide annual certifications, the landlord or property manager will
have the right to terminate my/our lease and recover possession of my/our apartment. Uwe
understand that the landlord and property manager are relying on this income certification in
accepting me/us as a tenant, and the landlord or property manager will be seriously harmed if
my/our income does not qualify the apartment for the Moderate Income affordable housing
program.
4. Income Recertification. During the term of tenancy, if an annual income recertification form
reflects that my/our gross household income exceeds the amount allowed for moderate
income, Uwe understand that the monthly rent charged for this unit will change to market
rate.
5. This rider shall be considered as part of my/our lease.
Date:
Tenant
Tenant
Tenant
Tenant
882/015610-0063 1
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ATTACHMENT NO. 5
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
[See following page]
882/015610-0063
325173.13 a05/23/03
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of
, owner of the Project, hereby represents
and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Affordable
Housing Agreement between the La Quinta Redevelopment Agency and Apartments at
La Quinta Village L.P.
2. As of June 30, 20_, the following number of residential units in the
Project (i) are currently occupied by tenants qualifying as Moderate Income
Household at Affordable Rents; (ii) are currently occupied by other tenants having incomes of
not greater than 120% of area -wide median income (the above terms are defined in California
Health and Safety Code Section 50053); or (iii) are currently vacant and being held available for
occupancy by Eligible Tenants and have been so held continuously since the date Eligible
Tenants vacated such unit, as indicated:
i. units at Moderate Income
ii. vacant units
3. The unit number, unit size, the tenant paid rental amount charged and collected,
the number of occupants and the income of the occupants for each restricted unit in the
Project is set forth on the attached list. All restricted units in the
Project are rented at Affordable Rent.
OWNER NAME
Dated: 920 By:
(Printed name and title)
882/015610-0063 1
325173.13 a05/23/03
ATTACHMENT NO. 6
RESTRICTED UNIT MIX
Flan Type
Square Feet
Total
Plan 1
1 B+ 1 B
670
46
Plan 2A
2B + 2B
889
46
Plan 2B
2B + 2B
889
46
Plan 2C
2B + 2B
942
14
Plan 2D
2B + 2B
952
2
Plan 3
3B + 2B
1177
46
200
Affordable
Units
30
30
15
75
882/015610-0063
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EXHIBIT "H"
FORM OF RELEASE OF CONSTRUCTION COVENANTS
[SEE FOLLOWING PAGES]
882/015610-0063
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RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta„ CA 92253
Attn: Executive Director
[NOTE: RECORD
AS PARTIAL RELEASE
OF AGREEMENT]
(Space Above Line for Recorder's Use Only)
(Exempt from Recording Fee per Gov. Code 6103)
RELEASE OF CONSTRUCTION COVENANTS
WHEREAS, APARTMENTS AT LA QUINTA VILLAGE L.P., a California limited
partnership, is the owner of fee title to that certain real property legally described in Attachment
No. 1 attached hereto and incorporated herein by reference (the "Site"); and
WHEREAS, by an Affordable Housing Agreement (hereinafter referred to as the
"Agreement") dated , by and between Participant and the La Quinta
Redevelopment Agency, a public body corporate and politic ("Agency"), Participant has
redeveloped the Site in accordance with the Agreement; and
WHEREAS, pursuant to Section 6.4 of the Agreement, promptly after Participant's
completion of the "Project" (as that term is defined in the Agreement) upon the Site, and upon
request by Participant, Agency shall furnish Participant with a Release of Construction
Covenants in such form as to permit it to be recorded in the Official Records of the County of
Riverside; and
WHEREAS, the issuance by Agency of the Release of Construction Covenants shall be
conclusive evidence that Participant has complied with the terms of the Agreement pertaining to
the rehabilitation of the Site; and
WHEREAS, Participant has requested that Agency furnish Participant with the Release
of Construction Covenants; and
WHEREAS, Agency has conclusively determined that the rehabilitation of the Site has
been satisfactorily completed as required by the Agreement;
NOW, THEREFORE:
1. As provided in the Agreement, Agency does hereby certify that rehabilitation of
the Site has been fully and satisfactorily performed and completed, and that such rehabilitation is
in full compliance with said Agreement.
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325173.13 a05/23/03
2. This Release of Construction Covenants shall not constitute evidence of
Participant's compliance with the following agreements, the provisions of which shall continue
to run with the land until termination thereof in accordance with the terms thereof-
(i) Deed of Trust with Assignment of Rents, Security Agreement and Fixture
Filing, by and between Participant as borrower and Agency as beneficiary, dated
and recorded on , as Instrument No.
, in the Office of the Riverside County; and
(ii) Regulatory Agreement and Declaration of Covenants and Restrictions by
and between Participant and Agency, and recorded on , as Instrument
No. in the Office of the Riverside County Recorder.
3. This Release of Construction Covenants shall not constitute evidence of
compliance with or satisfaction of any obligation of Participant to any holder of a mortgage, or
any insurer of a mortgage, securing money loaned to finance construction work on the Site, or
any part thereof.
4. This Release of Construction Covenants is not a Notice of Completion as referred
to in California Civil Code Section 3093.
5. Except as stated herein, nothing contained in this instrument shall modify in any
way any other provisions of the Agreement or any other provisions of any agreements or
documents referenced therein.
IN WITNESS WHEREOF, Agency has executed this Release of Construction Covenants
as of this day of ,
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
0
Executive Director
882/015610-0063 2
325173.13 a05/23/03
CON -SENT TO RECORDATION
AP ARTNIENTS AT LA QUINTA VILLAGE L.P. ("O`vner"), owner of the fee interest in the
real property le7ally described in attachment No. 1 hereto, hereby consents to the recordation of
the foregoing Release of Construction Covenants against said real property.
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing Member
By:
J.C. Gianulias
Its: President
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325173.13 a05/23/03
STATE OF CALIFORtiIA }
ss.
COUNT"'" 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]
STATE OF CALIFORNIA
ss.
COUNTY OF
Notary Public
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.
Notary Public
[SEAL]
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ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
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EXHIBIT 66I-1 "
SUBORDINATION AGREEMENT
[SEE FOLLOWING PAGES]
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Recording Requested By And
When Recorded Mail To:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Executive Director
[Exempt From Recording Fee Per Gov. Code § 6103]
SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS.
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of
by and among LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic ("Agency"), APARTMENTS AT LA QUINTA L.P. a
California limited partnership ("Participant"), and a
("Lender").
RECITALS
A. Participant owns fee title to the real property described on Attachment No. "1"
attached hereto and incorporated herein by reference (the "Real Property").
B. Agency and Participant have entered into that certain Affordable Housing
Agreement dated , 2003 (the "Affordable Housing Agreement"). Pursuant to
the terms of the Affordable Housing Agreement, Participant has agreed to construct a rental
apartment housing complex on the Real Property (the "Project") and (ii) the Agency has agreed
to provide financial assistance to Participant for certain costs incurred by Participant in acquiring
the Real Property and constructing the Project (the "Agency Financial Assistance"), all as more
particularly described in the Agreement.
C. As a condition to Agency's provision of the Agency Financial Assistance to
Participant, Participant agreed to, and did, execute that certain Regulatory Agreement and
Declaration of Covenants and Restrictions, which was recorded on , 2003, as
Instrument No. , in the Official Records of the County of Riverside (the
"Agency Regulatory Agreement"). Participant's performance of its obligations under the
Agency Regulatory Agreement are secured by a Deed of Trust with Assignment of Rents and
Rider Attached Hereto encumbering the Real Property and all improvements now or hereafter
located thereon (the "Property") recorded on , 2003, as Instrument No.
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400649.02 a06/03/03
in the Official Records of the County of Riverside (the "Agency Deed
of Trust").
D. The Agency Financial Assistance is evidenced by a promissory note executed by
the Participant on , 2003 (the "Agency Note"). The Agency Note is secured
by the Agency Deed of Trust. The Affordable Housing Agreement, Agency Regulatory
Agreement, Agency Note, and Agency Deed of Trust are collectively referred to herein as the
"Agency Agreements").
E. Participant has executed or is about to execute a deed of trust, in favor of Lender,
encumbering the Property to secure a promissory note in the sum of
Dollars ($ ) (the "Lender Loan"),
payable with interest and upon the terms and conditions described in such note (respectively, the
"Lender Deed of Trust" and "Lender Note").
F. The Lender is willing to make the Lender Loan provided the Lender Deed of
Trust is and unconditionally remains a lien or charge upon the Property prior and superior to the
lien or charge of the Agency Agreements, and provided that Lender's rights under the Lender
Note, Lender Deed of Trust, and other documents executed by Participant in connection with the
Lender Loan, all of which are described on Attachment No. "2" attached hereto (as the same may
be modified from time to time, the "Lender Loan Documents") shall be and remain superior to
the rights of Agency under the Agency Agreements in accordance with this Agreement.
G. It is to the mutual benefit of Lender, Agency and Participant that the Lender make
the Lender Loan to Participant. The Agency has agreed that the Lender Deed of Trust shall,
when recorded, constitute a lien or charge upon the Property which is unconditionally prior and
superior to the lien or charge of the Agency Agreements, subject to the specific terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the Agency,
Lender and Participant, and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lender to make the Lender Loan, it is hereby
declared, understood and agreed as follows:
1. Subordination by A eg_ncy
1.1 Necessity of Subordination
By executing this Agreement, Agency makes the finding set forth in
California Health and Safety Code Section 33334.14 that subordination is necessary and that
Agency has obtained written commitments as set forth in this Agreement, consistent with
California Health and Safety Code Section 33334.14, to protect the Agency's investment in the
event of a default. Therefore, the Agency hereby agrees to subordinate the lien of the Agency
Agreements to the Lender Deed of Trust on the terms set forth in this Agreement. This
Agreement shall set forth in the priority of liens between the parties and govern the terms and
conditions of such subordination.
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1.2 Subordination of Agency Agreements to Lender Deed of Trust and other
Lender Loan Documents; Termination of Agency Agreements.
The Lender and the Agency agree that: (i) the indebtedness evidenced by the
Agency Agreements is and shall be subordinated in right of payment to the prior payment in full
of the indebtedness evidenced by the Lender Loan Documents, and (ii) the Subordinate Deed of
Trust and the other Agency Agreements are and shall be subject and subordinate in all respects to
the liens, terms, covenants and conditions of the Lender Deed of Trust and the other Lender Loan
Documents and to all advances heretofore made or which may hereafter be made pursuant to the
Lender Deed of Trust and the other Lender Loan Documents (including but not limited to, all
sums advanced for the purposes of (1) protecting or further securing the lien of the Lender Deed
of Trust, curing defaults by the Participant under the Lender Loan Documents or for any other
purpose expressly permitted by the Lender Deed of Trust, or (2) constructing, renovating,
repairing, furnishing, fixturing or equipping the Property). This Agreement constitutes a
subordination by Agency for the purposes of Section 9.3 of the Affordable Housing Agreement.
Consequently, Agency further agrees with Lender that, in the event that Lender, any affiliate of
Lender or any third party acquires the Property by foreclosure of any of the Lender Loan
Documents or deed -in -lieu thereof, the Agency Agreements, and the covenants, restrictions and
obligations contained therein, shall terminate, and shall be null and void and of no further force
or effect.
1.3 Covenant of A eg_ncy
The Agency declares, agrees and acknowledges that to Agency's actual
knowledge, there is no breach, event of default or default existing under the Agency Agreements
or any circumstances, event, omission or failure of condition which would constitute such a
breach, default, or event of default after notice or lapse of time, or both.
1.4 Acknowledgement of A eg ncy
The Agency acknowledges that it has received a copy of the Lender Loan
Documents. A full and complete listing of all the fully executed Lender Loan Documents is
attached hereto and incorporated herein as Attachment No. "2".
2. Reliance by Lender and Agency
The Lender would not make the Lender Loan and the Agency would not have
agreed to subordinate the Agency Agreements without this Agreement and each of the
undersigned understands that in reliance upon, and in consideration of, this subordination,
specific loans and advances are being and will be made and, as part and parcel thereof, specific
monetary and other obligations are being and will be entered into which would not be made or
entered into but for such reliance upon this subordination.
882/015610-0063 -3-
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3. Rights of Agency and Lender
3.1 Default Under Agency Agreements.
(a) Notice of Default and Cure Rights. The Agency shall deliver to
the Lender a default notice within five (5) business days in each case where the Agency has
given a default notice to the Participant. Failure of the Agency to send a default notice to the
Lender shall not prevent the exercise of the Agency's rights and remedies under the Agency
Agreements, subject to the provisions of this Agreement. The Lender shall have the right, but
not the obligation, to cure any Agency Agreement default within ninety (90) days following the
date of such notice; provided, however that the Agency shall be entitled, during such ninety (90)-
day period, to continue to pursue its rights and remedies under the Agency Agreements. All
amounts paid by the Lender in accordance with the Lender Loan Documents to cure an Agency
Agreement default shall be deemed to have been advanced by the Lender pursuant to, and shall
be secured by the lien of, the Lender Deed of Trust.
(b) Agency's Exercise of Remedies After Notice to Lender. If an
Agency Agreement default occurs and is continuing, the Agency agrees that, without the
Lender's prior written consent, it will not commence foreclosure proceedings with respect to the
Property under the Agency Agreements or exercise any other rights or remedies it may have
under the Agency Agreements, including, but not limited to, accelerating the debt under the
Agency Note, collecting rents, appointing (or seeking the appointment of) a receiver or
exercising any other rights or remedies thereunder unless the default under the Agency
Agreements is occasioned by a default under the Lender Loan Documents that is a default under
the Agency Agreements pursuant to Section 3.2(b), in which case Agency shall be permitted to
commence foreclosure proceedings with respect to the Property under the Agency Agreements.
Subject to the foregoing, Agency shall be permitted to exercise and enforce all other rights and
remedies available to the Agency under the Agency Agreements and/or under applicable laws,
including without limitation, rights to enforce covenants and agreements of the Participant
relating to income, rent, or affordability restrictions contained in the Agency Agreements.
(c) Cross Default. The Participant and the Agency agree that a default
under any of the Agency Agreements shall constitute a default under the Lender Loan
Documents (if declared by Agency, and Agency agrees to notify Lender within five (5) business
days of any such declaration) and the Lender shall have the right to exercise all rights or
remedies under the Lender Loan Documents in the same manner as in the case of any other
default under the Lender Loan Documents. If the Agency notifies the Lender in writing that any
Agency Agreement default of which the Lender has received a default notice has been cured or
waived, as determined by the Agency in its sole discretion, then provided that (i) no other default
then exists under the Lender Loan Documents, (ii) all costs and expenses incurred by Lender as a
result of such default under the Agency Agreements have been paid, and (iii) Lender has not
conducted a sale of the Property pursuant to its rights under the Lender Loan Documents, such
default under the Lender Loan Documents arising solely from such Agency Agreement default
shall be deemed cured, and the Lender Loan shall be reinstated, provided, however, that the
Lender shall not be required to return or otherwise credit for the benefit of the Participant any
default rate interest or other default related charges or payments received by the Lender during
such default under the Lender Loan Documents.
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(d) Purchase by Ag_ency. Agency shall also have the right to purchase
the Property from Participant, during the continuance of a default under the Lender Loan
Documents which is a default under the Agency Agreements pursuant to Section 3.2(b), subject
to the Lender Loan and the Lender Loan Documents, in the period which is five (5) days prior to
a foreclosure sale by Agency so long as the conditions set forth in this Section 3.1(d) have been
satisfied. It shall be a condition precedent to Lender's obligation to permit Agency's acquisition
of the Property pursuant to the preceding sentence that (i) Agency shall have given Lender not
less that thirty (30) days prior written notice that it intends to acquire the Property from
Participant, which notice shall specify the anticipated acquisition date, and (ii) Agency has
engaged, to the extent required by Lender in its sole and absolute discretion, a construction
manager (if completion of the improvements has not occurred in accordance with the Lender
Loan Documents) and/or property managers for the Property reasonably acceptable to Lender on
terms and conditions reasonably acceptable to Lender (which terms and conditions shall include,
but not be limited to, the subordination of the related property and construction management
agreements on Lender's standard form) on or before the date which is fifteen (15) days prior to
the date on which Agency acquires the Property. If Agency acquires the Property as aforesaid, it
shall acquire the Property subject to the terms of the Lender Loan and the Lender Loan
Documents, but shall not be entitled to receive any disbursements of the Lender Loan unless
Agency shall have assumed all of the Participant's obligations under the Lender Loan
Documents in a manner acceptable to Lender prior to its acquisition of the Property. In the event
that Lender has commenced foreclosure proceedings with respect to the Lender Deed of Trust,
upon written notice from Agency to Lender received by Lender at least five (5) days prior to the
date set for foreclosure sale under the Lender Deed of Trust, Lender shall postpone the
foreclosure sale for a period not to exceed thirty (30) days to allow Agency to complete the
purchase of the Property; provided, however, that prior to the commencement of any such
postponement period of Lender's foreclosure, Agency shall have cured all monetary defaults
under the Lender Loan Documents, and, thereafter, during such foreclosure period, shall satisfy,
when due, all of Participant's monetary obligations under the Lender Loan to the extent not
satisfied by Participant. Lender shall not be obligated to postpone further any foreclosure
commenced under the Lender Loan Documents. Further, acquisition of the Property by Agency
shall not be deemed to result in the cure or wavier of any default under the Lender Loan
Documents except only to the extent of defaults which are not susceptible of cure by Agency.
The Lender agrees that subject to the satisfaction of the conditions precedent set forth in this
Section 3.1(d), the acquisition of the Property by Agency pursuant to this Section 3.1(d) shall not
constitute a default under the Lender Loan Documents.
3.2 Default Under Lender Loan Documents.
(a) Notice of Default and Cure Rights. The Lender shall deliver to the
Agency a default notice within five (5) business days in each case where the Lender has given a
default notice to the Participant. Failure of the Lender to send a default notice to the Agency
shall not prevent the exercise of the Lender's rights and remedies under the Lender Loan
Documents, subject to the provisions of this Agreement. The Agency shall have the right, but
not the obligation, to cure any monetary default under the Lender Loan Documents within ninety
(90) days following the date of such notice. Agency shall have up to ninety (90) days from the
date of such default notice to cure a non -monetary default if during such ninety (90)-day period
Agency satisfies, when due, all of Participant's monetary obligations under the Lender Loan
882/015610-0063 _
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Documents to the extent not satisfied by Participant. During the pendency of any monetary or
non -monetary default under the Lender Loan Documents, Lender shall be entitled, in its sole and
absolute discretion, to pursue any and all of its rights and remedies under the Lender Loan
Documents, including, without limitation, to accelerate the Lender Loan, to commence and
prosecute of foreclosure proceedings and to seek the appointment of a receiver. No monetary or
non -monetary default under the Lender Loan Documents shall be deemed to have been cured by
Agency unless Agency shall have also paid to Lender all amounts which Agency would have
been required to pay to Lender in order to cure the default under and reinstate the obligations
evidenced and secured by the Lender Loan Documents under and pursuant to California Civil
Code section 2924c. All amounts paid by the Agency to the Lender to cure a default under the
Lender Loan Documents shall be deemed to have been advanced by the Agency pursuant to, and
shall be secured by the lien of, the Agency Deed of Trust.
(b) Cross Default. The Agency agrees that, notwithstanding any
contrary provision contained in the Agency Agreements, a default under the Lender Loan
Documents shall not constitute a default under the Agency Agreements until the Lender has
taken affirmative action to exercise its rights under the Lender Loan Documents to collect rent,
to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of
sale contained in) the Lender Loan Documents (Lender agrees to notify Agency if it takes any of
such actions). At any time after a default under the Lender Loan Documents is determined to
constitute a default under the Agency Agreements, the Agency shall be permitted to pursue its
remedies for default under the Agency Agreements, subject to the restrictions and limitations of
this Agreement. If at any time the Participant cures a default under the Lender Loan Documents
to the satisfaction of the Lender, as evidenced by written notice from the Lender to the Agency,
any default under the Agency Agreements arising from such default under the Lender Loan
Documents shall be deemed cured and the obligations under the Agency Agreements shall be
retroactively reinstated as if such Lender Loan default had never occurred.
(c) Foreclosure of Agency Deed of Trust. In the event that Agency is
entitled to and does commence a foreclosure of the Agency Deed of Trust pursuant to Section
3.2(b), Lender agrees that the acquisition of the Property by Agency at such foreclosure shall not
constitute a default under the Lender Loan Documents so long as the conditions set forth in this
Section 3.2(c) have been satisfied. It shall be a condition precedent to Lender's obligation to
permit Agency's acquisition of the Property pursuant to the preceding sentence that Agency has
engaged, to the extent required by Lender in its sole and absolute discretion, a construction
manager (if completion of the improvements has not occurred in accordance with the Lender
Loan Documents) and/or property managers for the Property reasonably acceptable to Lender on
terms and conditions reasonably acceptable to Lender (which terms and conditions shall include,
but not be limited to, the subordination of the related property and construction management
agreements on Lender's standard form) on or before the date which is fifteen (15) days prior to
the date on which Agency acquires the Property. If Agency acquires the Property as aforesaid, it
shall acquire the Property subject to the terms of the Lender Loan and the Lender Loan
Documents, but shall not be entitled to receive any disbursements of the Lender Loan unless
Agency shall have assumed all of the Participant's obligations under the Lender Loan
Documents in a manner acceptable to Lender prior to its acquisition of the Property. In the event
that Lender has commenced foreclosure proceedings with respect to the Lender Deed of Trust,
upon written notice from Agency to Lender received by Lender at least five (5) days prior to the
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date set for foreclosure sale under the Lender Deed of Trust, Lender shall postpone the
foreclosure sale for a period not to exceed thirty (30) days to allow Agency to complete its
foreclosure; provided, however, that, prior to the commencement of any such postponement
period of Lender's foreclosure, Agency shall have cured all monetary defaults, and, thereafter,
during such foreclosure period, shall satisfy, when due, all of Participant's monetary obligations
under the Lender Loan to the extent not satisfied by Participant. Lender shall not be obligated to
postpone further any foreclosure commenced under the Lender Loan Documents. Further,
acquisition of the Property by Agency shall not be deemed to result in the cure or wavier of any
default under the Lender Loan Documents except only to the extent of defaults which are not
susceptible of cure by Agency.
3.3 Agency's Ri&ht to Reimbursement
Participant hereby agrees to reimburse Agency for any amounts expended by
Agency, pursuant to Section 3.1 above, to cure Participant's defaults under the Lender Deed of
Trust and/or to satisfy Participant's monetary obligations under the Lender Loan; provided,
however, that in the event Agency purchases the Property from Participant in accordance with
Section 3.1 above, Participant shall not be required to reimburse Agency for any amount
expended by Agency to the extent that amount results in a like reduction in Agency's purchase
price for the Property. Agency's right of reimbursement set forth herein shall be secured by a
lien on the Property, with power of sale; provided, however, that any such lien shall be
subordinate to those lien(s) or encumbrance(s) of Participant's construction and/or
takeout/permanent lender(s), including, without limitation, the Lender.
3.4 Disbursements
Lender, in making disbursements of the proceeds of said Loan, is under no
obligation or duty to, nor has Lender represented that it will, see to the application of such
proceeds by the person or persons to whom disbursements thereof are made and any application
or use of such proceeds for purposes other than those provided in the documents evidencing and
securing such Loan shall not defeat the subordination herein made in whole or in part.
4. Participant's and Agency's Representations and Warranties and Covenants.
The Participant and the Agency each make the following representations,
warranties and covenants to the Lender:
4.1 Relationship of Participant to Agency and Lender. The Agency is not an
affiliate of the Participant and is not in possession of any facts, which would lead it to believe
that the Lender is an affiliate of the Participant. This representation is limited to the actual
knowledge of the Executive Director of Agency without investigation.
4.2 Omitted.
4.3 Agency Loan Documents. The executed Agency Agreements are in the
same form as those submitted to, and approved by, Lender prior to the date of this Agreement.
Upon execution and delivery of the Agency Agreements, Participant shall deliver to Lender an
executed copy of each of the Agency Agreements, certified to be true, correct and complete.
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4.4 Lender Loan Documents. The executed Lender Loan Documents are in
the same form as, when applicable, those submitted to, and approved by, Agency prior to the
date of this Agreement. Upon execution and delivery of the Lender Loan Documents,
Participant shall deliver to Agency an executed copy of each of the Lender Loan Documents,
certified to be true, correct and complete.
4.5 Subordination of Subrogation Rights. The Agency agrees that if, by
reason of its payment of real estate taxes or other monetary obligations of the Participant, or by
reason of its exercise of any other right or remedy under the Agency Agreements, it acquires by
right of subrogation or otherwise a lien on the Property which (but for this subsection) would be
senior to the lien of the Lender Deed of Trust, then, in that event, such lien shall be subject and
subordinate to the lien of the Lender Deed of Trust.
4.6 Omitted.
4.7 Payments. The Participant agrees that it will not make any payments
under or pursuant to the Agency Agreements (including but not limited to principal, interest,
additional interest, late payment charges, default interest, attorney's fees, or any other sums
secured by the Agency Deed of Trust) without the Lender's prior written consent. The Agency
agrees that it will not accept any payments under or pursuant to the Agency Agreements
(including but not limited to principal, interest, additional interest, late payment charges, default
interest, attorney's fees, or any other sums secured by the Agency Deed of Trust) without the
Lender's prior written consent.
4.8 Remitting Subordinate Loan Payments to Lender, Agreement Not to
Waive Certain Conditions to Extension of the Lender Loan. If the Agency receives any
payments under the Agency Agreements, the Agency agrees that such payment or other
distribution will be received and held in trust for the Lender and unless the Lender otherwise
notifies the Agency in writing, will be promptly remitted, in kind, to the Lender, properly
endorsed to the Lender, to be applied to the principal of, interest on and other amounts due under
the Lender Loan Documents in accordance with the provisions of the Lender Loan Documents.
By executing this Agreement, the Participant specifically authorizes the Agency to endorse and
remit any such payments to the Lender, and specifically waives any and all rights to have such
payments returned to the Participant or credited against the Agency Agreements. Participant and
Lender acknowledge and agree that payments received by the Agency, and remitted to the
Lender under this Section 4.8, shall not be applied or otherwise credited against the Agency
Agreements, nor shall the tender of such payment to the Lender waive any Agency Agreement
default which may arise from the inability of the Agency to retain such payment or apply such
payment to the Agency Agreements. The Lender agrees with the Agency that the Lender will
not waive the conditions to extension of the maturity date of the Lender Loan set forth in
Sections 4.3(b)(iii) and (b)(vii) of that certain Construction Loan Agreement dated as of
with respect to the Lender Loan. [The sections referenced will be the
conditions to extension relating to completion of the project and debt service coverage.]
4.9 Agreement Not to Commence Proceeding. The Agency agrees that
during the term of this Agreement it will not commence, or join with any other creditor in
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commencing any bankruptcy reorganization, arrangement, insolvency or liquidation proceedings
with respect to the Participant, without the Lender's prior written consent.
4.10 Provisions Reding Bankruptcy. Agency agrees that, unless and until it
has obtained Lender's prior written consent (which consent may be given or withheld in
Lender's sole discretion), Agency shall take no action that may impair or otherwise adversely
affect or alter in any way Senior Lender's interests or claims in any Bankruptcy Proceeding (as
hereinafter defined), including, without limitation, in connection with any vote to accept or reject
a plan of reorganization, any cash collateral or adequate protection issues, any trustee
appointment issues, any exclusivity issues, any claim subordination issues (as between Lender
and any of Participant's creditors, including Agency), any motion to dismiss, any claim voting
entitlements (excluding the Agency's claim), or any other matters pertaining to the extent,
validity, or priority of Lender's liens, rights and entitlements. In the event of any liquidation or
dissolution of Participant, or any execution sale, receivership, insolvency, bankruptcy,
liquidation, readjustment, reorganization, or other similar proceeding relative to the Participant
or the Property (collectively, a "Bankruptcy Event"), the Agency shall not thereafter ask for,
demand, or be entitled to receive or retain any payment or prepayment thereafter made under or
with respect to the Agency Agreements and all amounts due under the Lender Loan or evidenced
and/or secured by the Lender Loan documents shall first be paid in full before any payment is
made under the Agency Agreements. In the event such a payment is nevertheless received by
Agency, such amounts shall be held in trust by Agency for the benefit of Lender and shall be
paid over to Lender for application in payment of the Lender Loan. In the event of the
occurrence of a Bankruptcy Event, any and all distributions, claims, awards or other amounts
paid or payable by Participant to Agency or on account of any claim or interest of Participant
shall be paid first to Lender, and Lender shall apply such amounts to the full and prior payment
of the Lender Loan; provided, however, that the balance of such amounts, after paying the
Lender Loan in full, shall be available for payment to Agency for application under the Agency
Agreements. In the event that an amount paid to Agency for application under the Agency
Agreements pursuant to the preceding sentence is rescinded or otherwise required to be returned
by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of
Participant, or upon or as a result of the appointment of a receiver, intervenor, custodian or
conservator of or trustee or similar officer for, Participant or any substantial part of its property,
or otherwise, Agency agrees to, within five (5) business days after written demand from Lender
to Agency, pay such amount to Lender. Junior Lender further agrees to execute and deliver to
Senior Lender such assignments or other instruments as may be required by Senior Lender in
order to enable Senior Lender to collect any and all such payments or disbursements otherwise
payable by Borrower to Junior Lender or on account of any claim or interest of Borrower.
5. Rights and Obligations of the Agency Under the Agency Agreements and of the
Lender under the Lender Loan Documents.
Subject to each of the other terms of this Agreement, all of the following
provisions shall supersede any provisions of the Agency Agreements covering the same subject
matter:
5.1 Protection of Security Interest. The Agency shall not, without the prior
written consent of the Lender in each instance, take any action which has the effect of increasing
882/015610-0063
400649.02 a06/03/03 9
the indebtedness outstanding under, or secured by, the Agency Agreements by an amount in
excess of $500,000, except that the Agency shall have the right to advance funds to cure defaults
under the Lender Loan Documents pursuant to Section 4.8 above and to advance funds pursuant
to the Agency Agreements for the purpose of paying real estate taxes and insurance premiums,
making necessary repairs to the Property and curing other defaults by the Participant under the
Agency Agreements.
5.2 Condemnation or Casualty. In the event of a taking or threatened taking
by condemnation or other exercise of eminent domain of all or a portion of the Property
(collectively, a "Taking"), or the occurrence of a fire or other casualty resulting in damage to all
or a portion of the Property (collectively, a "Casualty"), at any time or times when the Lender
Deed of Trust remains a lien on the Property the following provisions shall apply:
(a) The Agency hereby agrees that its rights (under the Agency
Agreements or otherwise) to participate in any proceeding or action relating to a Taking and/or a
Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a
Taking or a Casualty shall be and remain subordinate in all respects to the Lender's rights under
the Lender Loan Documents with respect thereto, and the Agency shall be bound by any
settlement or adjustment of a claim resulting from a Taking or a Casualty made by the Lender;
provided, however, this subsection and/or anything contained in this Agreement shall not limit
the rights of the Agency to file any pleadings, documents, claims or notices with the appropriate
court with jurisdiction over the proposed Taking and/or Casualty; and
(b) All proceeds received or to be received on account of a Taking or a
Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and
restoration or to payment of the Lender Loan) in the manner determined by the Lender in its sole
discretion; provided, however, that if the Lender elects to apply such proceeds to payment of the
principal of, interest on and other amounts payable under the Lender Loan, any proceeds
remaining after the satisfaction in full of the principal of, interest on and other amounts payable
under the Lender Loan shall be paid to, and may be applied by, the Agency in accordance with
the applicable provisions of the Agency Agreements, provided however, the Lender agrees to
consult with the Agency in determining the application of Casualty proceeds, provided further
however that in the event of any disagreement between the Lender and the Agency over the
application of Casualty proceeds, the decision of the Lender, in its sole discretion, shall prevail.
5.3 No Modification of Agency Agreements. The Participant and the Agency
each agrees that, until the principal of, interest on and all other amounts payable under the
Lender Loan Documents have been paid in full, it will not, without the prior written consent of
the Lender in each instance, increase the principal amount advanced under the Agency Note by
an amount in excess of $500,000, increase the required payments due under the Agency Note,
decrease the term of the Agency Note, increase the interest rate on the Agency Note, or
otherwise amend the Agency Note terms in a manner that creates an adverse effect upon the
Lender under the Lender Loan Documents. Any unauthorized amendment of the Agency
Agreements or assignment of the Agency's interest in the Agency Note without the Lender's
consent shall be void ab initio and of no effect whatsoever.
882/015610-0063 _ 1 O_
400649.02 a06/03/03
6. Modification or Refinancing of Lender Loan.
The Agency consents to any agreement or arrangement in which the Lender
waives, postpones, extends, reduces or modifies any provisions of the Lender Loan Documents,
including any provision requiring the payment of money. Agency further agrees that its
agreement to subordinate hereunder shall extend to any new mortgage debt which is for the
purpose of refinancing all or any part of the Lender Loan (including reasonable and necessary
costs associated with the closing and/or the refinancing); and that all the terms and covenants of
this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all
references to the Lender Loan, the Lender Note, the Lender Deed of Trust, the Lender Loan
Documents and Lender shall mean, respectively, the refinance loan, the refinance note, the
mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining
to the refinance note and the holder of the refinance note; provided, however, that the amount of
such refinance note shall not be in excess of the greater of (i) the aggregate amount of
indebtedness evidenced and secured by the Lender Loan Documents, and (ii) ninety percent
(90%) of the takeout lender's appraised fair market value of the Site upon completion of the
Project (based upon stabilized value).
7. Miscellaneous
7.1 Conflict.
The Participant, the Lender and the Agency each agrees that, in the event of any
conflict or inconsistency between the terms of the Lender Loan Documents, the Agency
Agreements and the terms of this Agreement, the terms of this Agreement shall govern and
control solely as to the following: (a) the relative priority of the security interests of the Lender
and the Agency in the Property; (b) the timing of the exercise of remedies by the Lender and the
Agency under the Lender Deed of Trust and the Agency Agreements, respectively; and (c) solely
as between the Lender and the Agency, the notice requirements, cure rights, and the other rights
and obligations which the Lender and the Agency have agreed to as expressly provided in this
Agreement. Participant acknowledges that the terms and provisions of this Agreement shall not,
and shall not be deemed to: extend Participant's time to cure any Lender Loan default or Agency
Agreement default, as the case may be; give the Participant the right to notice of any Lender
Loan default or Agency Agreement default, as the case may be other than that, if any, provided,
respectively under the Lender Loan Documents or the Agency Agreements; or create any other
right or benefit for Participant as against Lender or Agency.
7.2 Entire Agreement
This Agreement shall be the whole and only agreement with regard to the matters
set forth herein and shall supersede and cancel, but only insofar as would affect the priority
between the Lender Deed of Trust and the Agency Agreements, any prior agreement as to such
subordination including, but not limited to, those provisions, if any, contained in any of the
Agency Agreements which provide for the subordination of the lien or charge thereof to another
deed or deeds of trust or to another mortgage or mortgages, upon the Property.
882/015610-0063 -11-
400649.02 a06/03/03
7.3 Successors and Assigns
This Agreement shall inure to and bind the heirs, legatees, devisees,
administrators, executors, successors and assigns of the parties hereto.
California.
7.4 California Law
This Agreement shall be construed according to the laws of the State of
7.5 Severabilily
If any term, provision, condition or covenant of this Agreement or the
application thereof to any party or circumstances shall, to any extent, be held invalid or
unenforceable, the remainder of this instrument, or the application of such term, provision,
condition or covenant to persons or circumstances other than those as to whom or which it is
held invalid or unenforceable shall not be affected thereby, and each term and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
7.6 Notice
Any notice, demand, request, consent, approval or communication that
any party desires or is required to give to another party or any other person must be in writing
and may be given by personal delivery, by mailing the same by registered or certified mail,
return receipt requested, postage prepaid, or by a reputable same day or overnight delivery
service that provides a receipt showing date and time of delivery, to the party to whom the notice
is directed at the address of such party hereinafter set forth, or such other address and to such
other persons as the parties may hereafter designate. Any such notice shall be deemed given (i)
upon receipt if by personal delivery or by delivery service, or (ii) forty-eight (48) hours after
deposit in the United States mail, if sent by mail pursuant to the foregoing.
If to Agency: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Fax: (760) 777-7101
With copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626-1998
Attn: M. Katherine Jenson
Fax: (714) 546-9035
If to Participant: Apartments at La Quinta Village L.P.
1105 Quail Street
Newport Beach, CA 92655
Attn: Victor Mahoney
Fax: (949) 250-8574
882/015610-0063 -12-
400649.02 a06/03/03
With copy to: Croudace & Dietrich
5 Park Plaza, Suite 1150
Irvine, CA 92614
Attn: Debra Dietrich
Fax: (949) 794-9909
If to Lender:
7.7 Attorneys' Fees
In the event that any action, suit or other proceeding is brought to enforce
the obligations of under this Agreement, the prevailing party shall be entitled to receive all of
such party's costs and expenses of suit, including attorneys' fees, expert witness fees, and all
costs incurred in each and every action, suit or other proceeding, including any and all appeals or
petitions therefrom.
7.8 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one and the same document.
7.9 Default by the Agency or Lender.
If the Agency or Lender defaults in performing or observing any of the
terms, covenants or conditions to be performed or observed by it under this Agreement, the
other, non -defaulting lender shall have the right to all available legal and equitable relief.
7.10 No Partnership or Joint Venture.
The Lender's permission for the placement of the Agency Agreements
does not constitute the Lender as a joint venturer or partner of the Agency. The Agency's
permission for the placement of the Lender Loan Documents does not constitute the Agency as a
joint venturer or partner of Lender. Neither party hereto shall hold itself out as a partner, agent
or affiliate of the other party hereto.
7.11 Lender's and Agency's Consent.
Wherever the Lender's consent or approval is required by any provision of
this Agreement, such consent or approval may be granted or denied by the Lender in its sole and
absolute discretion, unless otherwise expressly provided in this Agreement. Wherever the
Agency's consent or approval is required by any provision of this Agreement, such consent or
approval may be granted or denied by the Agency in its sole and absolute discretion, unless
otherwise expressly provided in this Agreement.
882/015610-0063 -13 -
400649.02 a06/03/03
7.12 Further Assurances.
The Agency, the Lender and the Participant each agree, at the Participant's expense, to
execute and deliver all additional instruments and/or documents reasonably required by any other
party to this Agreement in order to evidence that the Agency Agreements are subordinate to the
lien, covenants and conditions of the Lender Deed of Trust and the other Lender Loan
Documents, or to further evidence the intent of this Agreement.
7.13 Amendment.
This Agreement shall not be amended except by written instrument signed
by all parties hereto.
7.14 Term.
The term of this Agreement shall commence on the date hereof and shall
continue until the earliest to occur of the following events: (i) the indefeasible payment of all of
the principal of, interest on and other amounts payable under the Lender Loan Documents; (ii)
the payment of all of the principal of, interest on and other amounts payable under the Agency
Agreements, other than by reason of payments which the Agency is obligated to remit to the
Lender pursuant to the terms hereof; (iii) the acquisition by the Lender of title to the Property
pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale
contained in, the Lender Deed of Trust and the termination of the Agency Agreements in
accordance therewith; or (iv) the acquisition by the Agency of title to the Property pursuant to a
foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the
Agency Agreements, but only if such acquisition of title does not violate any of the terms of this
Agreement.
[end - signature page follows]
882/015610-0063 -14-
400649.02 a06/03/03
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the date first written above.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS.
ATTEST:
By:
Secretary
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
IM
Agency Counsel
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
I-,
Executive Director
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California corporation
Its: Managing Member
By:
J.C. Gianulias
President
Its:
[Signatures Continued on Next Page]
882/015610-0063 -15
400649.02 a06/03/03
"LENDER"
By:
Its:
By:
Its:
[End of Signatures]
[Remainder of Page Intentionally Left Blank]
882/015610-0063 -16-
400649.02 a06/03/03
Attachment 1
Property Description
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
882/015610-0063 -17-
400649.02 a06/03/03
Attachment 2
Lender Loan Documents
[To be specifically listed when delivered and approved by Agency]
882/015610-0063 _ 18-
400649.02 a06/03/03
EXHIBIT "I-2"
SUBORDINATION AGREEMENT
[SEE FOLLOWING PAGES]
882/015610-0063
325173.13 a05/23/03
SUBORDINATION AGREEMENT
THIS SUBORDINATION
day of , _
AGREEMENT
by and
(the "Senior
(the
this "Agreement") is entered into this
among (i) a
Lender"), (ii) , a
"Subordinate Lender"), and (iii)
(the "Borrower").
Recitals
A. The Senior Lender has made or is making a loan (the "First Mortgage Loan") to the
Borrower in the original principal amount of $ . The First Mortgage
Loan is or will be secured by a first mortgage lien (the "First Mortgage") on a multifamily housing
project located in (the "Property"). The
Property is more fully described in Exhibit A attached hereto. The Borrower's obligation to repay
the First Mortgage Loan is evidenced by a Multifamily Note dated ,
(the "First Mortgage Note"), and is due in full on ,
B. The Borrower has requested the Senior Lender to permit the Subordinate Lender to
make a subordinate loan to Borrower in the amount of $ (the "Subordinate
Loan") and to secure the Subordinate Loan by, among other things, placing a mortgage lien against
the Property.
C. The Senior Lender has agreed to permit the Subordinate Lender to make the
Subordinate Loan and to place a subordinate mortgage lien against the Property subject to all of the
conditions contained in this Agreement.
D. The Senior Lender intends to sell, transfer and deliver the First Mortgage Note and
assign the First Mortgage to Fannie Mae.
NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate
Lender to make the Subordinate Loan to the Borrower and to place a subordinate mortgage lien
against the Property, and in consideration thereof, the Senior Lender, the Subordinate Lender and
the Borrower agree as follows:
1. Definitions.
In addition to the terms defined in the Recitals to this Agreement, for purposes of this
Agreement the following terms have the respective meanings set forth below:
Fannie Mae Subordination Agreement — Form 4503 10/98 (Pagel)
Affordable Housing
"Affiliate" means, when used with respect to a Person, any corporation, partnership,
joint venture, limited liability company, limited liability partnership, trust or individual
controlled by, under common control with, or which controls such Person (the term
"control" for these purposes hall mean the ability, whether by the ownership of shares or
other equity interests, by co itract or otherwise, to elect a majority of the directors of a
corporation, to make mana ment decisions on behalf of, or independently to select the
managing partner of, a partn rship, or otherwise to have the power independently to remove
and then select a majority of those individuals exercising managerial authority over an
entity, and control shall be c nclusively presumed in the case of the ownership of 50% or
more of the equity interests).
"Borrower" means 1he Person named as such in the first paragraph of this
Agreement and any other Person (other than the Senior Lender) who acquires title to the
Property after the date of this Agreement.
"Business Day" means any day other than Saturday, Sunday or a day on which the
Senior Lender is not open for business.
"Default Notice" means: (a) a copy of the written notice from the Senior Lender to
the Borrower stating that a First Mortgage Loan Default has occurred under the First
Mortgage Loan; or (b) a coy of the written notice from the Subordinate Lender to the
Borrower stating that a Subo hnate Loan Default has occurred under the Subordinate Loan.
Each Default Notice shall s cify the default upon which such Default Notice is based.
"First Mortgage Loan Default" means the occurrence of [a default by the Borrower
in performing or observing any of the terms, covenants or conditions in the First Mortgage
Loan Documents to be perfo ed or observed by it, which continues beyond any applicable
period provided in the First ortgage Loan Documents for curing the default] [an "Event of
Default" as that term is defined in the First Mortgage Loan Documents].
"First Mortgage Loan Documents" means the First Mortgage Note and all other
documents evidencing, securing or otherwise executed and delivered in connection with the
First Mortgage Loan.
"Person" means an individual,, estate, trust, partnership, corporation, limited liability
company, limited liability partnership, governmental department or agency or any other
entity which has the legal capacity to own property.
"Senior Lender"
this Agreement. When
First Mortgage Note, F
Senior Lender.
Fannie Mae Subordination
Affordable Housing
s the Person named as such in the first paragraph on page 1 of
'e Mae or any other Person becomes the legal holder of the
i Mae or such other Person shall automatically become the
Form 4503 10/98 (Page 2)
"Subordinate Lender" means the Person named as such in the first paragraph on
page 1 of this Agreement and any other Person who becomes the legal holder of the
Subordinate Note after the date of this Agreement.
"Subordinate Loan Default" means a default by the Borrower in performing or
observing any of the terms, covenants or conditions in the Subordinate Loan Documents to
be performed or observed by it, which continues beyond any applicable period provided in
the Subordinate Loan Documents for curing the default.
"Subordinate Loan Documents" means the Subordinate Note, the Subordinate
Mortgage, and all other documents evidencing, securing or otherwise executed and
delivered in connection with the Subordinate Loan.
"Subordinate Mortgage" means the mortgage or deed of trust encumbering the
Property as security for the Subordinate Loan, which the Subordinate Lender will cause to
be recorded among the applicable land records immediately before this Agreement.
"Subordinate Note" means the promissory note of even date herewith issued by the
Borrower to the Subordinate Lender, or order, to evidence the Subordinate Loan.
2. Permission to Place Mortgage Lien Against Property.
The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the
Property contained in the First Mortgage Loan Documents and subject to the provisions of this
Agreement, to permit the Subordinate Lender to record the Subordinate Mortgage and other
recordable Subordinate Loan Documents against the Property (which are subordinate in all respects
to the lien of the First Mortgage) to secure the Borrower's obligation to repay the Subordinate Note
and all other obligations, indebtedness and liabilities of the Borrower to the Subordinate Lender
under and in connection with the Subordinate Loan. Such permission is subject to the condition
that each of the representations and warranties made by the Borrower and the Subordinate Lender in
Section 3 is true and correct on the date of this Agreement and on the date on which the proceeds of
the Subordinate Loan are disbursed to the Borrower. If any of the representations and warranties
made by the Borrower and the Subordinate Lender in Section 3 is not true and correct on both of
those dates, the provisions of the First Mortgage Loan Documents applicable to unpermitted liens
on the Property shall apply.
3. Borrower's and Subordinate Lender's Representations and Warranties.
The Borrower and the Subordinate Lender each makes the following representations and
warranties to the Senior Lender:
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 3)
Affordable Housing
(a) Subordinate Note. The Subordinate Note contains the following provision:
The indebtedness evidenced by this Note is and shall be subordinate
in right of payment to the prior payment in full of the indebtedness
evidenced by a Multifamily Note of even date herewith in the original
principal amount of $ issued by
and payable to
("Senior Lender"), or order, to the
extent and in the manner provided in that certain Subordination Agreement
of even date herewith between the payee of this Note, and the Senior Lender
and (the "Subordination Agreement").
The Mortgage [Deed of Trust] securing this Note is and shall be subject and
subordinate in all respects to the liens, terms, covenants and conditions of
the Multifamily Mortgage [Deed of Trust] securing the Multifamily Note as
more fully set forth in the Subordination Agreement. The rights and
remedies of the payee and each subsequent holder of this Note under the
Mortgage [Deed of Trust] securing this Note are subject to the restrictions
and limitations set forth in the Subordination Agreement. Each subsequent
holder of this Note shall be deemed, by virtue of such holder's acquisition of
the Note, to have agreed to perform and observe all of the terms, covenants
and conditions to be performed or observed by the Subordinate Lender
under the Subordination Agreement.
(b) Relationship of Borrower to Subordinate Lender and Senior Lender.
The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any
facts which would lead it to believe that the Senior Lender is an Affiliate of the Borrower.
(c) Term. The term of the Subordinate Note does not end before the term of
the First Mortgage Note.
(d) Subordinate Loan Documents. The executed Subordinate Loan
Documents are substantially in the same forms as those submitted to, and approved by,
Fannie Mae prior to the date of this Agreement. Upon execution and delivery of the
Subordinate Loan Documents, Borrower shall deliver to Senior Lender an executed copy of
each of the Subordinate Loan Documents, certified to be true, correct and complete.
(e) Senior Loan Documents. The executed Senior Loan Documents are
substantially in the same forms as, when applicable, those submitted to, and approved by,
Fannie Mae prior to the date of this Agreement. Upon execution and delivery of the Senior
Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of
the Senior Loan Documents, certified to be true, correct and complete.
Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 4)
Affordable Housing
4. Terms of Subordination.
(a) Agreement to Subordinate. The Senior Lender and the Subordinate
Lender agree that: (i) the indebtedness evidenced by the Subordinate Loan Documents is
and shall be subordinated in right of payment, to the extent and in the manner provided in
this Agreement to the prior payment in full of the indebtedness evidenced by the First
Mortgage Loan Documents, and (ii) the Subordinate Mortgage and the other Subordinate
Loan Documents are and shall be subject and subordinate in all respects to the liens, terms,
covenants and conditions of the First Mortgage and the other First Mortgage Loan
Documents and to all advances heretofore made or which may hereafter be made pursuant
to the First Mortgage and the other First Mortgage Loan Documents (including but not
limited to, all sums advanced for the purposes of (1) protecting or further securing the lien
of the First Mortgage, curing defaults by the Borrower under the First Mortgage Loan
Documents or for any other purpose expressly permitted by the First Mortgage, or (2)
constructing, renovating, repairing, furnishing, fixturing or equipping the Property).
(b) Subordination of Subrogation Rights. The Subordinate Lender agrees
that if, by reason of its payment of real estate taxes or other monetary obligations of the
Borrower, or by reason of its exercise of any other right or remedy under the Subordinate
Loan Documents, it acquires by right of subrogation or otherwise a lien on the Property
which (but for this subsection) would be senior to the lien of the First Mortgage, then, in
that event, such lien shall be subject and subordinate to the lien of the First Mortgage.
(c) Payments Before First Mortgage Loan Default. Until the Subordinate
Lender receives a Default Notice of a First Mortgage Loan Default from the Senior Lender,
the Subordinate Lender shall be entitled to retain for its own account all payments made
under or pursuant to the Subordinate Loan Documents.
(d) Payments After First Mortgage Loan Default. The Borrower agrees that,
after it receives notice (or otherwise acquires knowledge) of a First Mortgage Loan Default,
it will not make any payments under or pursuant to the Subordinate Loan Documents
(including but not limited to principal, interest, additional interest, late payment charges,
default interest, attorney's fees, or any other sums secured by the Subordinate Mortgage)
without the Senior Lender's prior written consent. The Subordinate Lender agrees that, after
it receives a Default Notice from the Senior Lender with written instructions directing the
Subordinate Lender not to accept payments from the Borrower on account of the
Subordinate Loan, it will not accept any payments under or pursuant to the Subordinate
Loan Documents (including but not limited to principal, interest, additional interest, late
payment charges, default interest, attorney's fees, or any other sums secured by the
Subordinate Mortgage) without the Senior Lender's prior written consent. If the
Subordinate Lender receives written notice from the Senior Lender that the First Mortgage
Loan Default which gave rise to the Subordinate Lender's obligation not to accept payments
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 5)
Affordable Mousing
has been cured, waived, or otherwise suspended by the Senior Lender, the restrictions on
payment to the Subordinate Lender in this Section 4 shall terminate, and the Senior Lender
shall have no right to any subsequent payments made to the Subordinate Lender by the
Borrower prior to the Subordinate Lender's receipt of a new Default Notice from the Senior
Lender in accordance with the provisions of this Section 4(d).
(e) Remitting Subordinate Loan Payments to Senior Lender. If, after the
Subordinate Lender receives a Default Notice from the Senior Lender in accordance with
subsection (d) above, the Subordinate Lender receives any payments under the Subordinate
Loan Documents, the Subordinate Lender agrees that such payment or other distribution
will be received and held in trust for the Senior Lender and unless the Senior Lender
otherwise notifies the Subordinate Lender in writing, will be promptly remitted, in kind to
the Senior Lender, properly endorsed to the Senior Lender, to be applied to the principal of,
interest on and other amounts due under the First Mortgage Loan Documents in accordance
with the provisions of the First Mortgage Loan Documents. By executing this Agreement,
the Borrower specifically authorizes the Subordinate Lender to endorse and remit any such
payments to the Senior Lender, and specifically waives any and all rights to have such
payments returned to the Borrower or credited against the Subordinate Loan. Borrower and
Senior Lender acknowledge and agree that payments received by the Subordinate Lender,
and remitted to the Senior Lender under this Section 4, shall not be applied or otherwise
credited against the Subordinate Loan, nor shall the tender of such payment to the. Senior
Lender waive any Subordinate Loan Default which may arise from the inability of the
Subordinate Lender to retain such payment or apply such payment to the Subordinate Loan.
(f) Agreement Not to Commence Bankruptcy Proceeding. The Subordinate
Lender agrees that during the term of this Agreement it will not commence, or join with any
other creditor in commencing any bankruptcy reorganization, arrangement, insolvency or
liquidation proceedings with respect to the Borrower, without the Senior Lender's prior
written consent.
5. Default Under Subordinate Loan Documents.
(a) Notice of Default and Cure Rights. The Subordinate Lender shall deliver
to the Senior Lender a Default Notice within five Business Days in each case where the
Subordinate Lender has given a Default Notice to the Borrower. Failure of the Subordinate
Lender to send a Default Notice to the Senior Lender shall not prevent the exercise of the
Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject
to the provisions of this Agreement. The Senior Lender shall have the right, but not the
obligation, to cure any Subordinate Loan Default within 60 days following the date of such
notice; provided, however that the Subordinate Lender shall be entitled, during such 60-day
period, to continue to pursue its rights and remedies under the Subordinate Loan
Documents. All amounts paid by the Senior Lender in accordance with the First Mortgage
Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 6)
Affordable Housing
Loan Documents to cure a Subordinate Loan Default shall be deemed to have been
advanced by the Senior Lender pursuant to, and shall be secured by the lien of, the First
Mortgage.
(b) Subordinate Lender's Exercise of Remedies After Notice to Senior
Lender. If a Subordinate Loan Default occurs and is continuing, the Subordinate Lender
agrees that, without the Senior Lender's prior written consent, it will not commence
foreclosure proceedings with respect to the Property under the Subordinate Loan
Documents or exercise any other rights or remedies it may have under the Subordinate Loan
Documents, including, but not limited to accelerating the Subordinate Loan, collecting
rents, appointing (or seeking the appointment of) a receiver or exercising any other rights or
remedies thereunder unless and until it has given the Senior Lender at least 60 days' prior
written notice; during such 60 day period, however, the Subordinate Lender shall be entitled
to exercise and enforce all other rights and remedies available to the Subordinate Lender
under the Subordinate Loan Documents and/or under applicable laws, including without
limitation, rights to enforce covenants and agreements of the Borrower relating to income,
rent, or affordability restrictions contained in the Land Use Restriction Agreement.
(c) Cross Default. The Borrower and the Subordinate Lender agree that a
Subordinate Loan Default shall constitute a First Mortgage Loan Default under the First
Mortgage Loan Documents and the Senior Lender shall have the right to exercise all rights
or remedies under the First Mortgage Loan Documents in the same manner as in the case of
any other First Mortgage Loan Default. If the Subordinate Lender notifies the Senior
Lender in writing that any Subordinate Loan Default of which the Senior Lender has
received a Default Notice has been cured or waived, as determined by the Subordinate
Lender in its sole discretion, then provided that Senior Lender has not conducted a sale of
the Property pursuant to its rights under the First Mortgage Loan Documents, any First
Mortgage Loan Default under the First Mortgage Loan Documents arising solely from such
Subordinate Loan Default shall be deemed cured, and the First Mortgage Loan shall be
reinstated, provided, however, that the Senior Lender shall not be required to return or
otherwise credit for the benefit of the Borrower any default rate interest or other default
related charges or payments received by the Senior Lender during such First Mortgage Loan
Default.
6. Default Under First Mortgage Loan Documents.
(a) Notice of Default and Cure Rights. The Senior Lender shall deliver to the
Subordinate Lender a Default Notice within five Business Days in each case where the
Senior Lender has given a Default Notice to the Borrower. Failure of the Senior Lender to
send a Default Notice to the Subordinate Lender shall not prevent the exercise of the Senior
Lender's rights and remedies under the Senior Loan Documents, subject to the provisions of
this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure
Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 7)
Affordable Housing
any such First Mortgage Loan Default within 60 days following the date of such notice;
provided, however, that the Senior Lender shall be entitled during such 60-day period to
continue to pursue its remedies under the First Mortgage Loan Documents. Subordinate
Lender may have up to 90 days from the date of the Default Notice to cure a non -monetary
default if during such 90-day period Subordinate Lender keeps current all payments
required by the First Mortgage Loan Documents. In the event that such a non -monetary
default creates an unacceptable level of risk relative to the Property, or Senior Lender's
secured position relative to the Property, as determined by Senior Lender in its sole
discretion, then Senior Lender may exercise during such 90-day period all available rights
and remedies to protect and preserve the Property and the rents, revenues and other
proceeds from the Property. All amounts paid by the Subordinate Lender to the Senior
Lender to cure a First Mortgage Loan Default shall be deemed to have been advanced by the
Subordinate Lender pursuant to, and shall be secured by the lien of, the Subordinate
Mortgage.
(b) Cross Default. The Subordinate Lender agrees that, notwithstanding any
contrary provision contained in the Subordinate Loan Documents, a First Mortgage Loan
Default shall not constitute a default under the Subordinate Loan Documents if no other
default occurred under the Subordinate Loan Documents until either (i) the Senior Lender
has accelerated the maturity of the First Mortgage Loan, or (ii) the Senior Lender has taken
affirmative action to exercise its rights under the First Mortgage to collect rent, to appoint
(or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale
contained in) the First Mortgage. At any time after a First Mortgage Loan Default is
determined to constitute a default under the Subordinate Loan Documents, the Subordinate
Lender shall be permitted to pursue its remedies for default under the Subordinate Loan
Documents, subject to the restrictions and limitations of this Agreement. If at any time the
Borrower cures any First Mortgage Loan Default to the satisfaction of the Senior Lender, as
evidenced by written notice from the Senior lender to the Subordinate Lender, any default
under the Subordinate Loan Documents arising from such First Mortgage Loan Default
shall be deemed cured and the Subordinate Loan shall be retroactively reinstated as if such
First Mortgage Loan Default had never occurred.
7. Conflict.
The Borrower, the Senior Lender and the Subordinate Lender each agrees that, in the event
of any conflict or inconsistency between the terms of the First Mortgage Loan Documents, the
Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall
govern and control solely as to the following: (a) the relative priority of the security interests of the
Senior Lender and the Subordinate Lender in the Property; (b) the timing of the exercise of
remedies by the Senior Lender and the Subordinate Lender under the First Mortgage and the
Subordinate Mortgage, respectively; and (c) solely as between the Senior Lender and the
Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 8)
Affordable Housing
the Senior Lender and the Subordinate Lender have agreed to as expressly provided in this
Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and
shall not be deemed to: extend Borrower's time to cure any First Mortgage Loan Default or
Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any First
Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any,
provided, respectively under the First Mortgage Loan Documents or the Subordinate Loan
Documents; or create any other right or benefit for Borrower as against Senior Lender or
Subordinate Lender.
8. Rights and Obligations of the Subordinate Lender Under the Subordinate
Loan Documents and of the Senior Lender under the First Mortgage Loan Documents.
Subject to each of the other terms of this Agreement, all of the following provisions shall
supersede any provisions of the Subordinate Loan Documents covering the same subject matter:
(a) Protection of Security Interest. The Subordinate Lender shall not, without
the prior written consent of the Senior Lender in each instance, take any action which has
the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate
Loan Documents, except that the Subordinate Lender shall have the right to advance funds
to cure First Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds
pursuant to the Subordinate Mortgage for the purpose of paying real estate taxes and
insurance premiums, making necessary repairs to the Property and curing other defaults by
the Borrower under the Subordinate Loan Documents.
(b) Condemnation or Casualty. In the event of: a taking or threatened taking
by condemnation or other exercise of eminent domain of all or a portion of the Property
(collectively, a "Taking"); or the occurrence of a fire or other casualty resulting in damage to
all or a portion of the Property (collectively, a "Casualty"), at any time or times when the
First Mortgage remains a lien on the Property the following provisions shall apply:
(1) The Subordinate Lender hereby agrees that its rights (under the
Subordinate Loan Documents or otherwise) to participate in any proceeding or
action relating to a Taking and/or a Casualty, or to participate or join in any
settlement of, or to adjust, any claims resulting from a Taking or a Casualty shall be
and remain subordinate in all respects to the Senior Lender's rights under the First
Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall
be bound by any settlement or adjustment of a claim resulting from a Taking or a
Casualty made by the Senior Lender; provided, however, this subsection and/or
anything contained in this Agreement shall not limit the rights of the Subordinate
Lender to file any pleadings, documents, claims or notices with the appropriate court
with jurisdiction over the proposed Taking and/or Casualty; and
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 9)
Affordable Housing
(2) all proceeds received or to be received on account of a Taking or a
Casualty, or both, shall be applied (either to payment of the costs and expenses of
repair and restoration or to payment of the First Mortgage Loan) in the manner
determined by the Senior Lender in its sole discretion; provided, however, that if the
Senior Lender elects to apply such proceeds to payment of the principal of, interest
on and other amounts payable under the First Mortgage Loan, any proceeds
remaining after the satisfaction in full of the principal of, interest on and other
amounts payable under the First Mortgage Loan shall be paid to, and may be applied
by, the Subordinate Lender in accordance with the applicable provisions of the
Subordinate Loan Documents, provided however, the Senior Lender agrees to
consult with the Subordinate Lender in determining the application of Casualty
proceeds, provided further however that in the event of any disagreement between
the Senior Lender and the Subordinate Lender over the application of Casualty
proceeds, the decision of the Senior Lender, in its sole discretion, shall prevail.
(c) No Modification of Subordinate Loan Documents. The Borrower and the
Subordinate Lender each agrees that, until the principal of, interest on and all other amounts
payable under the First Mortgage Loan Documents have been paid in full, it will not,
without the prior written consent of the Senior Lender in each instance, increase the amount
of the Subordinate Loan, increase the required payments due under the Subordinate Loan,
decrease the term of the Subordinate Loan, increase the interest rate on the Subordinate
Loan, or otherwise amend the Subordinate Loan terms in a manner that creates an adverse
effect upon the Senior Lender under the First Mortgage Loan Documents. Any unauthorized
amendment of the Subordinate Loan Documents or assignment of the Subordinate Lender's
interest in the Subordinate Loan without the Senior Lender's consent shall be void ab initio
and of no effect whatsoever.
9. Modification or Refinancing of First Mortgage Loan.
The Subordinate Lender consents to any agreement or arrangement in which the Senior
Lender waives, postpones, extends, reduces or modifies any provisions of the First Mortgage Loan
Documents, including any provision requiring the payment of money. Subordinate Lender further
agrees that its agreement to subordinate hereunder shall extend to any new mortgage debt which is
for the purpose of refinancing all or any part of the First Mortgage Loan (including reasonable and
necessary costs associated with the closing and/or the refinancing); and that all the terms and
covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt;
and that all references to the First Mortgage Loan, the First Mortgage Note, the First Mortgage, the
First Mortgage Loan Documents and Senior Lender shall mean, respectively, the refinance loan, the
refinance note, the mortgage securing the refinance note, all documents evidencing securing or
otherwise pertaining to the refinance note and the holder of the refinance note.
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 10)
Affordable Housing
10. Default by the Subordinate Lender or Senior Lender.
If the Subordinate Lender or Senior Lender defaults in performing or observing any of the
terms, covenants or conditions to be performed or observed by it under this Agreement, the other,
non -defaulting lender shall have the right to all available legal and equitable relief.
11. Notices.
Each notice, request, demand, consent, approval or other communication (hereinafter in this
Section referred to collectively as "notices" and referred to singly as a "notice") which the Senior
Lender or the Subordinate Lender is required or permitted to give to the other party pursuant to this
Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if. (a)
personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have
been received at the time so delivered); or (b) sent by Federal Express (or other similar national
overnight courier) designating early morning delivery (any notice so delivered shall be deemed to
have been received on the next Business Day following receipt by the courier); or (c) sent by United
States registered or certified mail, return receipt requested, postage prepaid, at a post office
regularly maintained by the United States Postal Service (any notice so sent shall be deemed to
have been received two days after mailing in the United States), addressed to the respective parties
as follows:
SENIOR LENDER:
Attention:
With a copy to:
Fannie Mae
Attention: Multifamily Operations - Asset Management
Drawer AM
3900 Wisconsin Avenue, N.W.
Washington, DC 20016
SUBORDINATE LENDER:
Fannie Mae Subordination Agreement -- Form 4503 10/98 (Pagel 1)
Affordable Housing
Attention:
Either party may, by notice given pursuant to this Section, change the person or persons and/or
address or addresses, or designate an additional person or persons or an additional address or
addresses for its notices, but notice of a change of address shall only be effective upon receipt.
13. General.
(a) Assignment/Successors. This Agreement shall be binding upon the
Borrower, the Senior Lender and the Subordinate Lender and shall inure to the benefit of
the respective legal successors and assigns of the Senior Lender and the Subordinate
Lender.
(b) No Partnership or Joint Venture. The Senior Lender's permission for the
placement of the Subordinate Loan Documents does not constitute the Senior Lender as' a
joint venturer or partner of the Subordinate Lender. Neither party hereto shall hold itself out
as a partner, agent or Affiliate of the other party hereto.
(c) Senior Lender's and Subordinate Lender's Consent. Wherever the
Senior Lender's consent or approval is required by any provision of this Agreement, such
consent or approval may be granted or denied by the Senior Lender in its sole and absolute
discretion, unless otherwise expressly provided in this Agreement. Wherever the
Subordinate Lender's consent or approval is required by any provision of this Agreement,
such consent or approval may be granted or denied by the Subordinate Lender in its sole and
absolute discretion, unless otherwise expressly provided in this Agreement.
(d) Further Assurances. The Subordinate Lender, the Senior Lender and the
Borrower each agree, at the Borrower's expense, to execute and deliver all additional
instruments and/or documents reasonably required by any other party to this Agreement in
order to evidence that the Subordinate Mortgage is subordinate to the lien, covenants and
conditions of the First Mortgage, or to further evidence the intent of this Agreement.
(e) Amendment. This Agreement shall not be amended except by written
instrument signed by all parties hereto.
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 12)
Affordable Housing
(f) Governing Law. This Agreement shall be governed by the laws of the
State in which the Property is located.
(g) Severable Provisions. If any provision of this Agreement shall be invalid
or unenforceable to any extent, then the other provisions of this Agreement, shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
(h) Term. The term of this Agreement shall commence on the date hereof and
shall continue until the earliest to occur of the following events: (i) the payment of all of the
principal of, interest on and other amounts payable under the First Mortgage Loan
Documents; (ii) the payment of all of the principal of, interest on and other amounts payable
under the Subordinate Loan Documents, other than by reason of payments which the
Subordinate Lender is obligated to remit to the Senior Lender pursuant to Section 4 hereof;
(iii) the acquisition by the Senior Lender of title to the Property pursuant to a foreclosure or
a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the First
Mortgage; or (iv) the acquisition by the Subordinate Lender of title to the Property pursuant
to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale
contained in, the Subordinate Mortgage, but only if such acquisition of title does not violate
any of the terms of this Agreement.
(i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original for all purposes; provided,
however, that all such counterparts shall together constitute one and the same instrument.
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 13)
Affordable Housing
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first written above.
SENIOR LENDER:
By:
Name:
Title:
SUBORDINATE LENDER:
By:
Name:
Title:
BORROWER:
By:
Name:
Title:
[Jurats to be added]
Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 14)
Affordable Housing
EXHIBIT " J"
ASSIGNMENT AND ASSUMPTION AGREEMENT
[SEE FOLLOWING PAGES]
882/015610-0063
325173.13 a05/23/03
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment") is
made and entered into as of , 2003 ("Effective Date"), by and between
APARTMENTS AT LA QUINTA VILLAGE L.P., a California limited partnership
("Assignor"), and , a
("Assignee"), with reference to the following Recitals.
RECITALS
A. Assignor, as "Participant," and the La Quinta Redevelopment Agency, a public
body, corporate and politic ("Agency"), have entered into that certain Affordable Housing
Agreement dated as of , 2003 (the "Agreement"), which Agreement sets forth
the terms and conditions for (i) Assignor's construction of a rental apartment complex on certain
real property owned in fee by Participant and located in the City of La Quinta, State of California
(the "Project"); and (ii) Agency's provision of financial assistance to Assignor to reimburse
Assignor for certain costs incurred by Assignor in acquiring the real property and constructing
the Project (the "Agency Financial Assistance"), all as more particularly described in the
Agreement. As a condition of disbursement for Participant's receipt of the Agency Financial
Assistance, Assignor was required to execute that certain Regulatory Agreement and Declaration
of Covenants and Restrictions, which was recorded on , 2003, as Instrument
No. , in the Official Records of the County of Riverside ("Agency
Regulatory Agreement"). Capitalized terms used without definition in this Assignment shall
have the meaning ascribed to such terms in the Agreement.
B. In accordance with Section 7.4 of the Agreement and Section 9.4 of the Agency
Regulatory Agreement, Assignor now desires to assign its right, title, and interest in and to (i) the
Agreement and (ii) the Agency Regulatory Agreement, to Assignee, and Assignee desires to
accept such assignment on, and subject to, the terms and conditions set forth in this Assignment.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Assignment. Assignor hereby assigns, conveys, transfers and delivers to
Assignee all of Assignor's right, title, and interest in and to (i) the Agreement and (ii) the
Agency Regulatory Agreement, and Assignee hereby accepts such assignment and agrees to
assume performance of all terms, covenants and conditions occurring or arising under (i) the
Agreement and (ii) the Agency Regulatory Agreement, on or after the date of this Assignment.
2. Assumption of Obligations. By acceptance of this Assignment, Assignee hereby
agrees to assume all of Assignor's right, title, and interest in and to (i) the Agreement and (ii) the
Agency Regulatory Agreement, and Assignee agrees to timely discharge, perform or cause to be
performed and to be bound by all of the liabilities, duties and obligations imposed in connection
882/015610-0063
325173.13 a05/23/03
with (i) the Agreement and (ii) the Agency Regulatory Agreement from and after the date of this
Assignment to the same extent as if Assignee had been the original party thereto.
3. Indemnification by Assignor. Assignor hereby agrees that it shall defend,
indemnify and hold harmless Assignee, its partners, shareholders, directors, officers, employees,
and agents from and against any and all claims, liabilities, damages, losses, suits, costs and
expenses of every kind, nature and type (including reasonable attorneys' fees) asserted by any
person, entity or party for or on account of Assignor's obligations and liabilities arising out of or
under (i) the Agreement and/or (ii) the Agency Regulatory Agreement before the Effective Date
of this Assignment.
4. Indemnification by Assignee. Assignee hereby agrees that it shall defend,
indemnify and hold harmless Assignor, its partners, shareholders, directors, officers, employees,
and agents from and against any and all claims, liabilities, damages, losses, suits, costs and
expenses of every kind, nature and type (including reasonable attorneys' fees) asserted by any
person, entity or party for or on account of Assignee's obligations and liabilities arising out of or
under (i) the Agreement and/or (ii) the Agency Regulatory Agreement on or after the Effective
Date of this Assignment.
5. Successors and Assigns. This Assignment shall be binding upon and shall inure
to the benefit of the successors and assigns of the respective parties hereto.
6. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of California.
7. Further Assurances. The parties covenant and agree that they will execute such
other and further instruments and documents as are or may become necessary or convenient to
effectuate and carry out this Assignment.
8. Authority of Signatories to Bind Principals. The persons executing this
Assignment on behalf of their respective principals represent that (i) they have been authorized
to do so and that they thereby bind the principals to the terms and conditions of this Assignment
and (ii) their respective principals are properly and duly organized and existing under the laws
of, and permitted to do business in, the State of California.
9. Interpretation. The paragraph headings of this Assignment are for reference and
convenience only and are not part of this Assignment. They have no effect upon the construction
or interpretation of any part hereof. The provisions of this Assignment shall be construed in a
reasonable manner to affect the purposes of the parties and of this Assignment.
10. Counterparts. This Assignment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
882/015610-0063 2
325173.13 a05/23/03
IN WITNESS WHEREOF, this Assignment has been executed by the parties as of the
date set forth above.
"Assignor"
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes,
a California corporation
Its: Managing Member
By:
J.C. Gianulias
Its: President
"Assignee"
0
Its:
882/015610-0063 3
325173.13 a06/02/03
ACKNOWLEDGMENT OF ASSIGNMENT
The undersigned, on behalf of the La Quinta Redevelopment Agency ("Agency"),
acknowledges the foregoing Assignment of (i) the Affordable Housing Agreement and (ii) the
Agency Regulatory Agreement entered into by and between the Agency and Apartments at La
Quinta Village L.P. to Assignee.
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
I, -
Executive Director
882/015610-0063 4
325173.13 a05/23/03
EXHIBIT "K"
TITLE COMMITMENT
[SEE FOLLOWING PAGES]
882/015610-0063
325173.13 a05/23/03
A
k � r The First American Corporation
4. First American Title
2
Privacy Policy
We Are Committed to Safeguarding Customer Information
In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand
that you may be concerned about what we will do with such information — particularly any personal or financial information. We
agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our
parent company, The First American Corporation, we have adopted this Privacy Policy to govern the use and handling of your
personal information.
Applicability
This Privacy Policy governs our use of the information which you provide to us. It does not govern the manner in which we may
use information we have obtained from any other source, such as information obtained from a public record or from another person
or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source.
First American calls these guidelines its Fair Information values, a copy of which can be found on our website at
www.firstam.com.
Types of Information
Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include:
• Information we receive from you on applications, forms and in other communications to us, whether in writing, in person,
by telephone or any other means;
• Information about your transactions with us, our affiliated companies, or others; and
Information we receive from a consumer reporting agency.
Use of Information
We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party.
Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or
service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the
period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality
control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or
more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and
casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal
companies, home warranty companies, and escrow companies. Furthermore, we may also provide all the information we collect, as
described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies, or to other
financial institutions with whom we or our affiliated companies have joint marketing agreements.
Former Customers
Even if you are no longer our customer, our Privacy Policy will continue to apply to you.
Confidentiality and Security
We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to
nonpublic personal information about you to those individuals and entities who need to know that information to provide products
or sern*iccs to Vou. We wVill use our best efforts to train and oversce our employees and agcltts to ensure that your information will
be liandled responsible and in accordance with this Privacy Policy and First American's hair Information i%alues. We currently
maintain physical, electronic, and procedural safeguards that comply with federal regulations to `;card your nonpublic personal
information.
O 2001 'Ihc I.first Ameri.anCorporation • All Itif;lits Resetvo:`
Order No. 2197891
UPDATE 41AMENDED l
COMMITMENT FOR TITLE INSURANCE
Issued By
First American Title Insurance Company
3625 Fourteenth Street, (P.O. Box 986)
Riverside, California 92502
(Area Code 909) 787-1700
FIRST AMERICAN TITLE INSURANCE COMPANY
ATTENTION: GINA BALDING
REFERENCE NO.
Y
FIRST AMERICAN TITLE INSURANCE COMPANY, HEREIN CALLED THE COMPANY, FOR
VALUABLE CONSIDERATION, HEREBY COMMITS TO ISSUE ITS POLICY OR POLICIES OF
TITLE INSURANCE, AS IDENTIFIED IN SCHEDULE A, IN FAVOR OF THE PROPOSED
INSURED NAMED IN SCHEDULE A, AS OWNER OR MORTGAGEE OF THE ESTATE OR INTEREST
COVERED HEREBY IN THE LAND DESCRIBED OR REFERRED TO IN SCHEDULE A, UPON
PAYMENT OF THE PREMIUMS AND CHARGES THEREFOR; ALL SUBJECT TO THE PROVISIONS
OF SCHEDULES A AND B AND TO THE CONDITIONS AND STIPULATIONS HEREOF.
THIS COMMITMENT SHALL BE EFFECTIVE ONLY WHEN THE IDENTITY OF THE PROPOSED
INSURED AND THE AMOUNT OF THE POLICY OR POLICIES COMMITTED FOR HAVE BEEN
INSERTED IN SCHEDULE A HEREOF BY THE COMPANY, EITHER AT THE TIME OF THE
ISSUANCE OF THIS COMMITMENT OR BY SUBSEQUENT INDORSEMENT.
THIS COMMITMENT IS PRELIMINARY TO THE ISSUANCE OF SUCH POLICY OR POLICIES OF
TITLE INSURANCE AND ALL LIABILITY AND OBLIGATIONS HEREUNDER SHALL CEASE AND
TERMINATE TWELVE (12) MONTHS AFTER THE EFFECTIVE DATE HEREOF OR WHEN THE
POLICY OR POLICIES COMMITTED FOR SHALL ISSUE, WHICHEVER FIRST OCCURS,
PROVIDED THAT THE FAILURE TO ISSUE SUCH POLICY OR POLICIES IS NOT THE FAULT
OF THE COMPANY. THIS COMMITMENT SHALL NOT BE VALID OR BINDING UNTIL
COUNTERSIGNED BY AN AUTHORIZED OFFICER OR AGENT.
IN WITNESS 1iMMWF, THE COMPANY HAS CAUSED THIS COMMITMENT TO BE SIGNED AND
SEALED, TO BECOME VALID WHEN COUNTERSIGNED BY AN AUTHORIZED OFFICER OF AGENT
OR THE COMPANY, ALL IN ACCORDANCE WITH ITS BY-LAWS. THIS COMMITMENT IS
EFFECTIVE AS OF THE DATE SHOWN IN SCHEDULE A AS "EFFECTIVE DATE."
O
MATT ORk-TtITLE O1
FFICER
First American Title Insurance Company
Authorized Signatory
Page 1
SCHEDULE A
I
Order No. 2197891
UPDATE 41AMENDED 1
1. EFFECTIVE DATE: JANUARY 14, 2003
2. POLICY OR POLICIES TO BE ISSUED:
(A) ALTA STANDARD POLICY $
PROPOSED INSURED:
X (B) ALTA LOAN POLICY $3,000,000.00
PROPOSED INSURED:
THE LA QUINTA REDEVELOPMENT AGENCY
(C) EAGLE CLTA HOMEOWNER'S POLICY $
PROPOSED INSURED:
X (D) ALTA EXTENDED OWNERS POLICY $4,000,000.00
PROPOSED INSURED:
TRENDWEST RESORTS, INC.
3. THE ESTATE OR' INTEREST IN THE LAND DESCRIBED OR REFERRED TO IN
THIS COMMITMENT AND COVERED HEREBY IS:
IN FEE AND EASEMENT
4. TITLE TO THE ESTATE OR INTEREST IN SAID LAND IS VESTED IN:
APARTMENTS AT LA QUINTA VILLAGE, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
5. THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF
CALIFORNIA, COUNTY OF RIVERSIDE, CITY OF LA QUINTA AND IS
DESCRIBED AS"FOLLOWS:
PARCEL A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOR 203 PAGES 30 AND 31
OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
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Order No. 2197891
UPDATE 4/AMENDED l
PARCEL B:
AN EASEMENT FOR UTILITY AND INCIDENTAL PURPOSES, RECORDED
OCTOBER 24, 2002 AS INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
PARCEL C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC UTILTTY PURPOSES AS
SHOWN ON PARCEL MAP NO. 30721 RECORDED IN BOOR 203 PAGES 30 AND
31 OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
EC/ACE
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Order No. 2197891
UPDATE 41AMENDED l
SCHEDULE B - SECTION 1
REQUIREMENTS
THE FOLLOWING ARE THE REQUIREMENTS TO BE COMPLIED WITH:
ITEM (A) PAYMENT TO OR FOR THE ACCOUNT OF THE GRANTORS OR
MORTGAGORS OF THE FULL CONSIDERATION FOR THE ESTATE OR INTEREST
TO BE INSURED.
ITEM (B) PROPER INSTRUMENTS) CREATING THE ESTATE OR INTEREST
TO BE INSURED MUST BE EXECUTED AND DULY FILED FOR RECORD, TO
WIT:
X 1. DEED TRANSFERRING TITLE
X 2. TRUST DEED(S)
3. RELEASE(S) OR RECONVEYANCE (S ) OF ITEM(S)
4. OTHER
ITEM (C) THE FOLLOWING INFORMATION MUST BE SUBMITTED:
X 1. OFF RECORD LEASES, SURVEYS, ETC.
2. STATEMENT(S) OF IDENTITY, ALL PARTIES.
X 3. WITH RESPECT TO LANDAQ, INC., A CORPORATION:
a. A CERTIFICATE OF GOOD STANDING OF RECENT DATE ISSUED BY THE
SECRETARY OF STATE OF THE CORPORATION'S STATE OF DOMICILE.
b. A CERTIFIED COPY OF A RESOLUTION OF THE BOARD OF DIRECTORS
AUTHORIZING THE CONTEMPLATED TRANSACTION AND DESIGNATING WHICH
CORPORATE OFFICERS SHALL HAVE THE POWER TO EXECUTE ON BEHALF OF
THE CORPORATION.
c. OTHER REQUIREMENTS WHICH THE COMPANY MAY IMPOSE FOLLOWING ITS
REVIEW OF THE MATERIAL REQUIRED HEREIN AND OTHER INFORMATION
WHICH THE COMPANY MAY REQUIRE.
Page 4
SCHEDULE B - SECTION 2
EXCEPTIONS
PART 1:
Order No. 2197891
UPDATE 41AA LADED l
THE POLICY OR POLICIES TO BE ISSUED WILL CONTAIN EXCEPTIONS TO
THE FOLLOWING UNLESS THE SAME ARE DISPOSED OF TO THE
SATISFACTION OF THE COMPANY.
SEE EXHIBIT A ATTACHED HERETO AND MADE PART HEREOF.
Page 5
Order No. 2197891
UPDATE 41AMENDED I
PART II:
THE POLICY OR POLICIES TO BE ISSUED WILL CONTAIN EXCEPTIONS TO
THE FOLLOWING UNLESS THE SAME ARE DISPOSED OF TO THE
SATISFACTION OF THE COMPANY.
A. ANY LIEN, OR RIGHT TO A LIEN, FOR SERVICES, LABOR OR
MATERIAL THERETOFORE OR HEREAFTER FURNISHED, IMPOSED BY LAW AND
NOT SHOWN BY THE PUBLIC RECORDS.
B. DEFECTS, LIENS, ENCUMBRANCES, ADVERSE CLAIMS OR OTHER
MATTERS, IF ANY, CREATED, FIRST APPEARING IN THE PUBLIC RECORDS
OR ATTACHING SUBSEQUENT TO THE EFFECTIVE DATE HEREOF BUT PRIOR
TO THE DATE THE PROPOSED INSURED ACQUIRES OF RECORD FOR VALUE
THE ESTATE OR INTEREST OR MORTGAGE THEREON COVERED BY THIS
COMMITMENT.
1. GENERAL AND SPECIAL TAXES FOR THE FISCAL YEAR 2003-2004, A
LIEN NOT YET DUE OR PAYABLE.
2. THE LIEN OF SUPPLEMENTAL TAXES, IF ANY, ASSESSED PURSUANT
TO CHAPTER 3.5 COMMENCING WITH SECTION 75 OF THE CALIFORNIA
REVENUE AND TAXATION CODE.
3. INTENTIONALLY DELETED.
4. INTENTIONALLY DELETED.
5. VEHICULAR ACCESS RIGHTS TO EISENHOWER DRIVE HAVE BEEN
DEDICATED ON PARCEL MAP NO. 30721, EXCEPT AT STREET
INTERSECTIONS.
6. INTENTIONALLY DELETED.
7. INTENTIONALLY DELETED.
8. INTENTIONALLY DELETED.
9. INTENTIONALLY DELETED.
10. INTENTIONALLY DELETED.
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Order No. 2197891
UPDATE 41AMENDED 1
11. THE TERMS AND PROVISIONS CONTAINED IN THE DOCUMENT ENTITLED
"COMMERCIAL DOMESTIC WATER AND/OR SANITATION INSTALLATION
AGREEMENT", EXECUTED BY AND BETWEEN COACHELLA VALLEY WATER
DISTRICT, A PUBLIC AGENCY OF THE STATE OF CALIFORNIA AND LANDAQ,
INC., RECORDED JULY 25, 2002 AS INSTRUMENT NO. 407219 OF
OFFICIAL RECORDS. REFERENCE IS HEREBY MADE TO SAID DOCUMENT FOR
FULL PARTICULARS.
12. THE FOLLOWING MATTERS DISCLOSED BY AN ALTA/ACSM SURVEY MADE
BY MDS CONSULTING ON OCTOBER 23, 2002:
a . THE FACT THAT AN EXISTING BLOCK WALL IS LOCATED ON THE
MOST SOUTHERLY EAST PROPERTY LINE OF PARCEL 3.
b. THE FACT THAT AT&T OPTICAL CABLE (2) ARE LOCATED EAST
OF THE WEST PROPERTY LINE OF PARCEL 4.
C. THE FACT THAT AN EXISTING RETENTION BASIN (PROPOSED
DRAINAGE EASEMENT) IS LOCATED WITHIN THE EAST 315.19
FEET OF PARCEL 3.
d. THE FACT THAT AN EXISTING 42" HDPE STORM DRAIN IS
LOCATED WITHIN THE EASTERLY PORTION OF PARCEL 3.
13. COVENANTS, CONDITIONS AND RESTRICTIONS IN THE DOCUMENT
RECORDED OCTOBER 24, 2002 AS INSTRUMENT NO. 600846 OF OFFICIAL
RECORDS, BUT DELETING ANY COVENANT, CONDITION OR RESTRICTION
INDICATING A PREFERENCE, LIMITATION OR DISCRIMINATION BASED ON
RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS, OR
NATIONAL ORIGIN TO THE EXTENT SUCH COVENANTS, CONDITIONS OR
RESTRICTIONS VIOLATE TITLE 42, SECTION 3604(c), OF THE UNITED
STATES CODES.
14. A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS, ENCROACHMENT
OF GOLF BALLS, UTILITIES, DRAINAGE AND INCIDENTAL PURPOSES,
RECORDED OCTOBER 24, 2002 AS INSTRUMENT NO. 600846 OF OFFICIAL
RECORDS.
GRANTED TO: LANDAQ, INC., AND KSL RESORTS.
15. COVENANTS, CONDITIONS AND RESTRICTIONS IN THE DOCUMENT
RECORDED OCTOBER 24, 2002 AS INSTRUMENT NO. 600848 OF OFFICIAL
RECORDS, WHICH PROVIDE THAT A VIOLATION THEREOF SHALL NOT DEFEAT
OR RENDER INVALID THE LIEN OF ANY FIRST MORTGAGE OR DEED OF
TRUST MADE IN GOOD FAITH AND FOR VALUE, BUT DELETING ANY
COVENANT, CONDITION OR RESTRICTION INDICATING A PREFERENCE,
LIMITATION OR DISCRIMINATION BASED ON RACE, COLOR, RELIGION,
SEX, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN, TO THE
EXTENT SUCH COVENANTS, CONDITIONS OR RESTRICTIONS VIOLATE TITLE
42, SECTION 3604(c), OF THE UNITED STATES CODES.
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Order No. 2197891
UPDATE 41AMENDED I
16. AN OPTION AGREEMENT DATED OCTOBER 241 2002, EXECUTED BY
APARTMENTS AT LA QUINTA VILLAGE, L.P., A CALIFORNIA LIMITED
PARTNERSHIP, AS OPTIONOR, AND LANDAQ, INC., A DELAWARE
CORPORATION, AS OPTIONEE, AS DISCLOSED BY A DOCUMENT RECORDED
OCTOBER 24, 2002 AS INSTRUMENT NO. 600849 OF OFFICIAL RECORDS.
THE ABOVE NUMBERED EXCEPTIONS A AND B WILL BE ELIMINATED IN AN
ALTA LENDERS POLICY.
NOTE:
GENERAL AND SPECIAL PRORATED TAXES FOR THE FISCAL YEAR 2002-
2003.
FIRST INSTALLMENT: $12,007.31, PAID.
PENALTY: $0.00.
SECOND INSTALLMENT: $12,007.31, PAID.
PENALTY: $0.00.
CODE AREA: 020-016.
A.P. NO: 773-370-001-4.
FIRST INSTALLMENT: $3,787.91, PAID.
PENALTY: $0.00.
SECOND INSTALLMENT: $3,787.91, PAID.
PENALTY: $0.00.
CODE AREA: 020-016.
A.P. NO: 773-370-004-7.
EFFECTIVE JULY 1, 1999 AT 6 : 0 0 A.M., THE WIRING INSTRUCTIONS FOR
FIRST AMERICAN TITLE INSURANCE COMPANY RIVERSIDE OFFICE ONLY:
FIRST AMERICAN TRUST COMPANY
SANTA ANA BRANCH
421 NORTH MAIN STREET
SANTA ANA, CALIFORNIA 92701
ABA 122241255
CREDIT TO FIRST AMERICAN TITLE INSURANCE COMPANY DEMAND ACCOUNT
ACCOUNT NO. 18012
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Order No. 2197891
UPDATE 4/AMENDED l
WHEN WIRING, PLEASE REFERENCE OUR TITLE ORDER NUMBER AND THE
TITLE OFFICERS NAME.
PLEASE WIRE THE DAY BEFORE RECORDING.
PLEASE NOTIFY THE TITLE OFFICER OF YOUR INTENT TO WIRE.
Page 9
Order No. 2197891
UPDATE 4/AMENDED l
CONDITIONS AND STIPULATIONS
1. THE TERM MORTGAGE, WHEN USED HEREIN, SHALL INCLUDE DEED OF
TRUST, TRUST DEED, OR OTHER SECURITY INSTRUMENT.
2. IF THE PROPOSED INSURED HAS OR ACQUIRES ACTUAL KNOWLEDGE OF
ANY DEFECT, LIEN, ENCUMBRANCE, ADVERSE CLAIM OR OTHER
MATTER AFFECTING THE ESTATE OR INTEREST OR MORTGAGE THEREON
COVERED BY THIS COMMITMENT OTHER THAN THOSE SHOWN IN
SCHEDULE B HEREOF, AND SHALL FAIL TO DISCLOSE SUCH
KNOWLEDGE TO THE COMPANY IN WRITING, THE COMPANY SHALL BE
RELIEVED FROM LIABILITY FOR ANY LOSS OR DAMAGE RESULTING
FROM ANY ACT OF RELIANCE HEREON TO THE EXTENT THE COMPANY
IS PREJUDICED BY FAILURE TO SO DISCLOSE SUCH KNOWLEDGE. IF
THE PROPOSED INSURED SHALL DISCLOSE SUCH KNOWLEDGE TO THE
COMPANY, OR IF THE COMPANY OTHERWISE ACQUIRES ACTUAL
KNOWLEDGE OF ANY SUCH DEFECT, LIEN, ENCUMBRANCE, ADVERSE
CLAIM OR OTHER MATTER, THE COMPANY AT ITS OPTION MAY AMEND
SCHEDULE B OF THIS COMMITMENT ACCORDINGLY, BUT SUCH
AMENDMENT SHALL NOT RELIEVE THE COMPANY FROM LIABILITY
PREVIOUSLY INCURRED PURSUANT TO PARAGRAPH 3 OF THESE
CONDITIONS AND STIPULATIONS.
3. LIABILITY OF THE COMPANY UNDER THIS COMMITMENT SHALL BE
ONLY TO THE NAMED PROPOSED INSURED AND SUCH PARTIES
INCLUDED UNDER THE DEFINITION OF INSURED IN THE FORM OF
POLICY OR POLICIES COMMITTED FOR AND ONLY FOR ACTUAL LOSS
INCURRED IN RELIANCE HEREON IN UNDERTAKING IN GOOD FAITH
(A) TO COMPLY WITH THE REQUIREMENTS HEREOF, OR (B) TO
ELIMINATE EXCEPTIONS SHOWN IN SCHEDULE B, OR (C) TO ACQUIRE
OR CREATE THE ESTATE OR INTEREST OR MORTGAGE THEREON
COVERED BY THIS COMMITMENT. IN NO EVENT SHALL SUCH
LIABILITY EXCEED THE AMOUNT STATED IN SCHEDULE A FOR THE
POLICY OR POLICIES COMMITTED FOR AND SUCH LIABILITY IS
SUBJECT TO THE INSURING PROVISIONS, THE CONDITIONS AND
STIPULATIONS, AND THE EXCLUSIONS, FROM COVERAGE OF THE FORM
OF POLICY OR POLICIES COMMITTED FOR IN FAVOR OF THE
PROPOSED INSURED WHICH ARE HEREBY INCORPORATED BY REFERENCE
AND ARE MADE A PART OF THIS COMMITMENT EXCEPT AS EXPRESSLY
MODIFIED HEREIN.
4. ANY ACTION OR ACTIONS OR RIGHTS OF ACTION THAT THE PROPOSED
INSURED MAY HAVE OR MAY BRING AGAINST THE COMPANY ARISING
OUT OF THE STATUS OF THE TITLE TO THE ESTATE OR INTEREST OR
THE STATUS OF THE MORTGAGE THEREON COVERED BY THIS
COMMITMENT MUST BE BASED ON AND ARE SUBJECT TO THE
PROVISIONS OF THIS COMMITMENT.
Page 10
ADDENDUM TO EXIHBIT A
LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (By Policy Type)
11. EAGLE PROTECTION OWNER'S POLICY
CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998
ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998
Covered Risks 14 (Subdivision Law Violation), 15 (Building Permit), 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are
subject to Deductible Amounts and Maximum Dollar Limits of Liability
EXCLUSIONS
In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from:
1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning:
a. building d. improvements on the land
b. zoning e. land division
c. land use f. environmental protection
This Exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date.
This Exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24.
2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice
of the violation appears in the Public Records at the Policy Date.
3. The right to take the Land by condemning it, unless:
a. a notice of exercising the right appears in the Public Records on the Policy Date; or
b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking.
4. Risks:
a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records;
b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date;
C. that result in no loss to You; or
d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25.
5. Failure to pay value for Your Title.
6. Lack of a right:
a. to any Land outside the area specifically described and referred to in paragraph 3 of Schedule A; and
b. in streets, alleys, or waterways that touch the Land.
This exclusion does not limit the coverage described in Covered Risk 11 or 18.
12. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH A.L.T.A.
ENDORSEMENT FORM 1 COVERAGE WITH EAGLE PROTECTION ADDED
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of:
(a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating
to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the Land; (iii) a separation in
ownership or a change in the dimensions or area of the Land or any parcel of which the Land is or was a part; or (iv) environmental protection, or the effect of any violation
of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from
a violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under insuring
provisions 14, 15, 16 and 24 of this policy.
(b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from
a violation or alleged violation affecting the land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under insuring
provisions 14, 15, 16 and 24 of this policy.
2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the Public Records at Date of Policy, but not excluding from coverage any taking which has occurred prior to
Date of Policy which would be binding on the rights of a purchaser for value without Knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the Insured Claimant;
(b) not known to the Company, not recorded in the Public Records at Date of Policy, but known to the Insured Claimant and not disclosed in writing to the Company by the Insured
Claimant prior to the date the Insured Claimant became an Insured under this policy;
(c) resulting in no loss or damage to the Insured Claimant;
(d) attaching or created subsequent to Date of Policy (this paragraph (d) does not limit the coverage provided under insuring provisions 7, 8, 16, 17. 19, 20, 21, 23, 24 and 25);
or
(e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.
4. U nenforceab i lity of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply
with applicable doing business laws of the state in which the Land is situated.
5. Invalidity or unenforceabilityof the lien of the Insured Mortgage, or claim thereof, which arises out of the transaction evidenced by the Insured Mortgage and is based upon:
(a) usury, except as provided under insuring provision 10 of this policy; or
(b) any consumer credit protection or truth in lending law.
6. Taxes or assessments of any taxing or assessment authority which become alien on the Land subsequent to Date of Policy.
7. Any claim, which arises out of the transaction creating the interest of the mortgage insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights
laws, that is based on:
(a) the transaction creating the interest of the insured mortgage being deemed a fraudulent conveyance or fraudulent transfer; or
(b) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or
(c) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure:
(i) to timely record the instrument of transfer; or
(ii) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor.
8. Any claim of invalidity, unenforceabilityor lack of priority of the lien of the Insured Mortgage as to advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule
A is no longer the owner of the estate or interest covered by this policy. This exclusion does not limit the coverage provided under insuring provision 7.
9. Lack of priority of the lien of the Insured Mortgage as to each and every advance made after Date of Policy, and all interest charged thereon, over liens, encumbrances and other matters affecting
title, the existence of which are Known to the Insured at:
(a) The time of the advance; or
(b) The time a modification is made to the terms of the insured Mortgage which changes the rate of interest charged, if the rate of interest is greater as a result of the modification
than it would have been before the modification.
This exclusion does not limit the coverage provided under insuring provision 7.
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:
1. Environmental protection liens provided for by the following existing statutes, which liens will have priority over the lien of the Insured Mortgage when they arise: NONE.
13. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1"2
WITH EAGLE PROTECTION ADDED
WITH REGIONAL EXCEPTIONS
When the American Land Title Association Loan policy with EAGLE Protection Added is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph
12 above are used and the following exceptions to coverage appear in the policy.
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:
Part One:
1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records.
2. Any facts, rights, interest, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof.
3. Easements, claims or easement or encumbrances which are not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.
5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water.
6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records.
Part Two:
1. Environmental protection liens provided for by the following existing statutes, which liens will have priority over the lien of the Insured Mortgage when they arise: NONE
ADDENDUM TO EXHIBIT A
LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (By Policy Type)
11. EAGLE PROTECTION OWNER'S POLICY
CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998
ALTA HOMEOWNER'S POLICY OF TTTLE INSURANCE - 1998
Covered Risks 14 (Subdivision Law Violation), 15 (Building Permit), 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are
subject to Deductible Amounts and Maximum Dollar Limits of Liability
EXCLUSIONS
In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from:
1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning:
a. building d. improvements on the land
b. zoning e. land division
c. land use f. environmental protection
This Exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date.
'ibis Exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24.
2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice
of the violation appears in the Public Records at the Policy Date.
3. The right to take the Land by condemning it, unless:
a. a notice of exercising the right appears in the Public Records on the Policy Date; or
b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking.
4. Risks:
a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records;
b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date;
C. that result in no loss to You; or
d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25.
5. Failure to pay value for Your Title.
6. Lack of a right:
a. to any Land outside the area specifically described and referred to in paragraph 3 of Schedule A; and
b. in streets, alleys, or waterways that touch the Land.
This exclusion does not limit the coverage described in Covered Risk 11 or 18.
12. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH A.L.T.A.
ENDORSEMENT FORM 1 COVERAGE WITH EAGLE PROTECTION ADDED
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of:
(a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating
to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the Land; (iii) a separation in
ownership or a change in the dimensions or area of the Land or any parcel of which the Land is or was a part; or (iv) environmental protection, or the effect of any violation
of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from
a violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under insuring
provisions 14, 15, 16 and 24 of this policy.
(b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from
a violation or alleged violation affecting the land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under insuring
provisions 14, 15, 16 and 24 of this policy.
2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the Public Records at Date of Policy, but not excluding from coverage any taking which has occurred prior to
Date of Policy which would be binding on the rights of a purchaser for value without Knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the Insured Claimant,
(b) not known to the Company, not recorded in the Public Records at Date of Policy, but known to the Insured Claimant and not disclosed in writing to the Company by the Insured
Claimant prior to the date the Insured Claimant became an Insured under this policy;
(c) resulting in no loss or damage to the Insured Claimant;
(d) attaching or created subsequent to Date of Policy (this paragraph (d) does not limit the coverage provided under insuring provisions 7, 8, 16, 17. 19, 20. 21, 23. 24 and 25);
or
(e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.
4. U nenforceabi lity of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply
with applicable doing business laws of the state in which the Land is situated.
5. Invalidity or unenforceabilityof the lien of the Insured Mortgage, or claim thereof, which arises out of the transaction evidenced by the Insured Mortgage and is based upon:
(a) usury, except as provided under insuring provision 10 of this policy; or
(b) any consumer credit protection or truth in lending law.
6. Taxes or assessments of any taxing or assessment authority which become a lien on the Land subsequentto Date of Policy.
7. Any claim, which arises out of the transaction creating the interest of the mortgage insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights
laws, that is based on:
(a) the transaction creating the interest of the insured mortgage being deemed a fraudulent conveyance or fraudulent transfer; or
(b) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or
(c) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure:
(i) to timely record the instrument of transfer; or
(ii) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor.
8. Any claim of invalidity, unenforceabilityor lack of priority of the lien of the Insured Mortgage as to advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule
A is no longer the owner of the estate or interest covered by this policy. This exclusion does not limit the coverage provided under insuring provision 7.
9. Lack of priority of the lien of the Insured Mortgage as to each and every advance made after Date of Policy, and all interest charged thereon, over liens, encumbrances and other matters affecting
title, the existence of which are Known to the Insured at:
(a) The time of the advance; or
(b) The time a modification is made to the terms of the insured Mortgage which changes the rate of interest charged, if the rate of interest is greater as a result of the modification
than it would have been before the modification.
This exclusion does not limit the coverage provided under insuring provision 7.
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:
1. Environmental protection liens provided for by the following existing statutes, which liens will have priority over the lien of the Insured Mortgage when they arise: NONE.
13. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992
WITH EAGLE PROTECTION ADDED
WITH REGIONAL EXCEPTIONS
When the American Land Title Association Loan policy with EAGLE Protection Added is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph
12 above are used and the following exceptions to coverage appear in the policy.
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:
Part One:
1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records.
2. Any facts, rights, interest, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof.
3. Easements, claims or easement or encumbrances which are not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.
5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof. water rights, claims or title to water.
6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records.
Part Two:
1. Environmental protection liens provided for by the following existing statutes, which liens will have priority over the lien of the insured Mortgage when they arise: NONE
CANCELLED
NOTE
2003 ("Note Date") $3,000,000 ("Loan Amount")
i
FOR VALUE RECEIVED, the undersigned (herein, the "Maker") hereby promises to
pay to the order of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate
and politic ("Holder" or "Agency"), at a place designated by Holder, the principal sum of
THREE MILLION DOLLARS ($3,000,000) ("Note Amount"), plus accrued interest, or such
lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof.
The principal sum hereof shall be disbursed pursuant to the terms and conditions set forth herein
and in that certain Affordable Housing Agreement by and among Maker and Holder, dated
-,1e.24D,3. ("AHA"), pertaining to Maker's redevelopment of certain real property
defined in the AHA as the "Site."
Reference is also made to the following additional agreements and documents, of even
date herewith, involving Maker and Holder and/or pertaining to the Site:
(i) Deed of Trust with Assignment of Rents by and between Maker as Trustor,
Holder as beneficiary, and First American Title Insurance Company as Trustee,
and recorded in the Office of the Riverside County Recorder ("Agency Deed of
Trust"). The Agency Deed of Trust secures, in part, repayment of this Note.
(ii) Regulatory Agreement and Declaration of Covenants and Restrictions, by and
between Maker and Holder, for the benefit of Holder, and recorded in the Office
of the Riverside County Recorder ("Agency Regulatory Agreement").
The AHA, Agency Deed of Trust, and Agency Regulatory Agreement are referred to
herein collectively as the "Agency Agreements." The Agency Agreements are incorporated
herein as though fully set forth. Except as otherwise provided herein, the defined terms used in
this Note shall have the same meaning as set forth in the AHA.
1. Purpose of Loan. The loan evidenced by this Note is a loan for the purpose of
reimbursing Maker for a portion of Maker's Site acquisition costs and for assisting Maker with
Maker's costs for constructing the Project on the Site in accordance with the AHA.
2. Principal Amount. The principal amount of this loan shall be THREE MILLION
DOLLARS ($3,000,000) ("Loan Amount"). Simple interest shall accrue on the outstanding
principal amount at seven percent (7%) per annum, compounded annually. Interest shall accrue
as set forth in Section 4 in the event of a Maker default.
3. Disbursement of Agency Loan.
3.1 The Agency Loan shall be disbursed in three disbursements, in accordance with
this Section I
3.2 A portion of the Agency Loan in the amount of Six Hundred Fifty Thousand
Dollars ($650,000) ("Agency Acquisition Assistance") shall be disbursed to Maker within fifteen
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(15) business days after Maker's satisfaction of all of the conditions to disbursement set forth in
Section 3.6 below (except the conditions set forth in Sections 3.6(K) through 3.6(0)) to
reimburse Maker for a portion of Maker's purchase price for the Site.
3.3 [Intentionally Omitted].
3.4 A portion of the Agency Loan in the amount of One Million Nine Hundred Fifty
Thousand Dollars ($1,950,000) shall be disbursed to Maker within fifteen (15) business days
after Maker's satisfaction of all of the conditions precedent to disbursement of the Agency Loan
set forth in Section 3.6 below (except that Maker's requirement to obtain unconditional waiver
and releases, as set forth in Section 3.6(0) below, shall pertain only to the grading work and any
other work that, at the time of disbursement, has been completed on the Site).
3.5 A portion of the Agency Loan in the amount of Four Hundred Thousand Dollars
($400,000) ("Agency Completion Assistance") shall be disbursed, by check, to Maker within
fifteen (15) business days after Maker (i) satisfies of all of the conditions precedent to
disbursement of the Agency Loan set forth in Section 3.6 below; and (ii) completes construction
of the Project, as evidenced by Holder's issuance to Maker of a Release of Construction
Covenants.
3.6 The following shall be conditions precedent to Holder's disbursement of any
portions of the Agency Loan (provided, however, that Maker may obtain disbursement of the
Agency Acquisition Assistance prior to the time it satisfies, or without satisfying, (i) the
conditions set forth in paragraph 3.6(C) [with respect to all risk, but not liability insurance, which
liability insurance must be in place from and after the Effective Date of the AHA], and (ii) the
conditions set forth in paragraphs 3.6(K) — 3.6(0) below):
(A) Holder shall have executed the AHA;
(B) The Title Company shall have provided to Holder an acknowledgement
that it will issue to Agency, within ten (10) days thereafter, the Agency Title Policy for the Site
with only those exceptions pre -approved in the AHA and such additional exceptions, if any, as
may be approved by Holder's Executive Director in his/her sole and absolute discretion.
(C) Maker shall have timely submitted to the Executive Director of Holder
and obtained approval from same, of Maker's evidence of insurance;
(D) Maker shall have signed the Agency Regulatory Agreement and delivered
same to Holder for recordation;
(E) Maker shall have signed this Note and delivered same to Holder;
(F) Maker shall have signed the Agency Deed of Trust and delivered same to
Holder for recordation and filing;
(G) Maker shall not be in default of its obligations under the AHA, this Note,
or under the Agency Regulatory Agreement;
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(H) Maker shall not be in default of any of the Landaq Restrictions;
(I) Owner shall have executed, and Maker shall have recorded, a
subordination agreement, subordinating the Landaq Restrictions to the Agency Deed of Trust
and Agency Regulatory Agreement;
(J) Maker shall have obtained all of the necessary land use entitlements to
construct the Project; and
(K) Maker shall have provided evidence to Agency that it has timely obtained
all of the Approved Plans and Permits, including, but not limited to, building permits to construct
the Project (except that Maker may obtain disbursement of the Agency Acquisition Assistance
prior to the time it satisfies this condition); and
(L) Maker shall have provided Holder with supporting documentation
showing (i) that at least ninety percent (90%) of the architectural and engineering plan work for
the Project has been performed, including the preparation and submittal to the City of at least
ninety percent (90%) of the construction drawings necessary to secure all necessary permits for
the Project, and (ii) the actual costs thereof; and
(M) Maker shall have provided Holder with supporting documentation
showing that Maker has graded the Site, and the actual costs thereof, and that City has issued its
final pad certification for the Site; and
(N) Maker shall have (i) installed all of the wet utility infrastructure necessary
for the Project, as evidenced by a letter issued from each utility company that has required or will
require such infrastructure, and (ii) presented supporting documentation of the actual costs of
such utility infrastructure installation; and
(0) Maker shall have provided Holder with unconditional waiver and releases
in the form set forth in Civil Code Section 3262.
4. Term of Note; Repayment. Repayment of the Loan Amount, as adjusted and redefined as
the "Adjusted Loan Amount" pursuant to this Section 4, shall be through monthly installment
repayment amounts.
4.1 Subject to the provisions of (a) Section 5 herein which provide for acceleration of
the then outstanding principal and accrued interest and immediate payment thereof in the event
of a default by Maker and (b) Sections 4.2 through 4.4 below, which provide for the cancellation
of this Note in the event certain specified conditions are met:
(A) Maker shall not be required to make any payments of principal or interest
on this Note for a period of twenty-eight (28) months following the Note Date ("Grace Period").
(B) Maker agrees that interest shall accrue on any amounts of the Agency
Loan that have been disbursed prior to the expiration of the Grace Period, and that as a result
thereof, as of the first day of the next calendar month following expiration of the Grace Period
(the "Repayment Commencement Date"), the outstanding principal and accrued interest to date
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due Holder on which payments are to be made shall be adjusted to reflect said accrual ("Adjusted
Loan Amount"), and interest shall continue to accrue, on the Adjusted Loan Amount, at the rate
of seven percent (7%) per annum, compounded annually.
(C) Maker shall commence repayment of the Adjusted Loan Amount and
interest thereon (at the rate specified in Paragraph 1) in sixty (60) equal monthly installments of
an amount set forth in a repayment schedule to be prepared by Holder within sixty (60) days
after the Holder's disbursement to Maker of the Agency Completion Assistance.
4.2 Notwithstanding the foregoing, this Note shall be deemed paid in full when
Maker, through monthly payments, has repaid the Holder an amount equal to the Adjusted Loan
Amount plus interest, as set forth in this Note.
4.3 Notwithstanding anything to the contrary in this Note, this Note shall be
automatically cancelled, as evidenced by Holder's return to Maker of the original of this Note
marked "cancelled," and the Agency Deed of Trust shall no longer secure the obligations under
it, at such time that Holder has issued (or is required to issue, if earlier), a Release of
Construction Covenants for the Project. In the event of such cancellation, if Maker has
commenced repayment of this Note pursuant to Section 4.1(C), above, any outstanding amounts
due under this Note shall automatically be forgiven. In furtherance of the foregoing, it is
understood and agreed that, following the date Agency issues (or is required to issue, if earlier),
the Release of Construction Covenants, the Agency Deed of Trust shall no longer secure the
obligations under this Note (which shall be canceled) or the obligations under the AHA and
Agency Regulatory Agreement which are required to be released pursuant to the Release of
Construction Covenants for the Project.
4.4 Maker shall have the right to prepay all or any portion of this Note at any time
without penalty.
4.5 Any payments made by Maker in payment of this Note shall be applied in the
following order: (i) first to the interest then accrued and due on the unpaid principal balance
under this Note, (ii) second to reduction of the principal balance of this Note.
5. Default, Acceleration; Cross -Default. In the event:
5.1 Maker fails to timely make a payment required by this Note within ten (10) days
following the due date of any payment due hereunder; or
5.1 Maker fails to timely make any other payment due hereunder within ten (10) days
after notice thereof from Holder; or
5.2 Maker is in material default of any of the covenants, terms, or provisions of this
Note, any of the Agency Agreements, or any of the Landaq Restrictions and Maker fails to
timely cure such default under the terms of the applicable agreement, it being understood and
agreed by Maker that a default of this Note, or of any of the Agency Agreements or of the
Landaq Restrictions (beyond any applicable cure period) shall be a default of all of the foregoing
listed documents;
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400694.01 a05/23/03 4
then Maker shall be in default of this Note, and all portions of the Loan Amount that have been
disbursed to Maker and all accrued interest thereon shall become immediately due and payable.
The rate of interest applicable to periods of default for the defaults set forth in this Section 5 shall
be calculated at the lesser of ten percent (10%) per annum or the maximum legal rate, and shall
accrue as of the date such payment was originally due.
6. Collection Costs; Attorneys' Fees. If, because of any event of default under this Note or
any of the Agency Agreements, any attorney is engaged by Holder to enforce or defend any
provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon
demand reasonable attorneys' fees, expert witness fees and all costs so incurred by Holder
together with interest thereon until paid at the applicable rate of interest payable hereunder, as if
such fees and costs had been added to the principal owing hereunder.
7. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become
liable on this Note waive presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note and any and all other notices or matters of a like nature,
and consent to any and all renewals and extensions near the time of payment hereof and agree
further that at any time and from time to time without notice, the terms of payment herein may
be modified or the security described in any documents securing this Note released in whole or
in part, or increased, changed or exchanged by agreement between Holder and any owner of the
premises affected by said documents securing this Note, without in any way affecting the
liability of any party to this Note or any persons liable or to become liable with respect to any
indebtedness evidenced hereby.
7. Severability. The unenforceability or invalidity of any provision or provisions of this
Note as to any persons or circumstances shall not render that provision or those provisions
unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in
all other respects, shall remain valid and enforceable.
8. Modifications. Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof
be effective except by an instrument in writing signed by Maker and Holder. No delay or
omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note.
9. No Waiver by Holder. No waiver of any breach, default or failure of condition under the
terms of this Note shall be implied from any failure of the Holder of this Note to take, or any
delay be implied from any failure by the Holder in taking action with respect to such breach,
default or failure from any prior waiver of any similar or unrelated breach, default or failure.
10. Usury. Notwithstanding any provision in this Note, the total liability for payment in the
nature of interest shall not exceed the limit imposed by applicable laws of the State of California.
11. Nonassi n� ability. Maker may only Transfer (as that term is defined in the AHA) this
Note in accordance with provisions and restrictions pertaining to a transfer of the AHA as set
forth in the AHA. Holder may freely Transfer Holder's interest in this Note in any manner, at
882/015610-0063
400694.01 a05/23/03 5
Holder's sole discretion; provided, that at the time of such Transfer Holder also transfers the
AHA to such transferee.
12. Governing Law. This Note has been executed and delivered by Maker in the State of
California and is to be governed and construed in accordance with the laws thereof.
13. Time of Essence. Time is of the essence in the performance of the obligations and
provisions set forth in this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the Note Date.
"MAKER"
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managin ember
By:
J.C. Gianulias
Its: President
882/015610-0063
400694.01 a05/23/03 6
NOTE
, 2003 ("Note Date")
$3,000,000 ("Loan Amount")
FOR VALUE RECEIVED, the undersigned (herein, the "Maker") hereby promises to
pay to the order of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate
and politic ("Holder" or "Agency"), at a place designated by Holder, the principal sum of
THREE MILLION DOLLARS ($3,000,000) ("Note Amount"), plus accrued interest, or such
lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof.
The principal sum hereof shall be disbursed pursuant to the terms and conditions set forth herein
and in that certain Affordable Housing Agreement by and among Maker and Holder, dated
/ 1J.7 02 o ("AHA"), pertaining to Maker's redevelopment of certain real property
defined in the AHA as the "Site."
Reference is also made to the following additional agreements and documents, of even
date herewith, involving Maker and Holder and/or pertaining to the Site:
(i) Deed of Trust with Assignment of Rents by and between Maker as Trustor,
Holder as beneficiary, and First American Title Insurance Company as Trustee,
and recorded in the Office of the Riverside County Recorder ("Agency Deed of
Trust"). The Agency Deed of Trust secures, in part, repayment of this Note.
(ii) Regulatory Agreement and Declaration of Covenants and Restrictions, by and
between Maker and Holder, for the benefit of Holder, and recorded in the Office
of the Riverside County Recorder ("Agency Regulatory Agreement").
The AHA, Agency Deed of Trust, and Agency Regulatory Agreement are referred to
herein collectively as the "Agency Agreements." The Agency Agreements are incorporated
herein as though fully set forth. Except as otherwise provided herein, the defined terms used in
this Note shall have the same meaning as set forth in the AHA.
1. Purpose of Loan. The loan evidenced by this Note is a loan for the purpose of
reimbursing Maker for a portion of Maker's Site acquisition costs and for assisting Maker with
Maker's costs for constructing the Project on the Site in accordance with the AHA.
2. Principal Amount. The principal amount of this loan shall be THREE MILLION
DOLLARS ($3,000,000) ("Loan Amount"). Simple interest shall accrue on the outstanding
principal amount at seven percent (70Q per annum, compounded annually. Interest shall accrue
as set forth in Section 4 in the event of a Maker default.
3. Disbursement of Agency Loan.
3.1 The Agency Loan shall be disbursed in three disbursements, in accordance with
this Section 3.
3.2 A portion of the Agency Loan in the amount of Six Hundred Fifty Thousand
Dollars ($650,000) ("Agency Acquisition Assistance") shall be disbursed to Maker within fifteen
882/015610-0063
400694.01 a05/23/03
(15) business days after Maker's satisfaction of all of the conditions to disbursement set forth in
Section 3.6 below (except the conditions set forth in Sections 3.6(K) through 3.6(0)) to
reimburse Maker for a portion of Maker's purchase price for the Site.
3.3 [Intentionally Omitted] .
3.4 A portion of the Agency Loan in the amount of One Million Nine Hundred Fifty
Thousand Dollars ($1,950,000) shall be disbursed to Maker within fifteen (15) business days
after Maker's satisfaction of all of the conditions precedent to disbursement of the Agency Loan
set forth in Section 3.6 below (except that Maker's requirement to obtain unconditional waiver
and releases, as set forth in Section 3.6(0) below, shall pertain only to the grading work and any
other work that, at the time of disbursement, has been completed on the Site).
3.5 A portion of the Agency Loan in the amount of Four Hundred Thousand Dollars
($400,000) ("Agency Completion Assistance") shall be disbursed, by check, to Maker within
fifteen (15) business days after Maker (i) satisfies of all of the conditions precedent to
disbursement of the Agency Loan set forth in Section 3.6 below; and (ii) completes construction
of the Project, as evidenced by Holder's issuance to Maker of a Release of Construction
Covenants.
3.6 The following shall be conditions precedent to Holder's disbursement of any
portions of the Agency Loan (provided, however, that Maker may obtain disbursement of the
Agency Acquisition Assistance prior to the time it satisfies, or without satisfying, (i) the
conditions set forth in paragraph 3.6(C) [with respect to all risk, but not liability insurance, which
liability insurance must be in place from and after the Effective Date of the AHA], and (ii) the
conditions set forth in paragraphs 3.6(K) — 3.6(0) below):
(A) Holder shall have executed the AHA;
(B) The Title Company shall have provided to Holder an acknowledgement
that it will issue to Agency, within ten (10) days thereafter, the Agency Title Policy for the Site
with only those exceptions pre -approved in the AHA and such additional exceptions, if any, as
may be approved by Holder's Executive Director in his/her sole and absolute discretion.
(C) Maker shall have timely submitted to the Executive Director of Holder
and obtained approval from same, of Maker's evidence of insurance;
(D) Maker shall have signed the Agency Regulatory Agreement and delivered
same to Holder for recordation;
(E) Maker shall have signed this Note and delivered same to Holder;
(F) Maker shall have signed the Agency Deed of Trust and delivered same to
Holder for recordation and filing;
(G) Maker shall not be in default of its obligations under the AHA, this Note,
or under the Agency Regulatory Agreement;
882/015610-0063
400694.01 a05/23/03 2
(H) Maker shall not be in default of any of the Landaq Restrictions;
(I) Owner shall have executed, and Maker shall have recorded, a
subordination agreement, subordinating the Landaq Restrictions to the Agency Deed of Trust
and Agency Regulatory Agreement;
Q) Maker shall have obtained all of the necessary land use entitlements to
construct the Project; and
(K) Maker shall have provided evidence to Agency that it has timely obtained
all of the Approved Plans and Permits, including, but not limited to, building permits to construct
the Project (except that Maker may obtain disbursement of the Agency Acquisition Assistance
prior to the time it satisfies this condition); and
(L) Maker shall have provided Holder with supporting documentation
showing (i) that at least ninety percent (90%) of the architectural and engineering plan work for
the Project has been performed, including the preparation and submittal to the City of at least
ninety percent (90%) of the construction drawings necessary to secure all necessary permits for
the Project, and (ii) the actual costs thereof; and
(M) Maker shall have provided Holder with supporting documentation
showing that Maker has graded the Site, and the actual costs thereof, and that City has issued its
final pad certification for the Site; and
(N) Maker shall have (i) installed all of the wet utility infrastructure necessary
for the Project, as evidenced by a letter issued from each utility company that has required or will
require such infrastructure, and (ii) presented supporting documentation of the actual costs of
such utility infrastructure installation; and
(0) Maker shall have provided Holder with unconditional waiver and releases
in the form set forth in Civil Code Section 3262.
4. Term of Note; Repay ent. Repayment of the Loan Amount, as adjusted and redefined as
the "Adjusted Loan Amount" pursuant to this Section 4, shall be through monthly installment
repayment amounts.
4.1 Subject to the provisions of (a) Section 5 herein which provide for acceleration of
the then outstanding principal and accrued interest and immediate payment thereof in the event
of a default by Maker and (b) Sections 4.2 through 4.4 below, which provide for the cancellation
of this Note in the event certain specified conditions are met:
(A) Maker shall not be required to make any payments of principal or interest
on this Note for a period of twenty-eight (28) months following the Note Date ("Grace Period").
(B) Maker agrees that interest shall accrue on any amounts of the Agency
Loan that have been disbursed prior to the expiration of the Grace Period, and that as a result
thereof, as of the first day of the next calendar month following expiration of the Grace Period
(the "Repayment Commencement Date"), the outstanding principal and accrued interest to date
882/015610-0063
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due Holder on which payments are to be made shall be adjusted to reflect said accrual ("Adjusted
Loan Amount"), and interest shall continue to accrue, on the Adjusted Loan Amount, at the rate
of seven percent (7%) per annum, compounded annually.
(C) Maker shall commence repayment of the Adjusted Loan Amount and
interest thereon (at the rate specified in Paragraph 1) in sixty (60) equal monthly installments of
an amount set forth in a repayment schedule to be prepared by Holder within sixty (60) days
after the Holder's disbursement to Maker of the Agency Completion Assistance.
4.2 Notwithstanding the foregoing, this Note shall be deemed paid in full when
Maker, through monthly payments, has repaid the Holder an amount equal to the Adjusted Loan
Amount plus interest, as set forth in this Note.
4.3 Notwithstanding anything to the contrary in this Note, this Note shall be
automatically cancelled, as evidenced by Holder's return to Maker of the original of this Note
marked "cancelled," and the Agency Deed of Trust shall no longer secure the obligations under
it, at such time that Holder has issued (or is required to issue, if earlier), a Release of
Construction Covenants for the Project. In the event of such cancellation, if Maker has
commenced repayment of this Note pursuant to Section 4.1(C), above, any outstanding amounts
due under this Note shall automatically be forgiven. In furtherance of the foregoing, it is
understood and agreed that, following the date Agency issues (or is required to issue, if earlier),
the Release of Construction Covenants, the Agency Deed of Trust shall no longer secure the
obligations under this Note (which shall be canceled) or the obligations under the AHA and
Agency Regulatory Agreement which are required to be released pursuant to the Release of
Construction Covenants for the Project.
4.4 Maker shall have the right to prepay all or any portion of this Note at any time
without penalty.
4.5 Any payments made by Maker in payment of this Note shall be applied in the
following order: (i) first to the interest then accrued and due on the unpaid principal balance
under this Note, (ii) second to reduction of the principal balance of this Note.
5. Default; Acceleration; Cross -Default. In the event:
5.1 Maker fails to timely make a payment required by this Note within ten (10) days
following the due date of any payment due hereunder; or
5.1 Maker fails to timely make any other payment due hereunder within ten (10) days
after notice thereof from Holder; or
5.2 Maker is in material default of any of the covenants, terms, or provisions of this
Note, any of the Agency Agreements, or any of the Landaq Restrictions and Maker fails to
timely cure such default under the terms of the applicable agreement, it being understood and
agreed by Maker that a default of this Note, or of any of the Agency Agreements or of the
Landaq Restrictions (beyond any applicable cure period) shall be a default of all of the foregoing
listed documents;
882/015610-0063
400694.01 a05/23/03 -4-
then Maker shall be in default of this Note, and all portions of the Loan Amount that have been
disbursed to Maker and all accrued interest thereon shall become immediately due and payable.
The rate of interest applicable to periods of default for the defaults set forth in this Section 5 shall
be calculated at the lesser of ten percent (10%) per annum or the maximum legal rate, and shall
accrue as of the date such payment was originally due.
6. Collection Costs; Attorneys' Fees. If, because of any event of default under this Note or
any of the Agency Agreements, any attorney is engaged by Holder to enforce or defend any
provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon
demand reasonable attorneys' fees, expert witness fees and all costs so incurred by Holder
together with interest thereon until paid at the applicable rate of interest payable hereunder, as if
such fees and costs had been added to the principal owing hereunder.
7. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become
liable on this Note waive presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note and any and all other notices or matters of a like nature,
and consent to any and all renewals and extensions near the time of payment hereof and agree
further that at any time and from time to time without notice, the terms of payment herein may
be modified or the security described in any documents securing this Note released in whole or
in part, or increased, changed or exchanged by agreement between Holder and any owner of the
premises affected by said documents securing this Note, without in any way affecting the
liability of any party to this Note or any persons liable or to become liable with respect to any
indebtedness evidenced hereby.
7. Severability. The unenforceability or invalidity of any provision or provisions of this
Note as to any persons or circumstances shall not render that provision or those provisions
unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in
all other respects, shall remain valid and enforceable.
8. Modifications. Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof
be effective except by an instrument in writing signed by Maker and Holder. No delay or
omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note.
9. No Waiver by Holder. No waiver of any breach, default or failure of condition under the
terms of this Note shall be implied from any failure of the Holder of this Note to take, or any
delay be implied from any failure by the Holder in taking action with respect to such breach,
default or failure from any prior waiver of any similar or unrelated breach, default or failure.
10. Us u . Notwithstanding any provision in this Note, the total liability for payment in the
nature of interest shall not exceed the limit imposed by applicable laws of the State of California.
11. Nonassignability. Maker may only Transfer (as that term is defined in the AHA) this
Note in accordance with provisions and restrictions pertaining to a transfer of the AHA as set
forth in the AHA. Holder may freely Transfer Holder's interest in this Note in any manner, at
882/015610-0063
400694.01 a05/23/03 5
Holder's sole discretion; provided, that at the time of such Transfer Holder also transfers the
AHA to such transferee.
12. Governing Law. This Note has been executed and delivered by Maker in the State of
California and is to be governed and construed in accordance with the laws thereof.
13. Time of Essence. Time is of the essence in the performance of the obligations and
provisions set forth in this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the Note Date.
"MAKER"
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managin ember
By:
, J.C. Gianulias
Its: President
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I
Z
—Recording Requested By
First American Title Company
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
OOC " 2003--42e988
06/11/2003 e8:00A Fee:NC
Paige i of 41
Recorded in Offlclal Records
County of Riverside
Gary L. Orso
Assessor, County Clerk & Recorder
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(Exempt from Recording Fee per Gov. Code 6103)
REGULATORY AGREEMENT AND
DECLARATION OF COVENANTS AND RESTRICTIONS T
THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS A YS
RESTRICTIONS ("Agreement") is made and entered into this —h day of
("Effective Date"), by and between LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic ("Agency") and APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership ("Participant").
RECITALS:
A. Participant is the owner of fee title to that certain real property more particularly
described in Attachment No. 1, attached hereto and incorporated by reference herein (the "Site").
B. Pursuant to an Affordable Housing Agreement, by and between Participant and
Agency, dated (the "AHA"), Agency has agreed to provide financial
assistance to Participant in'the sum of Three Million Dollars ($3,000,000) (the "Agency Loan")
for the purpose of (i) reimbursing Participant for a portion of Participant's purchase price for the
Site and (ii) Participant's subsequent construction thereon of a rental apartment complex (the
"Project"). The AHA requires Participant to enter into this Agreement, which provides, among
other requirements, that the rental and occupancy of not fewer than seventy-five (75) of the
apartment units within the Project be rented to and occupied by persons and families whose
household income does not exceed 120% of the median income for Riverside County, in effect
from time to time.
C. Reference is also made to the following documents, of even date herewith:
(i) Note, by Participant as Maker and borrower in favor of the Agency as
lender, ("Agency Note"). The Agency Note evidences the Agency Loan.
(ii) Deed of Trust with Assignment of Rents, by and between Participant as
borrower and Agency as beneficiary, and recorded in the Office of the Riverside County
Recorder ("Agency Deed of Trust"). The Agency Deed of Trust secures (a) repayment of the
Agency Note, and (b) performance of Participant's obligations hereunder.
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The AHA and both of the foregoing listed documents are referred to herein collectively
as the "Agency Agreements." The Agency Agreements are incorporated herein as if fully set
forth.
D. Pursuant to the AHA and the Agency Agreements, Participant has agreed to
rehabilitate the Site and develop thereon, and thereafter maintain, a rental housing project with
not fewer than seventy-five (75) units restricted to rental and occupancy to persons and families
whose household income does not exceed 120% of the median income for Riverside County.
E. Agency and Participant now desire to place restrictions upon the use and
operation of the Site, in order to ensure that the Site shall be operated continuously, for a period
of fifty-five (55) years from the date the Agency issues (or is required to issue, if earlier) a
Release of Construction Covenants evidencing Participant's completion of the Project in
accordance with the AHA ("Term Commencement Date"), as a rental apartment complex in
accordance with the terms hereof.
AGREEMENT:
NOW, THEREFORE, the Participant and Agency declare, covenant and agree, by and for
themselves, their heirs, executors, administrators, successors and assigns, and all persons
claiming under or through them, that, for a term equal to fifty-five (55) years commencing upon
the Term Commencement Date, as follows:
1.0 DEFINITIONS,
S 1.1 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall
00 0) - mean an annual rent amount that does not exceed the maximum percentage of income that can be
m Q devoted to rent by a Moderate Income Tenant as set by California law.
CUcu
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CU% 1.2 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall refer
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0 to a Moderate Income Tenant.
1.3 Moderate Income. As used in this Agreement, the term "Moderate Income" shall
mean household income, adjusted for family size, which does not exceed one hundred twenty
percent (120%) of the Riverside County Median Income.
1.4 Moderate Income Tenant. As used in this Agreement, the term "Moderate
Income Tenant" shall mean a tenant whose household income does not exceed Moderate Income
and who is otherwise eligible to rent, and does rent, a Restricted Unit and thus is an Eligible
Tenant for a Restricted Unit.
1.5 Restricted Unit. As used in this Agreement, the term "Restricted Unit" shall
mean not fewer than seventy-five (75) Units to be rented to and occupied by Eligible Tenants.
A chart showing the mix of the Restricted Units is attached hereto and incorporated herein as
Attachment No. 6 ("Restricted Unit Mix").
1.6 Riverside County Median Income. For purposes of this Agreement, the
"Riverside County Median Income" as of any date shall be determined by reference to the
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regulations published by the California Department of Housing and Community Development
pursuant to Health and Safety Code Section 50093, or its successor, as of such date.
1.7 Unit. As used in this Agreement, the term "Unit" or "unit" shall mean a rental
apartment dwelling unit on the Site.
1.8 Unrestricted Unit. As used in this Agreement, the term "Unrestricted Unit" shall
mean a Unit that is not a Restricted Unit, i.e., a Unit that is not subject to the affordability
covenants that apply to the Restricted Units.
2.0 RESIDENTIAL RENTAL PROPERTY.
2.1 Construction of the Project on the Site. Participant shall construct the Project on
the Site in accordance with the Agency Agreements, including the Schedule of Performance set
forth in the AHA, for the purpose of providing the Restricted Units described herein and in the
Agency Agreements. The Project shall be owned, managed, and operated as a rental apartment
project, with not fewer than seventy-five (75) Units rented and occupied as Restricted Units as
provided in this Agreement.
2.2 Facilities. All of the dwelling units in the Project shall contain facilities for
living, sleeping, eating, cooking and sanitation in accordance with the this Agreement, the AHA,
the Agency Agreements, and all of the permits and approvals for the Project.
2.3 Residential Use. Without the Agency's prior written consent, which consent may
be given or withheld in its sole and absolute discretion, none of the dwelling units in the Project
will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory,
fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer
court or park, nor shall the Units be used for day care facilities or as a place of business except as
may otherwise be allowed by applicable law.
2.4 Conversion of Units. No part of the Project will at any time be owned by a
cooperative housing corporation, nor shall the Participant take any steps in connection with the
conversion to such ownership or uses to condominiums, or to any other form of ownership,
without the prior written approval of Agency which approval may be given or withheld in its sole
and absolute discretion.
2.5 Preference to Eligible Tenants. All of the dwelling units will be available for
rental in accordance with the terms of this Agreement, and the Participant shall not give
preference to any particular class or group in renting the dwelling units in the Project, except to
the extent that the Restricted Units are required to be leased or rented to Eligible Tenants and
except as provided in Section 3.5 below.
2.6 Resident Manager and Staff Units. A resident manager or staff unit or units may
be counted as a Restricted Unit only if the tenants of such Unit(s) are Eligible Tenants.
2.7 Liabilily of Participant. Participant and any manager it employs shall not incur
any liability under this Agreement as a result of fraud or intentional misrepresentation by a
tenant.
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3.0 OCCUPANCY OF RESTRICTED UNITS BY ELIGIBLE TENANTS.
Participant hereby represents, warrants, and covenants as follows:
3.1 Occupancy Levels. Except as expressly provided herein, throughout the term of
this Agreement, the Restricted Units shall be continuously occupied or held vacant and available
for occupancy by Eligible Tenants in accordance with the Restricted Unit Mix.
3.2 Rental Rates. Participant hereby agrees to and shall rent Restricted Units
occupied by Eligible Tenants at no greater than Affordable Rent.
3.3 Occupancy By Eligible Tenant. A Restricted Unit occupied by an Eligible Tenant
who qualified as a Moderate Income Tenant at the commencement of the occupancy shall be
treated as occupied by an Eligible Tenant at such income level until a recertification of such
Eligible Tenant's income in accordance with Section 3.6 below demonstrates that such tenant no
longer qualifies as an Eligible Tenant at that income level. A Restricted Unit previously
occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible
Tenant until the Restricted Unit is reoccupied, provided Participant uses its commercially
reasonable efforts to re -lease the vacant Restricted Unit to an Eligible Tenant. Any vacated
Restricted Unit shall be held vacant until re -leased to an Eligible Tenant, unless there are
sufficient numbers of Eligible Tenants then leasing and occupying Units; provided, however, that
after attempting, for a period of not less than sixty (60) days, to lease a vacated Restricted Unit to
an Eligible Tenant, Participant may lease the same on a month -to -month basis to other tenants
(subject to termination on thirty (30) days notice if an Eligible Tenant applies for the occupancy
of the leased Restricted Unit), and Participant shall not be in default hereunder for entering such
S lease so long as Participant continues its attempts to lease the Restricted Unit to an Eligible
00 _.
Tenant. Any such lease shall disclose that the Restricted Unit has been set aside for lease to an
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2 Cl) 4 Eligible Tenant, that the tenant is not an Eligible Tenant, and that the lease is subject to
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termination by Participant in the event an Eligible Tenant wishing to rent the Restricted Unit is
C ~ located. For purposes of this Agreement, attempting to lease a Restricted Unit shall mean
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0 Participant's performance at its cost, and provision to Agency of evidence of Participant's
performance, of all of the following with respect to such Restricted Unit: (i) notification to the
City of the available Restricted Unit; (ii) advertisement of the available Restricted Unit in a
newspaper of general circulation in the City; (iii) contacting and notifying the Riverside County
Housing Authority in writing of the available Restricted Unit. Participant agrees to pay for any
and all relocation costs that are required to be paid as a result of Participant's termination of a
tenancy pursuant to this Section and shall indemnify, defend, and hold harmless Agency and
City, and their respective officers, officials, members, employees, agents and representatives,
from any and all claims, demands and liabilities for relocation benefits that arise therefrom.
3.4 Income Computation and Certification. Immediately prior to an Eligible Tenant's
occupancy of a Restricted Unit, Participant shall obtain an Income Computation and
Certification Form in the form attached hereto and incorporated herein as Attachment No. 2
from each such Eligible Tenant dated immediately prior to the date of initial occupancy in the
Project by such Eligible Tenant. In addition, Participant shall provide such further information
as may be reasonably required in the future by the Agency for purposes of verifying a tenant's
status as an Eligible Tenant, provided the same is reasonably available to Participant without
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unreasonable expense in connection with obtaining the same. Participant shall use good faith
efforts to verify that the income provided by an applicant is accurate by taking the following
steps as a part of the verification process: (i) obtain three (3) pay stubs for the most recent pay
periods; (ii) obtain a written verification of income and employment from the applicant's current
employer; (iii) obtain an income verification form from the Social Security Administration,
California Department of Social Services, and/or California Employment Development
Department if the applicant receives assistance from any of said agencies; (iv) if an applicant is
unemployed or did not file a tax return for the previous calendar year, obtain other evidence
and/or verification of such applicant's total income received during the calendar year from any
source, taxable or nontaxable, or such other information as is satisfactory to the Agency.
Participant shall maintain in its records each Income Computation and Certification Form
obtained pursuant to this section for a minimum of five (5) years.
3.5 Rental Priority. During the term of this Agreement, Participant shall use its
reasonable commercial efforts to lease Restricted Units to credit -worthy Eligible Tenants in the
following order of priority: (i) displaced persons entitled to a preference pursuant to California
Health and Safety Code Section 33411.3 or successor statute; and (ii) other persons meeting the
eligibility requirements of this Agreement. Participant shall, and Agency may, maintain a list
(the "Housing List") of persons who have notified Participant and/or Agency of their desire to
rent a Restricted Unit in the Project and who have incomes which would qualify them as an
Eligible Tenant, and Participant shall offer to rent units on the above -referenced priority basis;
provided, however, that Participant shall not be required to prequalify persons on the Housing
List. Should multiple tenants be equally eligible (as to income, credit history, and other
nondiscriminatory criteria) and qualified to rent a unit, Participant shall rent available Restricted
Units to Eligible Tenants on a first -come, first -served basis.
3.6 Recertification. Within sixty (60) days prior to the first anniversary date of the
occupancy of a Restricted Unit by an Eligible Tenant, and on each anniversary date thereafter,
Participant shall attempt to recertify the income of such Eligible Tenant by using good faith
efforts to obtain a completed Income Recertification Form, in the form attached hereto and
incorporated herein as Attachment No. 3, based upon the current income of each known
occupant of the Restricted Unit. If, upon recertification, the occupants do not qualify as an
Eligible Tenant (or the occupants fail to provide a completed Income Recertification Form to
Participant) such occupants may be allowed to remain but their Unit shall be redesignated as an
Unrestricted Unit. In that event, Participant shall redesignate the next vacant Unrestricted Unit
that has an equivalent or greater number of bedrooms than the redesignated Unit as a Restricted
Unit and thereafter use good faith efforts to rent such redesignated unit to an Eligible Tenant;
provided, however, that Participant shall not be required to redesignate the next vacant
Unrestricted Unit as a Restricted Unit if, prior to the time an Unrestricted Unit becomes vacant,
Participant identifies an occupant of an Unrestricted Unit as qualifying as an Eligible Tenant,
completes an Income Recertification Form and any other required documentation to confirm that
such occupant(s) is an Eligible Tenant, redesignates that unit as a Restricted Unit, and notifies
the Agency in writing of such redesignation. Each lease agreement with an Eligible Tenant shall
include the lease rider attached hereto and incorporated herein as Attachment No. 4, and shall
reference this Section and inform such Eligible Tenant of the recertification requirements herein
and the ramifications for failing to comply therewith.
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3.7 Certification of Continuing Program Compliance. During the term of this
Agreement, on or before each September 1 following the Term Commencement Date, Participant
shall annually advise the Agency of the occupancy of the Project during the preceding fiscal year
(July 1 — June 30) by delivering a Certification of Continuing Program Compliance in the form
attached hereto and incorporated herein as Attachment No. 5, stating (i) the dwelling units of the
Project which were Restricted Units during such period (including an explanation for any of the
Units which were redesignated during such period) and (ii) that to the knowledge of Participant
either (a) no unremedied default has occurred under this Agreement, or (b) a default has
occurred, in which event the Certification shall describe the nature of the default and set forth the
measures being taken by the Participant to remedy such default. Participant shall pay to Agency
an annual fee pursuant to Health and Safety Code Section 33418(c) which shall not exceed FIVE
HUNDRED DOLLARS ($500) as such amount shall be permitted to increase by the Consumer
Price Index ("CPI") published by the United States Department of Labor, Bureau of Labor
Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles -Long Beach -Anaheim
Average, All Items (1984=100), from and after the date of this Agreement, or, if the CPI is
discontinued, such official index as may then be in existence and which is most nearly equivalent
to the CPI.
3.8 Maintenance of Records. Participant shall maintain complete and accurate
records pertaining to the Units, and shall permit any duly authorized representative of the
Agency, upon seventy-two (72) hours prior notice and during business hours, to inspect the
books and records of Participant pertaining to the affordable housing component of the Project
including, but not limited to, those records pertaining to the occupancy of the Restricted Units.
3.9 Reliance on Tenant Representations. Each tenant lease shall contain a provision
to the effect that Participant has relied on the income certification and supporting information
supplied by the tenant in determining qualification for occupancy of the unit, and that any
material misstatement in such certification (whether or not intentional) will be cause for
immediate termination of such lease.
3.10 Remedy For Excessive Rent Charge.
3.10.1 It shall constitute a default for Participant to charge or accept for a
Restricted Unit - rent amounts in excess of the amount provided for in Section 3.2 of this
Agreement. In the event that Participant charges or receives such higher rental amounts, in
addition to any other remedy Agency shall have for such default, Participant shall be required to
pay to Agency an amount equal to two (2) times the entire amount of rent received in excess of
the amount permitted pursuant to this Agreement.
3.10.2 Except as otherwise provided in this Agreement, it shall constitute a
default for Participant to knowingly (or without investigation as required herein) initially rent (or
continue to rent, at recertification) any Restricted Unit to a tenant who is not an Eligible Tenant.
In the event Participant violates this Section, in addition to any other equitable remedy Agency
shall have for such default, Participant, for each separate violation, shall be required to pay to
Agency an amount equal to (i) two times the greater of (A) the total rent Participant received
from such ineligible tenant, or (B) the total rent Participant was entitled to receive for renting
that Restricted Unit, plus (ii) any relocation expenses incurred by Agency or the City of La
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4
Quinta as a result of Participant having rented to such ineligible person; provided, however, that
no such fees shall be due and payable in the event Participant permits the ineligible tenant to
remain in the Restricted Unit and Participant redesignates an Unrestricted Unit as a Restricted
Unit, in accordance with the process described in Section 3.6 hereof.
3.10.3 It shall constitute a default for Participant to knowingly (or without
investigation as required herein) rent any of the Restricted Units in violation of the leasing
preference requirements of Sections 3.5 of this Agreement. In the event Participant violates this
Section, in addition to any other equitable remedy Agency shall have for such default,
Participant, for each separate violation, shall be required to pay Agency an amount equal to two
(2) months of rental charges. The terms of this Section shall not apply if Participant rents to an
ineligible person as a result of such person's fraud or misrepresentation.
3.10.4 Notwithstanding anything herein to the contrary, in the event Participant
violates more than one provision of this Section 3.10 in the rental of a specific unit to a specific
individual, Participant shall be required to pay to Agency for each such violation the amount
listed under the subsection above (e.g., either 3.10.1, 3.10.2, or 3.10.3) that results in the largest
payment amount by Participant to the Agency under this Section 3.10, but not the amounts
required pursuant to the other subsections, and upon Participant's payment thereof, the default
under this Section 3.10 shall be deemed cured with respect to the default for which such penalty
is assessed, except to the extent such violation continues after Participant's payment hereunder,
in which event the amounts required to be paid pursuant to this Section 3.10 shall apply.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN
SECTION 3.10 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASON-
ABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT AGENCY
WOULD SUFFER DUE TO THE DEFAULTS BY PARTICIPANT SET
FORTH IN SECTIONS 3.10.1 THROUGH 3.10.3, CONSIDERING ALL OF
THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS
AGREEMENT, INCLUDING THE RELATIONSHIP OF THE DAMAGE
AMOUNTS TO THE RANGE OF HARM TO AGENCY AND ACCOMPLISH-
MENT OF AGENCY'S PURPOSE OF ASSISTING IN THE PROVISION OF
AFFORDABLE HOUSING TO ELIGIBLE TENANTS THAT REASONABLY
COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF
ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE
AMOUNTS SET FORTH IN THIS SECTION 3.10 SHALL BE THE SOLE
MONETARY DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN
THIS SECTION 3.10, BUT NOTHING IN THIS SECTION 3.10 SHALL BE
INTERPRETED TO LIMIT AGENCY'S REMEDY FOR SUCH DEFAULT TO
SUCH A DAMAGES REMEDY AND IN THAT REGARD AGENCY MAY
DECLARE A DEFAULT UNDER THE TERMS OF THE AGENCY NOTE OR
OTHER OF THE AGENCY AGREEMENTS. IN PLACING ITS INITIAL AT
THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND
THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL
WHO HAS EXPLAINED THE CONSEQUENCES OF THE LIQUIDATED
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DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED
THIS AGREEMENT.
PARTI ANT'S INITIALS: AGENC INITIALS:
rN /J .
4.0 MAE ENANCE.
4.1 Maintenance Obligation. Participant agrees to and shall maintain all interior and
exterior improvements, including landscaping, on the Site in good condition and repair (and, as
to landscaping, in a healthy condition) and in accordance with all of the permits and approvals
for the Project, and all other applicable laws, rules, ordinances, orders, and regulations of all
federal, state, county, municipal, and other governmental agencies and bodies having or claiming
jurisdiction and all their respective departments, bureaus, and officials. Agency places prime
importance on quality maintenance to protect its investment and to ensure that all Agency -
assisted affordable housing projects within the City are not allowed to deteriorate due to below -
average maintenance. Normal wear and tear of the Site improvements will be acceptable to
Agency assuming Participant agrees to perform all necessary Site improvements to assure the
Site is maintained in good condition. Maintenance requirements shall include that: (a) no
improperly maintained landscaping shall be visible from public rights -of -way, including (i) no
lawns with grasses in excess of six (6) inches in height, (ii) no trees, shrubbery, lawns, and other
plant life dying from lack of water or other necessary maintenance, (iii) no trees, hedges, or
shrubbery grown uncontrolled without proper pruning, (iv) no vegetation so overgrown as to be
likely to harbor rats or vermin, and (v) no dead, decayed, or diseased trees, weeds, and/or other
vegetation; (b) no yard areas shall be left unmaintained, including (i) no broken or discarded
00 0 furniture, appliances, or other household equipment stored in yard areas for periods exceeding
co
05
m ' one (1) week, (ii) no packing boxes, lumber, trash, dirt, or other debris stored in yards for periods
exceeding one (1) week in areas visible from public property or neighboring properties, (iii) no
C unscreened trash cans, bins, or containers stored for unreasonable periods in areas visible from
public property or neighboring properties, and (iv) no vehicles parked or stored in areas other
than approved parking areas; (c) no buildings may be left in an unmaintained condition,
_ including (i) no violations of state law, Uniform Codes, or City ordinances, (ii) 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, (iii) no broken windows or chipped,
cracked, or peeling paint, (iv) no conditions constituting hazards and/or inviting trespassers or
malicious mischief, and (v) no graffiti or accumulation of waste or debris. Participant shall make
all repairs and replacements necessary to keep the improvements in good condition and repair
�■ and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping
with comparable approved materials. In the event that Participant breaches any of the covenants
contained in this Section and Participant does not commence to cure such breach within five (5)
days after written notice from Agency (with respect to graffiti, debris, waste material,
landscaping, and general maintenance) or thirty (30) days after written notice from Agency (with
_ respect to building improvements), and after commencing the cure to diligently prosecute such
cure to completion, then Agency, in addition to whatever other remedy it may have at law or in
equity, shall have the right, but not the obligation, to enter upon the Site and perform all acts and
work necessary to protect, maintain, and preserve the improvements and landscaped areas on the
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Site, and to attach a lien on the Site, or to assess the Site, in the amount of the expenditures
arising from such acts and work of protection, maintenance, and preservation by Agency and/or
costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall
be promptly paid by Participant to Agency upon demand.
4.2 Lien. If the costs incurred pursuant to Section 4.1 are not reimbursed within thirty
(30) days after Participant's receipt of notice thereof, or if Participant fails to timely pay other
sums required to be paid to Agency under this Agreement when due (after notice and an
opportunity to cure, as set forth in Section 10 or Section 11 (as applicable)), the same shall be
deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of ten percent
(10%) per annum until paid. Any and all delinquent amounts, together with said interest, costs
and reasonable attorney's fees, shall be a lien and charge, with power of sale (subordinate to any
lien to which Agency is required to subordinate pursuant to Section 4 of the Agency Deed of
Trust), upon the property interests of Participant, and the rents, issues and profits of such
property. Agency may bring an action at law against Participant to pay any such sums or
foreclose the lien against Participant's property interests. Any such lien may be enforced by sale
by the Agency following recordation of a Notice of Default of Sale given in the manner and time
required by law as in the case of a deed of trust; such sale to be conducted in accordance with the
provisions of Section 2924, et se ., of the California Civil Code, applicable to the exercise of
powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. No lien
recorded by Agency pursuant to this Section 4.2 shall defeat or render invalid the lien of any
senior mortgage or deed of trust.
5.0 MANAGEMENT.
5.1 Gross Mismanagement. In the event of "Gross Mismanagement" (as that term is
defined below) of the Project, Agency shall have the authority to require that such Gross
Mismanagement cease immediately, and further to require the immediate replacement of the
manager. Agency shall provide written notice to Participant of the event(s) of Gross
Mismanagement occurring and Participant shall have five (5) business days after receipt of such
notice to commence to cure, correct, or remedy the event(s) of Gross Mismanagement identified
in the Agency's notice and to notify the Agency's Executive Director of the steps taken to effect
such cure, correction, or remedy, and upon commencing such cure, correction, or remedy to
thereafter diligently prosecute such cure, correction, or remedy to completion. For purposes of
this Agreement the term "Gross Mismanagement" shall mean management of the Project in a
manner which materially violates the terms and/or intention of this Agreement to operate an
affordable rental housing complex of the highest standard, and shall include, but is not limited to,
the following:
5.1.1 Knowingly leasing Restricted Units to ineligible tenants or tenants whose
income exceeds the prescribed levels (except in the event (i) the Restricted Unit has been
redesignated as an Unrestricted Unit, in accordance with Section 3.6; or (ii) Participant is
authorized to lease the Restricted Unit to an ineligible tenant, pursuant to Section 3.3);
5.1.2 Knowingly allowing the tenants to exceed permitted occupancy levels
without taking immediate steps to stop such overcrowding;
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400697.01 a05/23/03 9
5.1.3 Failing to timely maintain the Project and the Site in the manner required
by this Agreement or failing to submit materially complete reports;
5.1.4 Failing to timely submit the reports as required by this Agreement;
5.1.5 Fraud in connection with any document or representation relating to this
Agreement or embezzlement of Project monies; and
5.1.6 Failing to fully cooperate with law enforcement in its attempts to maintain
a crime -free environment on the Site.
5.2 Lease Approval. The initial form lease agreement to be used by Participant for
the rental of any of the Units ("Lease Agreement"), and any changes to such form Lease
Agreement regarding the provisions required by Section 3.6 and Section 3.9 to be included in the
form Lease Agreement shall be reasonably approved in advance by Agency's Executive Director
prior to the initial use of the lease form and prior to the first use of the changed form.
6.0 COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
6.1 Compliance With Laws. Participant shall comply with (i) all ordinances,
regulations and standards of the City, Agency, County of Riverside, any regional governmental
entity, State of California, and federal government applicable to the Property; (ii) all rules and
regulations of any assessment district of the City with jurisdiction over the Property; and (iii) all
applicable labor standards of California law and federal law; and (iv) the requirements of
California law and federal law with respect to the employment of undocumented workers or
illegal aliens.
I
0
6.2 Environmental Matters.
0a
N 6.2.1 Definitions. For the purposes of this Agreement, unless the context
otherwise specifies or requires, the following terms shall have the meanings herein specified:
6.2.1.1 The term "Hazardous Materials" shall mean any substance,
material, or waste which is or becomes regulated by any local governmental authority, the
County of Riverside, the State of California, a regional governmental authority, or the United
States Government, including, but not limited to, any material or substance which is (i) defined
as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under
Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health
and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a
"hazardous substance" under Section 25316 of the California Health and Safety Code, Division
20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a
"hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the
.� California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of
the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
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designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
.1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C., 6901 et seg. (42 U.S.C., 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C., 9601 et se .
6.2.1.2 The term "Hazardous Materials Contamination" shall mean the
contamination (whether presently existing or hereafter occurring) of the improvements, facilities,
soil, groundwater, air or other elements on, in or of the Site by Hazardous Materials, or the
contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any
other property as a result of Hazardous Materials at any time emanating from the Site.
6.2.1.3 The term "Governmental Requirements" shall mean all past,
present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the
United States, the state, the county, the city, or any other political subdivision in which the Site is
located, and any other state, county city, political subdivision, agency, instrumentality or other
entity exercising jurisdiction over the Site.
6.2.2 Indemnity. Participant shall save, protect, defend, indemnify and hold
harmless Agency and the City and their respective officers, officials, members. employees,
agents, and representatives from and against any and all liabilities, suits, actions, claims,
demands, penalties, damages (including, without limitation, penalties, fines and monetary
sanctions), losses, costs or expenses (including, without limitation, consultants' fees,
investigation and laboratory fees, reasonable attorneys' fees and remedial and response costs)
(the foregoing are hereinafter collectively referred to as "Liabilities") which may now or in the
future be incurred or suffered by Agency or City or their respective officers, officials, members,
0
employees, agents, or representatives by reason of, resulting from, in connection with, or existing
in any manner whatsoever as a direct or indirect result of (i) Participant's placement on or under
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� the Site of any Hazardous Materials or Hazardous Materials Contamination on or after the date
C of this Agreement, (ii) the escape, seepage, leakage, spillage, discharge, emission or release from
0 the Site of any Hazardous Materials or Hazardous Materials Contamination on or after the date
of this Agreement, or (iii) any Liabilities incurred under any Governmental Requirements
relating to the acts described in the foregoing clauses (i) and (ii); provided, however, that the
same shall not apply to acts or omissions following Agency's or City's conduct of a foreclosure
sale or acceptance of a deed in lieu thereof.
6.3 Duty to Prevent Hazardous Material Contamination. Participant shall take
commercially reasonable action to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements
C with respect to Hazardous Materials. In addition, Participant shall install and utilize such
equipment and implement and adhere to such procedures as are consistent with the standards
generally applied by apartment complexes in Riverside County, California as respects the
disclosure, storage, use, removal, and disposal of Hazardous Materials.
6.4 Obligation of Participant to Remediate Premises. Notwithstanding the obligation
of Participant to indemnify Agency, City, and their respective officers, officials, members,
employees, agents, and representatives pursuant to Section 6.2.2, Participant shall, at its sole cost
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and expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all
actions necessary to make full economic use of the Site for the purposes contemplated by this
Agreement and the AHA, which requirements or necessity arise from the presence upon, about
or beneath the Site, prior to Agency's or City's conduct of a foreclosure sale or acceptance of a
deed in lieu thereof, of any Hazardous Materials or Hazardous Materials Contamination for
which Participant is responsible. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the Site, the preparation of any feasibility studies
or reports and the performance of any cleanup, remedial, removal or restoration work.
6.5 Environmental Inquiries. Participant, when it has received any notices of
violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease and
desist orders related to Hazardous Materials or Hazardous Materials Contamination, or when
Participant is required to report to any governmental agency any violation or potential violation
of any Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials
Contamination, shall concurrently notify Agency's Executive Director, and provide to him/her a
copy or copies, of the environmental permits, disclosures, applications, entitlements or inquiries
relating to the Site, the notices of violation, notices to comply, citations, inquiries, clean-up or
abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements,
and reports filed or applications made pursuant to any Governmental Requirement relating to
Hazardous Materials and underground tanks, and Participant shall report to the Executive
Director, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Participant shall, as soon as possible after it becomes aware of the release, furnish to the
000 Executive Director a copy of any and all reports relating thereto and copies of all correspondence
g3 � GO 'It
with governmental agencies relating to the release. Upon request of the Executive Director,
cu Participant shall furnish to the Executive Director a copy or copies of any and all other
environmental entitlements or inquiries relating to or affecting the Site including, but not limited
CU
0 to, all permit applications, permits and reports including, without limitation, those reports and
other matters which may be characterized as confidential.
7.0 INSURANCE.
7.1 Duty to Procure Insurance. Participant, for the term of this Agreement, shall
procure and keep in full force and effect or cause to be procured and kept in full force and effect
for the mutual benefit of Participant and Agency, and shall provide Agency evidence reasonably
acceptable to Agency's Executive Director, insurance policies meeting the minimum
requirements set forth below:
7.1.1 Commercial General Liability insurance with respect to the Site and the
operations of or on behalf of Participant, in an amount not less than One Million Dollars
($1,000,000) per occurrence combined single limit including products, completed operations,
contractual, bodily injury, personal injury, death and property damage liability per occurrence,
subject to such increases in amount as Agency may reasonably require from time to time;
provided, that the percentage increase in coverage shall not be required to exceed the percentage
increase in the Consumer Price Index published by the United States Department of Labor,
882/015610-0063 _ _
400697.01 a05/23/03 1 2
Bureau of Labor Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles -Long
Beach -Anaheim Average, All Items (1984 = 100) (the "Index"), from and after the date of this
Agreement, or, if said Index is discontinued, such official index as may then be in existence and
which is most nearly equivalent to said Index (the "CPI Adjustment"). Unless otherwise
approved in advance by the Agency Executive Director, the insurance to be provided by
Participant may provide for a deductible or self -insured retention of not more than Ten Thousand
Dollars ($10,000), with such maximum amount to increase at the same rate as the periodic
increases in the minimum amount of total insurance coverage set forth above.
7.1.2 With respect to the improvements and any fixtures and furnishings to be
owned by Participant on the Site, insurance against fire, extended coverage, vandalism, and
malicious mischief, and such other additional perils, hazards, and risks as now are or may be
included in the standard "all risk" form in general use in Riverside County, California, with the
standard form fire insurance coverage in an amount equal to full actual replacement cost thereof,
as the same may change from time to time. The above insurance policy or policies shall include
coverage for earthquakes to the extent generally and commercially available at commercially
reasonable rates, if such insurance is generally obtained for rental apartment projects of this size
and type in the counties of Los Angeles, Orange County, Riverside, and San Bernardino.
Agency shall be a loss payee under such policy or policies and such insurance shall contain a
replacement cost endorsement. Participant shall provide Agency, not later than ten (10) days
prior to the date Participant intends to commence construction of the Project on the Site, a
written notice stating the date Participant shall commence construction of the Project
("Participant's Notice of Commencement of Construction"). Participant shall not be required to
procure, and to provide Agency evidence of, the all risk insurance described in this Section 7.1.2
until the date of Participant's Notice of Commencement of Construction, and Participant shall
include with the delivery of Participant's Notice of Commencement of Construction to Agency
Go MIT
0 " evidence that Participant has procured and has in place the all risk insurance required by this
C" O M Section 7.1.2. For purposes of this Agreement, the phrase "commences construction of the
CU Project on the Site" shall mean the date Participant commences any work on the Site, other than
grading or excavation, which would be covered by the all risk insurance described by this
Section 7.1.2. Notwithstanding the foregoing, commencing on the first day of the first calendar
month following the Effective Date of this Agreement and on the first day of each successive
calendar month thereafter until Participant provides to Agency Participant's Notice of
Commencement of Construction, Participant shall provide the Agency Executive Director with a
written notice stating that Participant has not commenced construction of the Project on the Site
(as defined above), and indicating the date Participant anticipates delivering to Agency
Participant's Notice of Commencement of Construction.
7.2 Policy Requirements. All policies of insurance required to be carried by
Participant shall meet the following requirements and contain the following endorsements,
provisions, or clauses (as applicable):
7.2.1 The policies shall be written by responsible and solvent insurance
companies licensed in the State of California and having policyholders' rating of A or better, in
the most recent addition of "Best's Key Rating Guide -- Property and Casualty." A copy of each
paid -up policy evidencing such insurance (appropriately authenticated by the insurer) or a
certificate of the insurer, certifying that such policy has been issued, providing the coverage
882/015610-0063 -13 -
400697.01 a05/23/03
required herein, and containing the provisions specified herein, shall be delivered to Agency on
or prior to the date of this Agreement, and thereafter, upon renewals, not less than thirty (30)
days prior to the expiration of coverage. Agency may, at any time, and from time to time,
inspect and/or copy any and all insurance policies required to be procured by Participant
hereunder. In no event shall the limits of any policy be considered as limiting the liability of
Participant hereunder.
7.2.2 The insurer shall not cancel or materially alter the coverage provided by
such policy in a manner adverse to the interest of the insured without first giving Agency a
minimum of thirty (30) days prior written notice by certified mail, return receipt requested; and
7.2.3 A waiver by the insurer of any right to subrogation against Agency and
City, and their respective officers, officials, members, employees, agents, and representatives,
which arises or might arise by reason of any payment under such policy or policies or by reason
of any act or omission of Agency or City or their respective officers, officials, members,
employees, agents, or representatives.
7.2.4 The Agency and the City and their respective officers, officials, members,
employees, agents, and representatives shall be named as additional insureds on the Commercial
General Liability policies.
7.2.5 Coverage provided by these policies shall be primary and non-
contributory to any insurance carried by the Agency or City or their respective officers, officials,
members, employees, agents, or representatives.
7.2.6 Failure to comply with reporting provisions shall not affect coverage
provided to Agency and its officers, officials, members, employees, agents, or representatives.
0
0
7.3 Failure to Procure Insurance. If Participant fails to procure and maintain the
0 above -required insurance despite its availability, then Agency, in addition to any other remedy
C which Agency may have hereunder for Participants failure to procure, maintain, and/or pay for
0 the insurance required herein, may (but without any obligation to do so) at any time or from time
to time, after thirty (30) days written notice to Participant, procure such insurance and pay the
premiums therefor, in which event Participant shall immediately repay Agency all sums so paid
by Agency together with interest thereon at the maximum legal rate.
8.0 OBLIGATION TO REPAIR.
8.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance.
Subj ect to Section 8.3 below, if the Project shall be totally or partially destroyed or rendered
wholly or partly uninhabitable by fire or other casualty required to be insured against by
��. Participant, Participant shall promptly proceed to obtain insurance proceeds to the extent made
available by the senior lender, if any, and take all steps necessary to begin reconstruction and,
immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair
or replacement of the Project to substantially the same condition as the Project is required to be
C maintained in pursuant to this Agreement, whether or not the insurance proceeds are sufficient to
cover the actual cost of repair, replacement, or restoration, and Participant shall complete the
same as soon as possible thereafter so that the Project can continue to be operated and occupied
882/015610-0063 —14-
400697.01 a05/23/03
as an affordable housing project in accordance with this Agreement. Subject to extensions of
time for "Enforced Delay" events (as defined in Section 22 of this Agreement) occurring after
the casualty event, in no event shall the repair, replacement, or restoration period exceed (i) one
(1) year from the date Participant obtains insurance proceeds, if the damage or destruction is fifty
percent (50%) or less of the replacement cost of the improvements comprising the Project; or (ii)
two (2) years from the date Participant obtains insurance proceeds, if the damage or destruction
is greater than fifty percent (50%) of the replacement cost of the improvements comprising the
Project, unless the Agency Executive Director, in his or her sole and absolute discretion,
approves a longer period of time. Agency shall cooperate with Participant, at no expense to
Agency, in obtaining any governmental permits required for the repair, replacement, or
restoration and, upon issuance of such permits Agency shall promptly release control of any
insurance proceeds within Agency's control. If, however, the then -existing laws of any other
governmental agencies with jurisdiction over the Property do not permit the repair, replacement,
or restoration, Participant may elect not to repair, replace, or restore the Project by giving notice
to Agency (in which event Participant shall be entitled to all insurance proceeds but Participant
shall be required to remove all debris from the Property) or Participant may reconstruct such
other improvements on the Property as are consistent with applicable land use regulations and
approved by the City, Agency, and the other governmental agency or agencies with jurisdiction.
In such event, the Agency Agreements, including this Agreement, shall automatically terminate
and Agency shall cooperate to remove the Agency Agreements from title.
If Participant fails to obtain insurance as required by this Agreement (and Agency has not
procured such insurance and charged Participant for the cost), Participant shall be obligated to
reconstruct and repair any partial or total damage to the Project and improvements located on the
site in accordance with this Section 8.1.
M 8.2 Continued Operations. During any period of repair, Participant shall continue, or
`�001 OD V cause the continuation of the operation of the apartment complex on the Site to the extent
CO..
co m os reasonably practicable from the standpoint of prudent business management. The number of
C Restricted Units shall be reduced in proportion to the number of Units not habitable as a result of
CU the casualty during such period of repair.
�. 8.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance.
If the improvements comprising the Project are completely destroyed or substantially damaged
by a casualty for which Participant is not required to (and has not) insured against, then
Participant shall not be required to repair, replace, or restore such improvements and may elect
not to do so by providing Agency with written notice of election not to repair, replace, or restore
within ninety (90) days after such substantial damage or destruction. In such event, (i)
Participant shall remove all debris from the Property, and (ii) the Agency Agreements, including
this Agreement, shall automatically terminate and Agency shall cooperate to remove the Agency
Agreements from title. As used in this Section 8.3, "substantial damage" caused by a casualty
not required to be (and not) covered by insurance shall mean damage or destruction which is (A)
fifty percent (50%) or more of the replacement cost of the improvements comprising the Project,
if the damage or destruction occurs during the first fifty (50) years following the Term
Commencement Date, or (B) twenty-five percent (25%) or more of the replacement cost of the
improvements comprising the Project, if the damage or destruction occurs after the first fifty (50)
years following the Term Commencement Date. In the event Participant does not timely elect
882/015610-0063 -15 -
400697.01 a05/23/03
not to repair, replace, or restore the improvements as set forth in the first sentence of this Section
8.3, Participant shall be conclusively deemed to have waived its right not to repair, replace, or
restore the improvements and thereafter Participant shall promptly commence and complete the
repair, replacement, or restoration of the damaged or destroyed improvements in accordance with
Section 8.1 above and continue operation of the apartment complex during the period of repair
(if practicable) in accordance with Section 8.2 above.
9.0 LIMITATION ON TRANSFERS.
9.1 Sale or Transfer of the Project. Participant covenants that during the term of this
Agreement Participant shall not assign this Agreement or transfer the Site or any of its interests
therein except as provided in this Section 9.0.
9.2 Transfer Defined. As used in this Article 9.0, the term "Transfer" shall include
any assignment, hypothecation, mortgage, pledge, conveyance, or encumbrance of this
Agreement, the Site, or the improvements thereon. A Transfer shall also include the transfer to
any person, entity, or group of persons or entities acting in concert of more than fifty percent
(50%) (in the aggregate) of the present ownership and/or control of any person or entity
constituting Participant, taking all transfers into account on a cumulative basis. In the event any
entity constituting Participant, or the constituent partners or members of Participant or any
successor of Participant, is a corporation or trust, such transfer shall refer to the transfer of the
issued and outstanding capital stock of such corporation, or of beneficial interests of such trust;
in the event that any entity constituting Participant, or the constituent partners of Participant or
any successor of Participant is a limited or general partnership, such transfer shall refer to the
transfer of more than fifty percent (50%) of such limited or general partnership interest; in the
event that any entity constituting Participant, or the constituent members of Participant or any
successor of Participant is a limited liability company, such transfer shall refer to the transfer of
more than fifty percent (50%) of such membership interest; in the event that any entity
constituting Participant, or the constituent partners of Participant or any successor of Participant
is a joint venture, such transfer shall refer to the transfer of more than fifty percent (50%) of the
ownership and/or control of any such joint venture partner, taking all transfers into account on a
cumulative basis.
9.3 Agency Approval of Transfer Required. Except as set forth below, Participant
shall not Transfer this Agreement or any of Participant's rights hereunder, or any interest in the
Site or in the improvements thereon, directly or indirectly, voluntarily or by operation of law,
without the prior written approval of Agency, which approval shall not be unreasonably
withheld, conditioned, or delayed, and any such purported Transfer without such approval shall
be null and void. In addition to the foregoing and notwithstanding anything in this Section to the
contrary, so long as the Project is encumbered by a deed of trust (other than a deed of trust the
beneficiary of which is the Agency), any proposed transferee or assignee must also receive the
prior written consent of the beneficiary of such deed of trust, if required by such deed of trust,
before Agency shall approve such transfer or assignment; provided, however, that such consent
of beneficiary shall not obligate Agency to approve such Transfer. Notwithstanding the
foregoing, the following types of transfers shall not require Agency approval but as with all
Transfers shall be subject to Section 9.4:
1111111111111111111111111111111111111111111111111111111 eB���a`aae�°
882/015610-0063
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(a) transfers to any entity or entities owned or controlled directly or indirectly
by Participant or any of its respective shareholders, partners, or members,
to any limited liability company in which Participant is the managing
member, or to any parent corporation or subsidiary corporation of any
partners of Participant, or to any entity or entities controlled by any such
shareholders or partners, or to any members of any entity which is a
partner of Participant, or to any of its constituent members or partners;
(b) any mortgage, deed of trust, sale and leaseback, or other form of
conveyance required for any reasonable method of financing or
refinancing the acquisition of the Site and development of the Project
thereon, including all direct and indirect costs related thereto; or
(c) the leasing of individual rental units on the Site provided that such leasing
is in accordance with the terms of this Agreement;
(d) Transfers resulting from the death or mental or physical incapacity of an
individual;
(e) Transfers in trust for the benefit of a spouse, children, grandchildren, or
other family member, or for charitable purposes;
(f) Transfers of stock in a publicly -held corporation or of the beneficial
interest in ay publicly -held partnership or real estate investment trust; or
X
(g) the conveyance or dedication of portions of the Site to the City or other
T O governmental entity, or the granting of easements or permits to facilitate
C the development of the Site.
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Agency shall reasonably consider approving a transfer to an entity not owned or
controlled by Participant provided such entity has both of the following: (A) the financial
strength and capability, equal to or greater than the financial strength and capability of
Participant, to perform Participant's obligations hereunder; and (B) the experience and expertise,
C at levels equal to or greater than the experience and expertise of Participant, in the planning,
financing, development, ownership and operation of similar projects. Upon a Transfer by
Participant that has been approved by Agency, and for which Participant has delivered to Agency
a fully executed Assignment and Assumption Agreement that has been approved by Agency, in
MEM accordance with Section 9.4 below, Participant shall be released from liability hereunder from
and after the date thereof.
9.4 Assignment and Assumption Agreement. In the absence of specific written
agreement by Agency, no Transfer by Participant of all or any portion of its interest in the Site or
this Agreement, whether or not requiring the approval by Agency, shall be deemed to relieve
Participant or any successor party from the obligation to timely complete construction of the
Project. In addition, no attempted Transfer of any of Participant's obligations hereunder shall be
effective unless and until Participant and the transferee or successor party execute and deliver to
Agency a binding assignment and assumption agreement substantially in the form of Exhibit "J"
to the AHA, or upon request of Participant, another form to be reasonably approved by Agency's
882/015610-0063
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legal counsel, to accommodate the reasonable requests of the assuming party ("Assignment and
Assumption Agreement").
9.5 Permitted Transferee. A "Permitted Transferee" under this Agreement shall be a
transferee or assignee that either, (i) has been approved by the Agency Executive Director or (ii)
is a transferee of a Transfer not requiring the approval of the Agency Executive Director
pursuant to the terms of this Agreement, and in both the cases described in the foregoing clauses
(i) and (ii) has executed and delivered to the Agency Executive Director an assignment and
assumption agreement pursuant to Section 9.4.
10.0 EVENTS OF DEFAULT BY PARTICIPANT.
Subject to extensions of time pursuant to the terms of Section 22, the occurrence of one
or more of any of the following events shall constitute an "Event of Default" by Participant
hereunder if Participant shall have not cured, corrected, or remedied such failure within, unless a
shorter or longer cure period is provided for specific defaults elsewhere in this Agreement, thirty
(30) days following the service on Participant of a written notice from Agency specifying the
failure complained of, or if it is not practicable to cure or remedy such failure within such thirty
(30) day period (which impracticality shall not apply to monetary defaults), within such longer
period as shall be reasonable under the circumstances provided that Participant has commenced
to cure within the same thirty (30) day period and has diligently prosecuted such cure to
completion:
10.1 Construction of the Project on the Site has not commenced within the time set
forth in the AHA; or
10.2 Construction of the Project on the Site is not completed within the time set forth
0
CO 0, in the AHA; or
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1"- 0 a 10.3 Participant shall abandon or surrender the Site; or
C6CU-4
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10.4 Participant is in default of the Agency Note and has not cured such default within
0 the cure period applicable to such default as set forth in the Agency Note; or
C
ault of any of the covenants, terms or provisions of
10.5 Participant is in material def
this Agreement or any of the Agency Agreements; or
10.6 Participant voluntarily files or has involuntarily filed against it any petition under
any bankruptcy or insolvency act or law and the same has not been dismissed within sixty (60)
days thereafter; or
10.7 Participant is adjudicated a bankrupt; or
10.8 Participant makes a general assignment for the benefit of creditors in violation of
the terms of this Agreement or any of the Agency Agreements.
10.9 Participant is in default, beyond any applicable cure period, of any of the
following: (i) any senior indebtedness encumbering the Site, (ii) the covenants and restrictions
882/015610-0063 _ 18-
400697.01 a05/23/03
contained in the grant deed pursuant to which Landaq Inc., a Delaware corporation ("Landaq")
as "Seller" conveyed the Site to Participant ("Grant Deed"), which Grant Deed was recorded on
October 24, 2002, as Instrument No. 2002-600846, in the Official Records of the County of
Riverside ("Official Records"); (iii) that certain Declaration of Development Covenants,
Conditions and Restrictions entered into and recorded on October 24, 2002, as Instrument No.
2002-600848, in the Official Records, by and between Landaq, as the "Company," and
Participant, as the "Builder," which sets forth certain development and use restrictions with
which Participant is required to comply; or (iv) that certain Option Agreement and Escrow
Instructions entered into on or about October 24, 2002, by and between Landaq, as the
"Company," and Participant, as the "Builder," which provides for Participant's grant to Landaq
of an option to repurchase the Site in accordance with the terms thereof, as memorialized by that
certain Memorandum of Option entered into by those parties and recorded on October 24, 2002,
as Instrument No. 2002-600849, in the Official Records.
11.0 REMEDIES OF AGENCY.
In the event Participant defaults in the performance or observance of any covenant,
agreement or obligation of Participant pursuant to this Agreement, and if such default remains
uncured for a period of thirty (30) days after written notice thereof shall have been given by
Agency (or such lesser period as may apply under Section 4.1), or, in the event said default
cannot be cured within said time period, Participant has failed to commence to cure such default
within the applicable time period and diligently prosecute said cure to completion, then Agency
shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one
or more of the following steps:
11.1 With respect to (i) the physical condition of the Site, or (ii) Participant's Gross
Mismanagement of the Project, enter the Site and correct or cause to be corrected said default
and charge the costs thereof (including costs incurred by Agency in enforcing this provision) to
the account of Participant, which charge shall be due and payable within thirty (30) days after
presentation by Agency of a statement of all or part of said costs, and if such bill is not timely
paid then to (A) place a lien on the Site for said amount due plus interest at the maximum legal
rate, or (B) foreclose with respect to Agency's lien on the Site for said amount due plus interest
at the maximum legal rate;
11.2 Correct or cause to be corrected said default and pay the costs thereof (including
costs incurred by Agency in enforcing this provision) from the proceeds of any insurance;
11.3 Exercise its right to maintain any and all actions or proceedings at law or suits in
equity to compel Participant to correct or cause to be corrected said default, or to foreclose as a
result thereof, including without limitation exercise of Agency's rights under the Agency Deed
of Trust;
11.4 Have a receiver appointed to take possession of Participant's interest in the Site,
with power in said receiver to administer Participant's interest in the Site, to collect all funds
available to Participant in connection with its operation and maintenance of the Site, and to
perform all other actions consistent with Participant's obligations under this Agreement as the
court deems proper;
2003-426888
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882/015610-0063
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11.5 Terminate this Agreement by written notice to Participant and seek repayments of
any remaining principal and accrued interest then owing on the Agency Note;
11.6 With respect to a default for which foreclosure would be an available remedy,
exercise the right to foreclose, or, during the period which is five (5) days prior to the foreclosure
sale date, exercise the right to purchase the Project from Participant, for a purchase price equal to
the appraised value of the Site less (i) the outstanding amount due under any senior indebtedness,
(ii) the amount due under the Agency Note, (iii) any delinquent taxes and assessments owing on
the Site, and (iv) any reasonable costs incurred by Agency to effect the curing of a default and
purchase of the Project, including but not limited to escrow fees and attorney's fees.
Except as otherwise expressly stated in this Agreement, the rights and remedies of the
parties are cumulative, and the exercise by any party of one or more of its 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 another party.
12.0 NONDISCRIMINATION.
12.1 Antidiscrimination. 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, or any part thereof, nor shall Participant, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees of the Site, or any part thereof (except as permitted by this
Agreement).
12.2 Anti -Discrimination Clauses in Agreements. Participant agrees for itself and any
successor in interest that Participant shall refrain from restricting the rental, sale, or lease of any
portion of the Site, or contracts relating to the Site, on the basis of race, color, creed, religion,
sex, marital status, ancestry, or national origin of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
12.2.1 In deeds: "The grantee herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of any person or group of persons on account of
race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall
the grantee itself, or any persons claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land
herein conveyed. The foregoing covenants shall run with the land."
12.2.2 In leases: "The lessee herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through them, and this
lease is made and accepted upon and subject to the following conditions:
1111111111111111111111111111111111111111111111111111111 B6'a��'oaaa�
882/015610-0063 —20-
400697.01 a05/23/03
"That there shall be no discrimination against or segregation of any person or
group of persons on account of status, race, color, creed, religion, sex, marital
status, ancestry, or national origin in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee
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, sublessees,
subtenants, or vendees in the land herein leased."
12.2.3 In contracts: "There shall be no discrimination against or segregation of
any persons or group of persons on account of status, race, color, creed, religion, sex, marital
status, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or
enjoyment of land, nor shall the transferee itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees,
or vendees of land."
13.0 COVENANTS TO RUN WITH THE LAND.
Participant hereby subjects the Site to the covenants, reservations, and restrictions set
forth in this Agreement. Agency and Participant hereby declare their express intent that all such
covenants, reservations, and restrictions shall be deemed covenants running with the land, and
shall pass to and be binding upon the Participant's successors in title to the Site; provided,
however, that on the termination of this Agreement said covenants, reservations and restrictions
shall automatically expire. All covenants established in this Agreement shall, without regard to
technical classification or designation, be binding for the benefit of the Agency, and such
covenants shall run in favor of the Agency for the entire term of this Agreement, without regard
to whether the Agency is or remains an owner of any land or interest therein to which such
covenants relate. Each and every contract, deed or other instrument hereafter executed covering
or conveying the Site or any portion thereof shall conclusively be held to have been executed,
delivered and accepted subject to such covenants, reservations, and restrictions, regardless of
whether such covenants, reservations, and restrictions are set forth in such contract, deed or other
instrument.
Agency and Participant hereby declare their understanding and intent that the burden of
the covenants set forth herein touch and concern the land in that Participant's legal interest in the
Site is rendered less valuable thereby. Agency and Participant further hereby declare their
understanding and intent that the benefit of such covenants touch and concern the land by
enhancing and increasing the enjoyment and use of the Project by Eligible Tenants, the intended
beneficiaries of such covenants, reservations, and restrictions, and by furthering the public
purposes for which the Agency was formed.
Participant, in exchange for the Agency entering into the AHA, hereby agrees to hold,
sell, and convey the Site subject to the terms of this Agreement. Participant also grants to the
Agency the right and power to enforce the terms of this Agreement against the Participant and all
persons having any right, title or interest in the Site or any part thereof, their heirs, successive
owners and assigns.
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882/015610-0063 _ _
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The covenants set forth in this Agreement shall remain in effect for a period terminating
on the earlier of (i) fifty-five (55) years following the Term Commencement Date; (ii)
foreclosure by Agency with respect to the Site; and (iii) foreclosure by a senior lender.
14.0 INDEMNIFICATION.
Participant agrees for itself and its successors and assigns to indemnify, defend, and hold
harmless Agency, City, and their respective officers, officials, members, employees, agents, and
representatives from and against any loss, liability, claim, or judgment relating in any manner to
the Project excepting only any such loss, liability, claim, or judgment arising out of the
intentional wrongdoing or gross negligence of Agency, City, or their respective officers,
officials, members, employees, agents, or representatives.
15.0 UTILITIES AND TAXES.
Participant, while in possession of the Property, and each successor or assign of
Participant while in possession of the Property, shall remain fully obligated for the payment of (i)
real and personal property taxes and assessments in connection with the Property, and (ii) all
charges for all utilities serving the Property for which Participant is responsible.
16.0 ATTORNEYS' FEES.
In the event that a party to this Agreement brings an action against the other party hereto
by reason of the breach of any condition, covenant, representation or warranty in this Agreement,
or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to
recover from the other expert witness fees, and its reasonable attorney's fees and costs.
Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to
attorney's fees shall be entitled to all other reasonable costs for investigating such action,
including the conducting of discovery.
17.0 AMENDMENTS.
This Agreement shall be amended only by a written instrument executed by the parties
hereto or their successors in title, and duly recorded in the real property records of the County of
Riverside.
18.0 NOTICE.
Formal notices, demands, and communications between Agency and Participant shall be
sufficiently given if (i) personally delivered, (ii) delivered by a reputable same -day or overnight
courier services that provides a receipt showing date and time of delivery, (iii) delivered by
United States mail, registered or certified, postage prepaid, return receipt requested, or (iv)
delivered by facsimile transmission, provided the original of the faxed communication is
delivered within twenty-four (24) hours by one of methods described in clauses (i), (ii), or (iii) of
the foregoing. Delivery shall be made to the following addresses:
111111111111111111111111111111111111111111111111111111 �/ 219 �8
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882/015610-0063 -22.
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If to Agency: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Fax: (760) 777-7101
With a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: M. Katherine Jenson, Esq.
Fax: (714) 546-9035
If to Participant: Apartments at La Quinta Village L.P.
1105 Quail Street
Newport Beach, CA 92658
Attn: Victor Mahoney
Fax: (949) 250-8574
With a copy to: Palmieri, Tyler, Wiener, Wilhelm
& Waldron, LLP
2603 Main Street, Ste. 1300
P.O. Box 19712
Irvine, CA, 92014-0220
Attn: Robert Ihrke
Fax: (949) 851-1554
Notices that are personally delivered, delivered by messenger/courier, or by fax (provided
there is compliance with the terms of clause (iv) above) shall be deemed effective upon receipt.
Notices delivered by mail shall be deemed effective upon the earlier of actual receipt by the
addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States
Postal System in the manner described in this Section. Such written notices, demands, and
communications may be sent in the same manner to such other addresses as a party may from
time to time designate by mail.
19.0 NONLIABILITY OF AGENCY OFFICIALS.
No officer, official, member, employee, agent, or representative of Agency shall be
personally liable to Participant, or any successor in interest, in the event of any default or breach
by Agency or for any amount which may become due to Participant or successor or on any
obligations under the terms of this Agreement or any of the Agency Agreements.
20.0 TRANSACTIONS WITH AFFILIATES.
Participant shall have the right to enter into contracts with subsidiaries, affiliates and
other related entities for the purpose of providing cleaning, maintenance and repair services,
insurance policies and other purposes related to the operation of the Site, provided that all such
costs and charges are competitive with the costs, charges, rent and other sums which would be
882/015610-0063 -23 -
400697.01 a05/23/03
i f ' . _. . I i
paid by or to, as the case may be, an unrelated third party. Agency acknowledges and agrees that
Participant may act as its own general contractor or may engage a third party licensed contractor
for the constructions of any improvements on the Site and that will be entitled in so doing to earn
a commercially reasonable fee.
21.0 SEVERABILITY/WAIVER/INTEGRATION.
21.1 Severabilitv. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not
in any way be affected or impaired thereby.
21.2 Waiver. All waivers of the provisions of this Agreement, unless specified
otherwise herein, must be in writing and signed by the appropriate authorities of Agency or
Participant, as applicable. No delay or omission by either party hereto in exercising any right or
power accruing upon the compliance or failure of performance by the other party hereto under
the provisions of this Agreement shall impair any such right or power or be construed to be a
waiver thereof. A waiver by either party hereto of a breach of any of the covenants, conditions
or agreements hereof to be performed by the other party shall not invalidate this Agreement nor
shall it be construed as a waiver of any succeeding breach of the same or other covenants,
agreements, restrictions or conditions hereof.
21.3 Integration. This Agreement contains the entire Agreement between the parties
concerning the subject matter hereof and neither party relies on any warranty or representation
not contained in this Agreement.
22.0 ENFORCED DELAY, EXTENSIONS OF TIME.
Performance by a party hereunder shall not be deemed to be in default where delays or
defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires;
casualties; supernatural causes; 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; acts of the other
party; acts or the failure to act of a public or governmental agency or entity (except that acts or
the failure to act of Agency or City shall not excuse performance by Agency or City unless the
act or failure is caused by the acts or omissions of Participant); or any other causes beyond the
reasonable control or without the fault of the party claiming an extension of time to perform. In
the event of such a delay (herein "Enforced Delay"), the party delayed shall continue to exercise
reasonable diligence to minimize the period of the delay. An extension of time for any such
cause shall be limited to the period of the Enforced Delay, and shall commence to run from the
time of the commencement of the cause, provided notice by the party claiming such extension is
sent to the other party within fifteen (15) days after the sending party has knowledge, or should
have obtained knowledge, of the commencement of the cause. The following shall not be
considered as events or causes beyond the control of Participant, and shall not entitle Participant
to an extension of time to perform: (i) Participant's failure to obtain financing for the Project
(except as a result of an omission or breach by Agency), (ii) Participant's failure to negotiate
agreements with prospective tenants or users for the Project, or (iii) interest rates or economic or
market conditions. Times of performance under this Agreement may also be extended by mutual
III IOII II IIII III IIIII II III IIII II w200E: 2a6`8eaw
882/015610-0063 _ _
400697.01 a05/23/03 24
written agreement by Agency and Participant. The Agency Executive Director shall also have
the authority on behalf of Agency to administratively approve extensions of time not to exceed a
cumulative total of one (1) year.
23.0 THIRD PARTY BENEFICIARY.
The City of La Quinta is deemed a third party beneficiary of the terms and covenants
contained in this Agreement and has the right, but not the obligation, to enforce the terms and
covenants contained herein.
24.0 FUTURE ENFORCEMENT.
The parties hereby agree that should the Agency cease to exist as an entity at any time
during the term of this Agreement, the City of La Quinta shall have the right to enforce all of the
terms and conditions herein, unless the Agency had previously specified another entity to enforce
this Agreement.
25.0 GOVERNING LAW.
This Agreement shall be governed by the laws of the State of California.
26.0 NO MERGER.
The covenants, terms, and provisions of this Agreement shall not merge with any grant
deed or other instrument pertaining to the conveyance of any interest in real property.
27. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which shall
constitute one original and all of which shall be one and the same instrument.
[end - signature page follows]
1111111111111111111111111111111111111111111111111111111 �a=;'of aaaa
882/015610-0063 -25-
400697.01 a05/23/03
IN WITNESS WHEREOF, the Agency and Participant have executed this Regulatory
Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on
the date first written hereinabove.
ATTEST:
APPROVED AS TO FORM:
RUTAN & TUC R, LLP
By: •
Attorneys for the La inta
Redevelopment Agency
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
By�
Thomas Genovese
Executive Director
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing ber
By:
J.C. Gianuhas
Its: Vresident
2003-426988
882/015610-0063 —26-
400697.01 a05/23/03
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On ` before me, personally
appeared3 i , personally known to me (or pro 011M-
to be the person whose name�0a;e-subscribed
to the within instrument and acknowledged to me tha slwAha t executed the same in
(�erftht authorized capacityXs), and that b is ei signatureV on the instrument the
person or the entity upon behalf of which the persono acted, executed the instrument.
Witness my hand and official seal.
DIANE BAESMAN
Co wbdon # 1290M
Notary Pubic - CaOfbmfo
Orange County
[SEAL] F0-L-MVCanrn.8cpmjmjj=
STATE OF CALIFORNIA )
ss.
COUNTY O )
Notary Public
On ,,, e v�p03 before me, personally
appeared , personally known tS me (of: pr4ved
tiden o be the person(,*) whose name(,v) is/on subscribed
to the within instrument and acknowledged to me that he/*e/they executed the same in
his/b&/thEir authorized capacity(jos), and that by his/}wr/their signature(.v) on the instrument the
person(s) or the entity upon behalf of which the person(() acted, executed the instrument.
Witness my hand and official seal.
REGENlA HE14SLEY No Public
Commbsion # 127440
< Notrary Public - C 0f rft
[S Y
MyCarrrn.6#wAu819,2004
IIIIIIIIIIIII�IIIIIIIINIIIIIIIN�IIIIIINIIIIIIIII ash ea:�aaA
882/015610-0063 _ _
400697.01 a05/23/03 27
Under the provisions of Government Code 27361.7, I certify under penalty of
perjury that the notary seal on the document to which this statement is attached
reads as follows:
Name of notary: 9,f�en \ CA,
Commission M I E-1 y L45 <
Vn
Place of execution: \ \4
Date commission expires:--% j�
Date: JUN 112003
Signature:
2803-426988
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
II IIII II IIII IIII II IIII II 0029 em
M
ev
ATTACHMENT NO. 2
INCOME COMPUTATION AND CERTIFICATION FORM
[See following pages]
ames�.oi us.xw� III III I III�II � III I II es�i�i30 zeeebee8wa
CITY OF LA QUINTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Prnnerty Address-
1 r
PART II. TENANT HOUSEHOLD INFORMATION
Date of Birth Soc. Sec. # Relationship
TOTAL NUMBER OF PERSONS IN HOUSEHOLD: (Please list information on other household members below)
Mailing Address:
Telephone Numbers: Work (�
Home �)
PART III. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required verification as specified
below. Attach a note explaining any significant changes in household income between the previous year and the current year.
INFORMATION IS REQUIRED FOR ALL MEMBERS OF THE HOUSEHOLD AGE 18 OR OLDER REGARDLESS OF
WHETHER THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a tax return, please
indicate this in Part V by your signature.
ANN INCOME
ANN INCOME
INCOME SOURCES
for owner
others in hshld
VERIFICATIONS (needed for file)
A. Employment earnings
Last tax return & last 3 pay stubs,
employer verification
B. Self-employment earnings
Last 2 tax returns & current financial stmt
C. Social Security (OASDI)
Annual award letter
D. Supplemental Security Income (SSI)
Annual award letter
E. Public assistance (AFDC, general
Current benefit statement
assistance, unemployment, etc.)
F. Pension (s)
Annual award letter, year end stmt, W-2
G. Interest income
Last 2 statements for all accounts
H. Investment income (stocks, bonds,
real estate, etc.)
Last 2 statements for all accounts
I. Room rental
Rental agreement, copies of checks, etc.
J. Other income (list type/source)
K. TOTAL INCOME (sum of A thru 7J)
/ 12 months = mo. income
882/015610-0063
400697.01 a05/23/03
1
PART IV. PROPERTY STATUS
Will this property be your primary residence?
Will someone other than the individuals listed above be occupying this property?
If yes - Name of occupants:
Telephone Number: Mailing Address:
My/our housing expenses are as follows:
1. Monthly tenant rent
2. Average monthly utilities
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determination, completion of monitoring forms is required on an annual basis.
I/We certify that Uwe have disclosed all information pertaining to my/our application and that the information presented in the
foregoing Sections I through IV is true and accurate to the best of my (our) knowledge.
Tenant Date
Tenant Date
For more information regarding this application, please contact management staff at (760)
Comments:
FOR OFFICE USE ONLY
Information verified
Income category
Maximum allowable annual income % of median)
Applicant's annual income gross monthly max housing costs
Management Staff
1111111111111111111111111111111111111111111111111111111 as'aa3="`aaa�
Date
ATTACHMENT NO. 3
INCOME RECERTIFICATION FORM
[See following pages]
wmaiai ms23m3 I�•mI111111 H111I�11III I111111A11I I11lOIIIIIINI es 2003<M988
LA QUINTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
PART I. GENERAL INFORMATION
1. Property Owner Name
2. Renter Name
3. Property Address
La Quinta, CA 92253 (Please include P.O. Box No. if applicable)
4. Has there been a change in ownership of this property during the preceding 12 month
period?
Yes ( ) No ( )
(If yes, please explain)
PART II. UNIT INFORMATION
5. Number of Bedrooms
6. Number of Occupants
Names:
PART III. AFFIDAVIT OF RENTER
I, , and I, , as renters of units assisted pursuant to
the La Quinta Redevelopment Agency's (the "Agency") Affordable Housing
Program (the "Program"), do hereby represent and warrant as follows:
A. (My/Our) adjusted income (anticipated total annual income) does not exceed moderate income
which is one hundred twenty percent (120%) of the median gross income for the Riverside/San
Bernardino Primary Metropolitan Statistical Area as such income levels are established and
amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and
published by the State Department of Housing and Community Development in the California
Administrative Code. Based upon this median income which has been adjusted for family size,
the following table depicts the maximum eligible income levels for the Program.
Income Category 1 Person 2 Persons 3 Persons 4 Persons
Moderate Income xxx xxx xxx xxx
Income Category 5 Persons 6 Persons 7 Persons 8 Persons
Moderate Income xxx xxx xxx xxx
As an example, the gross income of a household of 4 persons could not exceed $
annually. (I/We) understand that the applicable median gross income for our household size is
�� aos��aaa
1. The following computation includes all income (Uwe) anticipate receiving for the 12-
month period commencing on January, 1, 20 For the renter and all family members
include:
(a) amount of wages, salaries, overtime pay, commissions, fees,
tips and bonuses, and payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation
and severance pay (before payroll deduction)
(b) net income from business or profession or rental of property
(without deduction for repayment of debts or expansion of business)
(c) interest and dividends
(d) periodic receipts such as social security, annuities, pensions,
retirement funds, insurance policies, disability or death benefits,
alimony, child support, regular contributions or gifts
from persons not occupying unit
(e) public assistance allowance or grant plus excess of maximum
allowable for shelter or utilities over the actual allowance for
such purposes
(f) regular and special pay and allowances of a member of
armed services (whether or not living in the dwelling)
who is head of the family or spouse
Subtotal (a) through (f)
LESS: Portion of above items which are income of a family member
who is less than 18 years old or a full-time student ( )
TOTAL ELIGIBLE INCOME
NOTE: The following items are not considered income: casual or sporadic gifts; amounts
0 - specifically for or in reimbursement of medical expenses; lump sum payment such as inheritances,
00 m V- insurance payments, capital gains and settlement for personal or property losses; educational
CU 0 ° scholarships paid directly to the student or educational institution; government benefits to a
IZO % veteran for education; special pay to a serviceman head of family away from home and under
KZOC hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food
Stamp Act of 1964 which is in excess of amount actually charged the eligible household;
relocation payments under Title II of Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970; payments received pursuant to participation in the following
C programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE,
Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community
Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the Landlord and
the Agency to determine maximum income for eligibility and (Uwe) warrant that all
information set forth in this Part III is true, correct and complete and based upon
Cinformation (Uwe) deem reliable and that the estimate contained in paragraph 1 is
_ reasonable and based upon such investigation as the undersigned deemed necessary.
�. 3. (I/We) will assist the Landlord and the Agency in obtaining any information or documents
required to verify the statements made in this Part III and have attached hereto a copy of
our federal income tax return for the last year (20__).
4. (I/We) acknowledge that (Uwe) have been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material breach of
(my/our) agreement with the Landlord to rent the unit and will additionally enable the
882/015610-0063
400697.01 a05/23/03
Agency to initiate and pursue all applicable legal and equitable remedies with respect to
the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
1. Base rent
2. Average Monthly Utilities
3. Other (explain)
(I/We) understand that completion of monitoring forms is required on an annual basis and agree to notify
the La Quinta Redevelopment Agency in writing of any change in ownership or rental of the unit. (I/We)
do hereby swear under penalty of perjury that the foregoing statements are true and correct.
Date
Renter(s)
IIIIIIIIIIIIIINIIIIIIIIIIIIIIIII�lllllllnllllllll as280'�ae1 8
�A
882/015610-0063 3
400697.01 a05/23/03
ATTACHMENT NO.4
LEASE RIDER
[See following page]
I�NII�4MI�IN�I�II�IINIIUIhIIINI '�`�
(Project Name) AFFORDABLE HOUSING PROJECT
Moderate Income Lease Rider
RESIDENT:
(if there is more than one adult occupant, each person must sign the rider)
LEASE DATE:
UNIT NO.:
The undersigned tenant(s) hereby certify and agree as follows:
1. Income Certification. The attached income certification is true, correct and complete.
Uwe agree to provide a similar certification annually upon request during the term of
my occupancy.
2. Employer Verification. The landlord or property manager has my permission to
verify my/our income from any sources of income Uwe receive.
3. False Statements. If the income certification and/or lease application submitted by
me/us is false, or if Uwe fail to provide annual certifications, the landlord or property
manager will have the right to terminate my/our lease and recover possession of my/our
apartment. Uwe understand that the landlord and property manager are relying on this
income certification in accepting me/us as a tenant, and the landlord or property
manager will be seriously harmed if my/our income does not qualify the apartment for
the Moderate Income affordable housing program.
4. Income Recertification. During the term of tenancy, if an annual income
recertification form reflects that my/our gross household income exceeds the amount
allowed for moderate income, Uwe understand that the monthly rent charged for this
unit will change to market rate.
5. This rider shall be considered as part of my/our lease.
Date:
Tenant
Tenant
Tenant
Tenant
20A
111111111111111111111111111111111111111111111111111111 ee �of eeBea+
882/015610-0063 1
400697.01 a05/23/03
ATTACHMENT NO. 5
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
[See following page]
� �Of aaaw
it
Y
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of
owner of the Project, hereby represents
and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Affordable
Housing Agreement between the La Quinta Redevelopment Agency and Apartments at
La Quinta Village L.P.
2. As of June 30, 20_, the following number of residential units in the
Project (i) are currently occupied by tenants qualifying as Moderate Income
Household at Affordable Rents; (ii) are currently occupied by other tenants having incomes of
not greater than 120% of area -wide median income (the above terms are defined in California
Health and Safety Code Section 50053); or (iii) are currently vacant and being held available for
occupancy by Eligible Tenants and have been so held continuously since the date Eligible
Tenants vacated such unit, as indicated:
i. units at Moderate Income
ii. vacant units
3. The unit number, unit size, the tenant paid rental amount charged and collected,
the number of occupants and the income of the occupants for each restricted unit in the
Project is set forth on the attached list. All restricted units in the
Project are rented at Affordable Rent.
OWNER NAME
Dated: , 20_ By:
(Printed name and title)
I�I IIIIII IIIIIIIII XIIII IIIII II IIIII es 200.e %eeemn
882/015610-0063 1
400697.01 a05/23/03
ATTACHMENT NO. 6
RESTRICTED UNIT MIX
Plan Type
Square Feet
Total,
Plan 1
1 B+ 1 B
670
46
Plan 2A
2B + 2B
889
46
Plan 2B
2B + 2B
889
46
Plan 2C
2B + 2B
942
14
Plan 2D
2B + 2B
952
2
Plan 3
3B + 2B
1177
46
200
Affordable
IIIIIIIIIII IIII I IIIII IIIIIIIII IIIIIN II �I av 01/260 03-17b'a88eeA
Units
30
30
15
75
882/015610-0063
400697.01 a05/23/03
• Recording Requested By
First American Title CoMWY
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
DOC a MOOM-426989
06/11/2003 08:00A Fee:NC
Page i of 13
Recorded in Official Records
County of Riverside
Gary L. Orso
Assessor, County Clerk i Recorder
1111111111111111111111111111111111111111111111111111111
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[Exempt From Recording Fee Per Gov. Code § 6103] 113/1
SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY YS
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENTS.
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of June 5,
2003, by and among LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate
and politic ("Agency"), APARTMENTS AT LA QUINTA VILLAGE, LP, a California limited
partnership ("Participant"), and LANDAQ, INC., a Delaware corporation ("Seller").
RECITALS
A. Participant owns fee title to the real property described on Attachment No. 111"
attached hereto and incorporated herein by reference (the "Property").
B. Seller and Participant have entered into that certain Option Agreement and
Escrow Instructions pursuant to which Participant granted Seller an option to purchase the
Property in accordance with the terms and conditions thereof, as memorialized by that certain
Memorandum of Option entered into by those parties and recorded on the same date hereof
("Option Agreement").
C. Participant has executed or is about to execute an Affordable Housing Agreement
("AFA") with Agency which provides for (i) Participant's construction on a portion of the
Property of a rental apartment complex containing two hundred (200) units and related interior
and exterior amenities (collectively, the "Project"), with seventy-five (75) of the units
covenanted for occupancy by persons and families of low- and moderate -income for a period of
fifty-five (55) years ("Affordability Covenants"); and (ii) the Agency's provision of financial
assistance to Participant in the amount of Three Million Dollars ($3,000,000) from Agency's
low- and moderate -income housing fund ("Agency Assistance"), a portion of which Agency
Assistance Participant used to partially fund its acquisition of the Property, and a portion of
which Agency Assistance Participant intends to use to develop the project. The Agency
Assistance is evidenced by a note, the repayment of which is partially secured by a Deed of Trust
recorded against the Property ("Agency Deed of Trust"). As a condition to Participant's receipt
of the Agency Assistance, Participant is required to execute and record, and has executed and
KSLLandagVMRRDCSubordAgrRDA 1 6/5/03
recorded, that certain Regulatory Agreement and Declaration of Covenants and Restrictions
("Agency Regulatory Agreement") against the Property memorializing the Affordability
Covenants. The Agency Deed of Trust and the Agency Regulatory Agreement are hereinafter
collectively referred to as the "Agency Restrictions."
D. Agency is willing to provide to Participant the Agency Assistance provided the
Agency Restrictions are liens or charges upon the Property prior and superior to the lien or
charge of the Option Agreement and provided that Seller will specifically and unconditionally
subordinate the lien or charge of the Option Agreement to the lien or charge of the Agency
Restrictions.
E. It is the mutual benefit of Seller, the Agency and Participant that the Agency
provide the Agency Assistance to Participant. Seller has agreed that the Agency Restrictions
shall, when recorded, constitute liens or charges upon the Property which are unconditionally
prior and superior to the lien or charge of the Option Agreement subject to the specific terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the Agency,
Seller and Participant, and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Agency to provide the Agency Assistance, it is
hereby declared, understood and agreed as follows:
1. Subordination b. Sy eller.
1.1 Subordination of Option Agreement to Agency Restrictions. The Agency
Restrictions (and any renewals or extensions of, or advances, including interest, thereunder) shall
unconditionally be and remain at all times liens or charges on the Property, prior and superior to
the lien or charge of the Option Agreement to all present and future indebtedness and obligations
secured thereby, together with all rights and privileges of Seller thereunder, but subject to the
terms and conditions of this Agreement.
1.2 Covenant of Seller. The Seller declares, agrees and acknowledge that to
Seller's actual knowledge, there is no breach, event of default or default existing under the
Option Agreement or any circumstances, event, omission or failure of condition which would
constitute such a breach, default, or event of default after notice or lapse of time, or both.
2. Reliance by Agency and Seller. The Agency would not provide the Agency
Assistance and the Seller would not have agreed to subordinate the Option Agreement without
this Agreement and each of the undersigned understands that in reliance upon, and in
consideration of, this subordination, specific loans and advances are being and will be made and,
as part and parcel thereof, specific monetary and other obligations are being and will be entered
into which would not be made or entered into but for such reliance upon this subordination.
1111111111111111111111111111111111111111111111111111111 as�� B3`m�eBP
KSLLandagVMRRDCSubordAgrRDA.doc 2 6/5/03
3. Miscellaneous.
3.1 Entire Agreement. This Agreement shall be the whole and only agreement
with regard to the matters set forth herein and shall supersede and cancel, but only insofar as
would affect the priority between the Option Agreement and the Agency Restrictions, any prior
agreement as to such subordination.
3.2 Successors and Assigns. This Agreement shall inure to and bind the heirs,
legatees, devisees, administrators, executors, successors and assigns of the parties hereto.
3.3 California Law. This Agreement shall be construed according to the laws
of the State of California.
3.4 Severability. If any term, provision, condition or covenant of this
Agreement or the application thereof to any party or circumstances shall, to any extent, be held
invalid or unenforceable, the remainder of this instrument, or the application of such term,
provision, condition or covenant to persons or circumstances other than those as to whom or
which it is held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
3.5 Notice. Any notice, demand, request, consent, approval or communication
that any party desires or is required to give to another party or any other person must be in
writing and may be given by personal delivery, by mailing the same by registered or certified
mail, return receipt requested, postage prepaid, or by a reputable same day or overnight delivery
service that provides a receipt showing date and time of delivery, to the party to whom the notice
is directed at the address of such party hereinafter set forth, or such other address and to such
other persons as the parties may hereafter designate. Any such notice shall be deemed given (i)
upon receipt if by personal delivery or by delivery service, or (ii) forty-eight (48) hours after
deposit in the United States mail, if sent by mail pursuant to the foregoing.
If to Agency: Community Development Agency of
the City La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Executive Director
With copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626-1998
Attention: M. Katherine Jenson
If to Participant: Apartments at La Quinta Village, LP
1105 Quail Street
Newport Beach, CA 92658
Attention: Victor Mahoney
2003-426989
KSLLandagVMRRDCSubordAgrRDA.doc 3 6/5/03
If to Seller: Landaq, Inc.
50-905 Avenida Bermudas
La Quinta, CA 92253
Attention: Legal Department
3.6 Attorneys' Fees. In the event that any action, suit or other proceeding is
brought to enforce the obligations of under this Agreement, the prevailing party shall be entitled
to receive all of such parry's costs and expenses of suit, including attorneys' fees, expert witness
fees, and all costs incurred in each and every action, suit or other proceeding, including any and
all appeals or petitions therefrom.
3.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall constitute one and the
same document.
[CONTINUED ON NEXT PAGE]
111111111111111111111111111111111111111111111111111111 �aaW�e'eBP
KSLLandagVMRRDCSubordAgrRDA.doc 4 6/5/03
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the date first written above.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENTS.
�I
1404dary
"SELLER"
LANDAQ, INC.,
a Delaware corporation
By:
Its:
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
By: _
Executive Director
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
Lo
Agency Counsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE, LP,
a California limited partnership
By: Apartments at La Quinta Village, LLC,
a California limited liability company
General Partner
By: Cameo Homes,
a California corporation
Managing Member
0
James Gianulias
President
KSLLandagVMRRDCSubordAgrRDA 5 6/5/03
STATE OF CALIFORNIA )
) ss
COUNTY OF )
On ` n e- . O a before me, .
personally appeared .
personally known to me ) to be the
person(jr) whose name(r) is/ape subscribed to the within instrument and acknowledged to me that
he/ske/tl*y executed the same in his/her/thpit authorized capacity(*), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person)
acted, executed the instrument.
Witness my hand and official seal.
REGENIA HENSLEYOle
lieComildn 1 # 12144n Not Public
Nokxy PJ3W - CdlMft
i�v�side 04:"
My Carmn. Fges Aug 19.2M4
STATE OF CALIFORNIA )
) ss
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.
Notary Public
[SEAL]
2003-426989
KSLLandagVMRRDCSubordAgrRDA 6 6/5/03
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the date first written above.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENTS.
ATTEST:
By:
Secretary
"SELLER"
LANDAQ, INC.,
a Delaware corporation
By:
Its:
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
M
Executive Director
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By: R, /
Agency ounsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE, LP,
a California limited partnership
By: Apartments at La Quinta Village, LLC,
a California limited liability company
General Partner
By: Cameo Homes,
a California corporation
Managing Member
0
James Gianulias
President
2003-426989
KSLLandagVMRRDCSubordAgrRDA.doc 5 6/5/03
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the date first written above.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENTS.
ATTEST:
By:
Secretary
"SELLER"
LANDAQ, INC.,
a Delaware corp a on
By:
Its: : CX Y�2J t
Z . bOU6
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
LN
Executive Director
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
LIZ
Agency Counsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE, LP,
a California limited partnership
By: Apartments at La Quinta Village, LLC,
a California limited liability company
General Partner
By: Cameo Homes,
a California corporation
Managing Member
Lo
James Gianulias
President
asseaA
8 of 13
KSLLandagVMRRDCSubordAgrRDA.doc 5 6/5/03
STATE OF CALIFORNIA )
) ss
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]
STATE OF CALIFORNIA )
ss
COUNTY OF q (Ak-
On LtAk- (1 ? 3 , before me,
personally appeared U) l LL
Notary Public
abs
no`�a-✓�I dh�
personally known to e to be the
person whose name;)s subscribed to the within instrument and acknowledged to me that
(9 executed the same ingl�� authorized capacitAiesj', and that by i
signature on the instrument the persono o or the entity upon behalf of which the person
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
Notary Public
Dec71.2M4
/'A'W
II�IIIIIIIINIIIIIII�IIIIIIIIIUIIIIIIINIIIIIIIINI 2aaof 13
s`�B9aa°
KSLLandagVMRRDCSubordAgrRDA.doc 6 6/5/03
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the date first written above.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENTS.
ATTEST:
By:
Secretary
"SELLER"
LANDAQ, INC.,
a Delaware corporation
By:
Its:
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
LE
Executive Director
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
0
Agency Counsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE, LP,
a California limited partnership
By: Apartments at La Quinta Village, LLC,
a California limited liability company
General Partner
By: Cameo Homes,
a California corporation
Managing Member
By: ��<w j �7,
. . Gianulias
President
III III�II I III I�III III IIIIli III a200 13-426989
een
KSLLandagVMRRDCSubordAgrRDA.doc 5 6/5/03
STATE OF CALIFORNIA )
SS
COUNTY OFF )
*n (j:A (p before me,
personally appeared
personally known to me ) to be the
person(p3 whose namefsry are subscribed to the within instrument and acknowledged to me that
(N)sheAhey executed the same i it authorized capacityW, and that b3fMnerftheir
signature(Won the instrument the personVor the entity upon behalf of which the personk6
acted, executed the instrument.
Witness my hand and official seal.
' DIANE LAEa�uw
-Whft1.1290M
[SEAL] � • �►
M-
STATE OF CALIFORNIA )
) ss
COUNTY OF )
Notary Public
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.
Notary Public
[SEAL]
2003-426989
KSLLandagVMRRDCSubordAgrRDA.doc 6 6/5/03
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF PROPERTY
Real property located in the City of La Quinta, County of Riverside, State of California,
described as follows:
Parcels 3 and 4 of Parcel Map No. 30721 as filed in Book 203, Pages 30 and 31 of
Parcel Maps, Official Records of said County.
III �'n1�11111111111111111111 „�,•1III� ��z 26%9ean
KSLLandagVMRRDCSubordAgrRDA.doc 8 6/5/03
r or Recorder
GARY L. ORSO P.O.'Box psi
COUNTY OF RIVERSIDE Riverside, CA 92502-0751
?: f ASSESSOR -COUNTY CLERK -RECORDER (909) 486-7000
}tip.:nversi e-asrc(krec.con.2
NOTARY CLARITY
Under the provisions of Government Code 27361.7, 1 certify under the penalty of perjury
that the notary seal on the document to which this statement is attached reads as
follows:
Name of Notary:
Commission #:
Place of Execution:
M
1? q 1")lPlP2-
Date Commission Expires:
s
Jars1 ICJ 1 a)C)0-
Date:
Signature:
Print Name: k1A V 40P7- )WCk K kA,-
29
nca 1e6ens4veote. of.za» III IIII II IIIIII IIII IIIIIIIII III III me�36eeasa
u
RECORDING REQUSTED BY:
FIRST AMERICAN TITLE COMPANY
WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
DOC N 2003-426987
06/11/2003 08:00A Fes:NC
Palos i of 11
Recorded in Official Records
County of Riverside
Garry L . Orso
Assessor, County Clerk 8 Recorder
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RIDER ATTACHED HERETO
THIS
AREAI T
FOR
C*
r*-.
RECORDER' S
USE ONLY
THIS PAGE ADDED TO PROVIDE ADEQUATE SPACE FOR RECORDING INFORMATION
($3.00 Additional Recording Fee Applies)
STC-SCSD 996a (Rev8/97)
Recording Requested By And
When Recorded Return to:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
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SPACE ABOVE THIS LINE FOR RECORDER'S USE
EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103
DEED OF TRUST WITH ASSIGNMENT OF RENTS
AND RIDER ATTACHED HERETO
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS INCLUDING SECURITY
AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH SSIGNMENT OF RENTS AND RIDER ATTACHED HERETO ("Deed of
Trust"), is made , between APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership, herein called TRUSTOR, whose address is 1105 Quail Street, Newport Beach, CA,
92658, a California corporation, herein called TRUSTEE, and LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic, herein called BENEFICIARY.
N WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor's estate, dated on or about the
date hereof, in that property in the City of La Quinta, County of Riverside, State of California, described as:
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203 PAGES 30 AND 31 OF PARCEL MAPS,
RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC UTILITY PURPOSES AS SHOWN ON PARCEL
MAP NO. 30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter
given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of
securing (1) payment of the sum of THREE MILLION DOLLARS ($3,000,000), with interest thereon according to
the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and
extensions or renewals thereof; (2) the performance of Trustor's obligations set forth in each agreement of Trustor
incorporated by reference or contained herein; and (3) the payment of any sum expended by Beneficiary to cure any
default of Trustor under Trustor's construction, takeout, or permanent loan(s); and (4) payment of additional sums
and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a
promissory note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the Property above described, Trustor expressly
makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms
and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set
forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other
counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the
county where said property is located, noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and
provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are
by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as
if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby,
provided the charge therefor does not exceed the maximum allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to
him at his address hereinbefore set forth.
SEE RIDER ATTACHED TO THIS DEED OF TRUST
STATE OF CALIFORNIA
COUNTY OF C'�i(
On
before me,
personally appeared JAMES GIANULIAS, personally
known to me
to be the person(s) whose
names(p Vase subscribed to the within instrument and
acknowledged to me tha ?�shey executed the
same in(g hen their authorized capacity(yo, and that
b3$Yi hcrfthvir signatures(4 on the instrument the
person or the entity upon behalf of which the
persono acted, executed the instrument.
WITNESS mv hand and seal.
Signature
(This area for official notarial seal)
Signature of Trustor
APARTMENTS AT LA QUINTA VILLAGE L.P., a
California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California corporation
Its: Man mg Me er
By:
J.C. Gianulias
Its: President
DMA UBMM
chow IIIIIIIIIIhIIIIIIIIIIIIIIIII�IIIIIIIIIIIIIIIIINIIII ��aa,�see�� 11
882/015610-0063
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing
Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore
promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all
claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation
of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably
necessary, the specific enumerations herein not excluding the general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The
amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order
as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such
application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments
on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be
prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to
do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such
manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said
property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.
5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of
expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof
regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when
said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is
hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same
effect as above provided for disposition of proceeds of fire or other insurance.
2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to
require prompt payment when due of all other sums so secured or to declare default for failure so to pay.
3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting
any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this
Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of
its fees, Trustee shall reconvey, without warranty, 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 such reconveyance may be described as "the person or persons legally
entitled thereto."
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the
continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by
Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues
and profits as they become due and payable. Upon any such default (beyond any applicable cure period, and during the continuance of such
default), Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to
the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own
882/015610-0063 2083-426987
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4 of 11
name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may
determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as
aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement
hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default
and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed
for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale
having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said
notice of sale, either as a whole or in separate parcels, 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 time of sale. Trustee may postpone sale of all or any portion of said property by public
announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed
by the preceding postponement. Trustee shall deliver to such purchaser its deed 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 Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale,
Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the
amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in
writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed is recorded and the name and address of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby,
whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by
law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
DO NOT RECORD REQUEST FOR FULL RECONVEYANCE
TO ,TRUSTEE:
The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust.
Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby
requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above
mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust,
and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated
Please mail Deed of Trust,
Note and Reconveyance to
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before
reconveyance will be made.
2983-426987
882/015610-0063
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RIDER TO SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS
THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is
executed this day of , by APARTMENTS
AT LA QUINTA VILLAGE L.P., a California limited partnership, herein "Trustor," in favor of
the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein
"Beneficiary," the same parties to that certain form Deed of Trust With Assignment of Rents, of
even date hereto, to which this Rider is attached. This Rider is made a part of and is
incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or
provision of the form Deed of Trust to which it is attached.
Reference is made to (i) that certain Note by and between Trustor and Beneficiary, dated
on or about the date set forth above, the repayment of which by Trustor is secured by this Deed
of Trust ("Note"), and (ii) to the Agency Agreements which are described in the Note.
The parties hereto agree:
1. Propert . The estate subject to this Deed of Trust is Trustor's fee estate in the real
property legally described in the foregoing Deed of Trust to which this Rider is attached (the
"Property").
2. Obligations Secured. Trustor makes this grant and assignment for the purpose of
securing the following obligations ("Secured Obligations"):
a. Payment to Beneficiary of all indebtedness at any time owing under the
terms of the Note prior to the time that Agency issues or is required to
issue, if earlier) a Release of Construction Covenants (as defined in the
Agency Agreements);
b. Payment and performance of all obligations of Trustor under this Deed of
Trust;
C. Payment and performance of all obligations of Trustor under the Agency
Agreements; provided, however, that (i) from and after the date Agency
issues or is required to issue (if earlier) a Release of Construction
Covenants, obligations released or required to be released pursuant to the
Release of Construction Covenants shall no longer be secured by this
Deed of Trust; and (ii) from and after the date the covenants set forth in
the Agency Regulatory Agreement (as defined in the Note) terminate, as
described more fully therein, this Deed of Trust shall be reconveyed.
d. Payment and performance of all future advances by Beneficiary to
Trustor, and other obligations of Trustor, with the approval of Trustor, that
Trustor may agree to pay and/or perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary, when the obligation is evidenced
by a writing which recites that it is secured by this Deed of Trust; and
,882/015610-0063 �so,.o,,,,o, IIIIIIIIIINIIIIIIIIIIIIIIIII�IIIIIIIIIIIIIIIIIIIIIII �20Aso'saa'a�
e. All modifications, extensions and renewals of any of the obligations
secured hereby, however evidenced.
3. Obligations. The term "obligations" is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and charges,
prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured
Obligations.
4. Subordination. Beneficiary agrees to subordinate this Deed of Trust to Trustor's
construction loan and subsequent permanent and/or construction loans, provided that (i) the
maximum cumulative principal amount of the construction and/or permanent loan shall not
exceed the greater of (A) ninety percent (90%) of the proposed lender's appraised value of the
Property upon completion of the affordable housing project described in the Agency Agreements
(with stablized occupancy) (the "Project"), which amount shall be verified in writing to
Beneficiary's Executive Director's reasonable satisfaction, and (B) the total outstanding
indebtedness under the prior loan to which Agency has subordinated; (ii) the loan(s) shall
obligate Trustor to expend loan proceeds for no other purpose than the Project or refinance of a
loan secured by the Project that was previously subordinated to by the Beneficiary; and (iii) the
loan(s) shall be entered into in connection with execution by Agency of a subordination
agreement, substantially in the form attached to and incorporated in the Affordable Housing
Agreement (as defined in the Agency Agreements) as Exhibit I-1 , with respect to a
construction loan, and Exhibit "I-2", with respect to takeout or permanent financing, or such
other form that shall be reasonably requested by Trustor's lender and reasonably approved by
Beneficiary's Executive Director (which form Beneficiary agrees to promptly execute and deliver
upon Trustor's request therefor) ("Subordination Agreement"). Notwithstanding clause (ii)
above, to the extent that the amount of a refinance loan authorized by this Section, and obtained
co m -4 after the time Beneficiary issues (or is required to issue) a Release of Construction Covenants for
00 M the Project, exceeds the amount of the loan it replaces, the additional proceeds of such refinance
Gn loan may be distributed to Trustor.
0 Beneficiary agrees that the lender may, during the period of default, proceed with its
rights and remedies against Trustor as a result of such default, subject only to the cure rights
provided in the Subordination Agreement. In agreeing to provide the subordination referred to in
the preceding sentence, Beneficiary hereby incorporates the finding required to be made in
accordance with Health and Safety Code Section 33334.14.
5. IncoKporation. All terms of the Note, Agency Agreements, and the Secured
Obligations are incorporated herein by this reference. All persons who may have or acquire an
interest in the Property shall be deemed to have notice of the terms of all of the foregoing
documents.
6. Mortgagee -in -Possession. Neither the assignment of rents set forth in the Deed of
Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed
to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect
to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof.
Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or
by agreement with Trustor, or the entering into possession of the Property by such receiver, be
882/015610-0063
400696.01 a05/23/03 2
deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with
respect to the Property.
7. No Cure. In the event Beneficiary collects and receives any rents under the Deed
of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of
the default, except if and to the extent the same are sufficient to cure all monetary defaults and
no other defaults then exist.
8. Possession Upon Default. Upon the occurrence of and during the continuation of
a default, Beneficiary, after having given notice and the applicable cure periods having expired
with the default having not been cured (hereinafter, a "default"), may, at its option, without any
action on its part being required and without in any way waiving such default, take possession of
the Property in accordance with applicable law and have, hold, manage, lease and operate the
same, on such terms and for such period of time as Beneficiary may deem proper, and may
collect and receive all rents and profits, with full power to make, from time to time, all
commercially reasonable alterations, renovations, repairs or replacements thereto as may seem
proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all
such alterations, renovations, repairs and replacements, and all costs and expenses incident to
taking and retaining possession of the Property, and the management and operation thereof, and
keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other
liens which may be prior in lien or payment of the Note, and premiums for insurance, with
interest on all such items; and (c) the indebtedness secured hereby, together with all costs and
attorney's fees, in such order or priority as to any of such items as Beneficiary in its sole
discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any
amounts received by Beneficiary or its agents in the performance of any acts prohibited by the
terms of this assignment, including, but not limited to, any amounts received in connection with
any cancellation, modification or amendment of any lease prohibited by the terms of this
assignment and any rents and profits received by Trustor after the occurrence of a default shall
be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to
Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving
any portion of such trust funds shall receive the same in trust for Beneficiary as if such person
had actual or constructive notice that such funds were impressed with a trust in accordance
therewith.
9. Receiver. In addition to any and all other remedies of Beneficiary set forth under
this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have
been cured within any applicable cure period, Beneficiary, to the extent permitted by law and
without regard to the value, adequacy or occupancy of the security for the Note and other sums
secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver
to enter upon and take possession of the Property and to collect all rents and profits and apply the
same as the court may direct, and such receiver may be appointed by any court of competent
jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly
waived. The expenses, including receiver's fees, attorneys' fees, costs and agent's
compensation, incurred pursuant to the power herein contained shall be secured by this Deed of
Trust.
h =`�asaapIIIIIIIIIIIIIHIIIIIIIIIIIIIIIIIIINIIIIIIIIIIIIIIIII
882/015610-0063 _
400696.01 a05/23/03 -3
10. Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary
addressed to:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92263
Attn: Executive Director
[SIGNATURE ON NEXT PAGE]
2003-426987
882/015610-0063
400696.01 a05/23/03 4
IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor's
acknowledgment hereinbelow, to be effective for all purposes as of the day and year first set
forth above.
TRUSTOR:
APARTMENTS AT LA QUINTA VILLAGE L.P.,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California
corporation
Its: Managing Mem r
By
r
J.C. Gianulias
Its: 'sident
�aa
1111111111111111111111111111111111111111111111111111111 ea��aap
882/015610-0063
400696.01 a05/23/03 5
STATE OF CALIFORNIA )
) ss.
COUNTY OF
b before me, --1 personally
On a b
personally known to me er
appeared . G . Ccr►�t��tt+k''S � p y (
praued in we on the basis of satisfarAQFY to be the person(pf whose name(t)&/tee.
r-- - --
subscribed to the within instrument and acknowledged to me that&sheAhey executed the same
ir�i h@FA r authorized capacity( os'), and that bye ignature(; ' on the instrument
the person or the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
OIANE BAESMAN Notary Public
Conwrilmlon # 1290662
[SEAL] Way PJMC - California
Orange County
MVCorrxn. BVbw Jan 1&2M5
882/015610-0063 ,�ao,.o�,n, III�I�NNI�II�II�IIIpIhIN�IIIIINI ��A'� a,
r/
rj
Recording Requested By
First American Title Company
Recording Requested By And
When Recorded Mail To:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Executive Director
DOC a 2002-482314
06/30/2003 08:00A Fee:NC
Page 1 of 25
Recorded in Official Records
County of Riverside
Gary L. Orso
Assessor, County Clerk & Recorder
1111111111111111111111111111111111111111111111111111111
M
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PAGE
SIZE
DA
PCOR
NOCOR
I SMF
MISC.
----------------------
A
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COPY
LONG
REFUND
NCHG
EXAM
[Exempt From Recording Fee Per Gov. Code § 6103]-
SUBORDINATION AGR
EEMENT T
MA
l NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS.
Z
N
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of June 18,
C% 2003 b and among LA UINTA REDEVELOPMENT AGENCY, a public body, corporate
Y g Q
and politic ("Agency"), APARTMENTS AT LA QUINTA VILLAGE L.P., a California limited
partnership ("Participant"), and KeyBank National Association, a national banking association
("Lender").
RECITALS
A. Participant owns fee title to the real property described on Attachment No. "1"
attached hereto and incorporated herein by reference (the "Real Property").
B. Agency and Participant have entered into that certain Affordable Housing
Agreement dated June 4, 2003 (the "Affordable Housing Agreement"). Pursuant to the terms of
the Affordable Housing Agreement, Participant has agreed to construct a rental apartment
housing complex on the Real Property (the "Project") and (ii) the Agency has agreed to provide
financial assistance to Participant for certain costs incurred by Participant in acquiring the Real
Property and constructing the Project (the "Agency Financial Assistance"), all as more
particularly described in the Agreement.
C. As a condition to Agency's provision of the Agency Financial Assistance to
Participant, Participant agreed to, and did, - execute that certain Regulatory Agreement and
Declaration of Covenants and Restrictions, which was recorded on June 11, 2003, as Instrument
No. 426988, in the Official Records of the County of Riverside (the "Agency Regulatory
Agreement"). Participant's performance of its obligations under the Agency Regulatory
Agreement are secured by a Deed of Trust with Assignment of Rents and Rider Attached Hereto
encumbering the Real Property and all improvements now or hereafter located thereon (the
17134:6345198.6 -1-
"Property") recorded on June 11, 2003, as Instrument No. 426987, in the Official Records of the
County of Riverside (the "Agency Deed of Trust").
D. The Agency Financial Assistance is evidenced by a promissory note executed by
the Participant on June 4, 2003 (the "Agency Note"). The Agency Note is secured by the
Agency Deed of Trust. The Affordable Housing Agreement, Agency Regulatory Agreement,
Agency Note, and Agency Deed of Trust are collectively referred to herein as the "Agency
Agreements").
E. Participant has executed or is about to execute a deed of trust, in favor of Lender,
encumbering the Property to secure a promissory note in the sum of Sixteen Million Four
Hundred Eighty Thousand Dollars ($16,480,000) (the "Lender Loan"), payable with interest and
upon the terms and conditions described in such note (respectively, the "Lender Deed of Trust"
and "Lender Note").
F. The Lender is willing to make the Lender Loan provided the 'Lender Deed of
Trust is and unconditionally remains a lien or charge upon the Property prior and superior to the
lien or charge of the Agency Agreements, and provided that Lender's rights under the Lender
Note, Lender Deed of Trust, and other documents executed by Participant in connection with the
Lender Loan, all of which are described on Attachment No. "2" attached hereto (as the same may
be modified from time to time, the "Lender Loan Documents") shall be and remain superior to
the rights of Agency under the Agency Agreements in accordance with this Agreement.
G. It is to the mutual benefit of Lender, Agency and Participant that the Lender make
the Lender Loan to Participant. The Agency has agreed that the Lender Deed of Trust shall,
when recorded, constitute a lien or charge upon the Property which is unconditionally prior and
superior to the lien or charge of the Agency Agreements, subject to the specific terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the Agency,
Lender and Participant, and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lender to make the Lender Loan, it is hereby
declared, understood and agreed as follows:
1. Subordination by A eg ncy
1.1 Necessity of Subordination
By executing this Agreement, Agency makes the finding set forth in
California Health and Safety Code Section 33334.14 that subordination is necessary and that
Agency has obtained written commitments as set forth in this Agreement,) consistent with
California Health and Safety Code Section 33334.14, to protect the Agency's investment in the
event of a default. Therefore, the Agency hereby agrees to subordinate the lien of the Agency
Agreements to the Lender Deed of Trust on the terms set forth in this Agreement. This
Agreement shall set forth in the priority of liens between the parties and govern the terms and
conditions of such subordination.
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Pe�aP'��='NA
17134:6345198.6 -2-
1.2 Subordination of Agency Agreements to Lender Deed of Trust and other
Lender Loan Documents; Termination of Agency Agreements.
The Lender and the Agency agree that: (i) the indebtedness evidenced by the
Agency Agreements is and shall be subordinated in right of payment to the prior payment in full
of the indebtedness evidenced by the Lender Loan Documents, and (ii) the Subordinate Deed of
Trust and the other Agency Agreements are and shall be subject and subordinate in all respects to
the liens, terms, covenants and conditions of the Lender Deed of Trust and the other Lender Loan
Documents and to all advances heretofore made or which may hereafter be made pursuant to the
Lender Deed of Trust and the other Lender Loan Documents (including but not limited to, all
sums advanced for the purposes of (1) protecting or further securing the lien of the Lender Deed
of Trust, curing defaults by the Participant under the Lender Loan Documents or for any other
purpose expressly permitted by the Lender Deed of Trust, or (2) constructing, renovating,
repairing, furnishing, fixturing or equipping the Property). This Agreement constitutes a
subordination by Agency for the purposes of Section 9.3 of the Affordable Horsing Agreement.
Consequently, Agency further agrees with Lender that, in the event that Lender, any affiliate of
Lender or any third party acquires the Property by foreclosure of any of the Lender Loan
Documents or deed -in -lieu thereof, the Agency Agreements, and the covenants, restrictions and
obligations contained therein, shall terminate, and shall be null and void and of no further force
or effect.
1.3 Covenant of Agency
The Agency declares, agrees and acknowledges that to Agency's actual
knowledge, there is no breach, event of default or default existing under the Agency Agreements
or any circumstances, event, omission or failure of condition which would constitute such a
breach, default, or event of default after notice or lapse of time, or both.
1.4 Acknowledgement of Ag_engy
The Agency acknowledges that it has received a copy of the Lender Loan
Documents. A full and complete listing of all the fully executed Lender Loan Documents is
attached hereto and incorporated herein as Attachment No. "2".
2. Reliance by Lender and A eg ncy
The Lender would not make the Lender Loan and the Agency', would not have
agreed to subordinate the Agency Agreements without this Agreement and each of the
undersigned understands that in reliance upon, and in consideration of, this subordination,
specific loans and advances are being and will be made and, as part and parcel, thereof, specific
monetary and other obligations are being and will be entered into which would not be made or
entered into but for such reliance upon this subordination.
3. Rights of Agency and Lender
3.1 Default Under Agency Agreements.
IIIII III IIIIIIII IIIIIII IIII III IIIII III a'20�i e��s eeA
17134:6345198.6 -3-
(a) Notice of Default and Cure Rights. The Agency shall deliver to
the Lender a default notice within five (5) business days in each case where the Agency has
given a default notice to the Participant. Failure of the Agency to send a default notice to the
Lender shall not prevent the exercise of the Agency's rights and remedies under the Agency
Agreements, subject to the provisions of this Agreement. The Lender shall have the right, but
not the obligation, to cure any Agency Agreement default within ninety (90) dalys following the
date of such notice; provided, however, that the Agency shall be entitled, during such ninety
(90)-day period, to continue to pursue its rights and remedies under the Agency Agreements. All
amounts paid by the Lender in accordance with the Lender Loan Documents to cure an Agency
Agreement default shall be deemed to have been advanced by the Lender pursuant to, and shall
be secured by the lien of, the Lender Deed of Trust.
(b) Agency's Exercise of Remedies After Notice to Lender. If an
Agency Agreement default occurs and is continuing, the Agency agrees that, without the
Lender's prior written consent, it will not commence foreclosure proceedings with respect to the
Property under the Agency Agreements or exercise any other rights or remedies it may have
under the Agency Agreements, including, but not limited to, accelerating the debt under the
Agency Note, collecting rents, appointing (or seeking the appointment of) a receiver or
exercising any other rights or remedies thereunder unless the default under the Agency
Agreements is occasioned by a default under the Lender Loan Documents that is a default under
the Agency Agreements pursuant to Section 3.2(b), in which case Agency shall be permitted to
commence foreclosure proceedings with respect to the Property under the Agency Agreements.
Subject to the foregoing, Agency shall be permitted to exercise and enforce ally other rights and
remedies available to the Agency under the Agency Agreements and/or under applicable laws,
including without limitation, rights to enforce covenants and agreements of the Participant
relating to income, rent, or affordability restrictions contained in the Agency Agreements.
(c) Cross Default. The Participant and the Agency agree that a default
under any of the Agency Agreements shall constitute a default under the Lender Loan
Documents (if declared by Agency, and Agency agrees to notify Lender within five (5) business
days of any such declaration) and the Lender shall have the right to exercise all rights or
remedies under the Lender Loan Documents in the same manner as in the case of any other
default under the Lender Loan Documents. If the Agency notifies the Lender in writing that any
Agency Agreement default of which the Lender has received a default notice has been cured or
waived, as determined by the Agency in its sole discretion, then provided that (i) no other default
then exists under the Lender Loan Documents, (ii) all costs and expenses incurred by Lender as a
result of such default under the Agency Agreements have been paid, and (iii) Lender has not
conducted a sale of the Property pursuant to its rights under the Lender Loan Documents, such
default under the Lender Loan Documents arising solely from such Agency Agreement default
shall be deemed cured, and the Lender Loan shall be reinstated, provided, however, that the
Lender shall not be required to return or otherwise credit for the benefit of the Participant any
default rate interest or other default related charges or payments received by the Lender during
such default under the Lender Loan Documents.
(d) Purchase by A eg ncy. Agency shall also have the tight to purchase
the Property from Participant, during the continuance of a default under the Lender Loan
Documents which is a default under the Agency Agreements pursuant to Section 3.2(b), subject
17134634519e6-4-IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII es.366a Qa2ee°919A
to the Lender Loan and the Lender Loan Documents, in the period which is five (5) days prior to
a foreclosure sale by Agency so long as the conditions set forth in this Section 3.1(d) have been
satisfied. It shall be a condition precedent to Lender's obligation to permit Agency's acquisition
of the Property pursuant to the preceding sentence that (i) Agency shall have given Lender not
less that thirty (30) days prior written notice that it intends to acquire the Property from
Participant, which notice shall specify the anticipated acquisition date, and (ii) Agency has
engaged, to the extent required by Lender in its sole and absolute discretion, a construction
manager (if completion of the improvements has not occurred in accordance 'with the Lender
Loan Documents) and/or property managers for the Property reasonably acceptable to Lender on
terms and conditions reasonably acceptable to Lender (which terms and conditions shall include,
but not be limited to, the subordination of the related property and construction management
agreements on Lender's standard form) on or before the date which is fifteen (I5) days prior to
the date on which Agency acquires the Property. If Agency acquires the Property as aforesaid, it
shall acquire the Property subject to the terms of the Lender Loan and the Lender Loan
Documents, but shall not be entitled to receive any disbursements of the Lender Loan unless
Agency shall have assumed all of the Participant's obligations under the Lender Loan
Documents in a manner acceptable to Lender prior to its acquisition of the Property. In the event
that Lender has commenced foreclosure proceedings with respect to the Lender Deed of Trust,
upon written notice from Agency to Lender received by Lender at least five (5) days prior to the
date set for foreclosure sale under the Lender Deed of Trust, Lender shall postpone the
foreclosure sale for a period not to exceed thirty (30) days to allow Agency to complete the
purchase of the Property; provided, however, that prior to the commencement of any such
postponement period of Lender's foreclosure, Agency shall have cured all monetary defaults
under the Lender Loan Documents, and, thereafter, during such foreclosure period, shall satisfy,
when due, all of Participant's monetary obligations under the Lender Loan to the extent not
satisfied by Participant. Lender shall not be obligated to postpone further any foreclosure
commenced under the Lender Loan Documents. Further, acquisition of the Property by Agency
shall not be deemed to result in the cure or wavier of any default under the Lender Loan
Documents except only to the extent of defaults which are not susceptible of 'ure by Agency.
The Lender agrees that subject to the satisfaction of the conditions precedent, set forth in this
Section 3.1(d), the acquisition of the Property by Agency pursuant to this Section 3.1(d) shall not
constitute a default under the Lender Loan Documents.
3.2 Default Under Lender Loan Documents.
(a) Notice of Default and Cure Rights. The Lender shall deliver to the
Agency a default notice within five (5) business days in each case where the Lender has given a
default notice to the Participant. Failure of the Lender to send a default notice to the Agency
shall not prevent the exercise of the Lender's rights and remedies under the Lender Loan
Documents, subject to the provisions of this Agreement. The Agency shall have the right, but
not the obligation, to cure any monetary default under the Lender Loan Documents within ninety
(90) days following the date of such notice. Agency shall have up to ninety (90) days from the
date of such default notice to cure a non -monetary default if during such ninety( (90)-day period
Agency satisfies, when due, all of Participant's monetary obligations under the Lender Loan
Documents to the extent not satisfied by Participant. During the pendency of any monetary or
non -monetary default under the Lender Loan Documents, Lender shall be entitled, in its sole and
absolute discretion, to pursue any and all of its rights and remedies under the Lender Loan
17134.63451986 5 II IIIII III II IIIII III III III es 3e03 ei e54eea
Documents, including, without limitation, to accelerate the Lender Loan, to commence and
prosecute of foreclosure proceedings and to seek the appointment of a receiver. No monetary or
non -monetary default under the Lender Loan Documents shall be deemed to have been cured by
Agency unless Agency shall have also paid to Lender all amounts which Agency would have
been required to pay to Lender in order to cure the default under and reinstate the obligations
evidenced and secured by the Lender Loan Documents under and pursuant to California Civil
Code section 2924c. All amounts paid by the Agency to the Lender to cure a default under the
Lender Loan Documents shall be deemed to have been advanced by the Agency pursuant to, and
shall be secured by the lien of, the Agency Deed of Trust.
(b) Cross Default. The Agency agrees that, notwithstanding any
contrary provision contained in the Agency Agreements, a default under the Lender Loan
Documents shall not constitute a default under the Agency Agreements until the Lender has
taken affirmative action to exercise its rights under the Lender Loan Documents to collect rent,
to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of
sale contained in) the Lender Loan Documents (Lender agrees to notify Agency if it takes any of
such actions). At any time after a default under the Lender Loan Documents is determined to
constitute a default under the Agency Agreements, the Agency shall be permitted to pursue its
remedies for default under the Agency Agreements, subject to the restrictions and limitations of
this Agreement. If at any time the Participant cures a default under the Lender Loan Documents
to the satisfaction of the Lender, as evidenced by written notice from the Lender to the Agency,
any default under the Agency Agreements arising from such default under the Lender Loan
Documents shall be deemed cured and the obligations under the Agency Agreements shall be
retroactively reinstated as if such Lender Loan default had never occurred.
(c) Foreclosure of Agency Deed of Trust.. In the event that Agency is
entitled to and does commence a foreclosure of the Agency Deed of Trust pursuant to Section
3.2(b), Lender agrees that the acquisition of the Property by Agency at such foreclosure shall not
constitute a default under the Lender Loan Documents so long as the conditions set forth in this
Section 3.2(c) have been satisfied. It shall be a condition precedent to Lender's obligation to
permit Agency's acquisition of the Property pursuant to the preceding sentence'that Agency has
engaged, to the extent required by Lender in its sole and absolute discretion, a construction
manager (if completion of the improvements has not occurred in accordance with the Lender
Loan Documents) and/or property managers for the Property reasonably acceptable to Lender on
terms and conditions reasonably acceptable to Lender (which terms and conditions shall include,
but not be limited to, the subordination of the related property and construction management
agreements on Lender's standard form) on or before the date which is fifteen (15) days prior to
the date on which Agency acquires the Property. If Agency acquires the Property as aforesaid, it
shall acquire the Property subject to the terms of the Lender Loan and the Lender Loan
Documents, but shall not be entitled to receive any disbursements of the Leader Loan unless
Agency shall have assumed all of the Participant's obligations under the Lender Loan
Documents in a manner acceptable to Lender prior to its acquisition of the Property. In the event
that Lender has commenced foreclosure proceedings with respect to the Lender Deed of Trust,
upon written notice from Agency to Lender received by Lender at least five (5) days prior to the
date set for foreclosure sale under the Lender Deed of Trust, Lender shall postpone the
foreclosure sale for a period not to exceed thirty (30) days to allow Agency to complete its
foreclosure; provided, however, that, prior to the commencement of any such postponement
17134:6345198.6-6-
II III II IIII I I IIII III II II II a 3e06 o�z's4eea
period of Lender's foreclosure, Agency shall have cured all monetary defaults, and, thereafter,
during such foreclosure period, shall satisfy, when due, all of Participant's monetary obligations
under the Lender Loan to the extent not satisfied by Participant. Lender shall not be obligated to
postpone further any foreclosure commenced under the Lender Loan Documents. Further,
acquisition of the Property by Agency shall not be deemed to result in the cure or wavier of any
default under the Lender Loan Documents except only to the extent of defaults which are not
susceptible of cure by Agency.
3.3 Agency's Right to Reimbursement
Participant hereby agrees to reimburse Agency for any amounts expended by
Agency, pursuant to Section 3.1 above, to cure Participant's defaults under the Lender Deed of
Trust and/or to satisfy Participant's monetary obligations under the Lender Loan; provided,
however, that in the event Agency purchases the Property from Participant in accordance with
Section 3.1 above; Participant shall not be required to reimburse Agency 'for any amount
expended by Agency to the extent that amount results in a like reduction in Agency's purchase
price for the Property. Agency's right of reimbursement set forth herein shall be secured by a
lien on the Property, with power of sale; provided, however, that any such lien shall be
subordinate to those lien(s) or encumbrance(s) of Participant's construction and/or
takeout/permanent lender(s), including, without limitation, the Lender.
3.4 Disbursements
Lender, in making disbursements of the proceeds of said Loan, is under no
obligation or duty to, nor has Lender represented that it will, see to the application of such
proceeds by the person or persons to whom disbursements thereof are made and any application
or use of such proceeds for purposes other than those provided in the documents evidencing and
securing such Loan shall not defeat the subordination herein made in whole or in part.
4. Participant's and Agency's Representations and Warranties and Covenants.
The Participant and the Agency each make the following representations,
warranties and covenants to the Lender:
4.1 Relationship of Participant to Agency and Lender. The Agency is not an
affiliate of the Participant and is not in possession of any facts, which would lead it to believe
that the Lender is an affiliate of the Participant. This representation is limited to the actual
knowledge of the Executive Director of Agency without investigation.
4.2 Omitted.
4.3 Agency Loan Documents. The executed Agency Agreements are in the
same form as those submitted to, and approved by, Lender prior to the date of this Agreement.
Upon execution and delivery of the Agency Agreements, Participant shall deliver to Lender an
executed copy of each of the Agency Agreements, certified to be true, correct and complete.
4.4 Lender Loan Documents. The executed Lender Loan Documents are in
the same form as, when applicable, those submitted to, and approved by, Agency prior to the
°°'°�"°fl` ' 1111111111111111111111111111111111111111111111111111111 � a� �a°�'aa°
date of this Agreement. Upon execution and delivery of the Lender Loan Documents,
Participant shall deliver to Agency an executed copy of each of the Lender Loan Documents,
certified to be true, correct and complete.
4.5 Subordination of Subrogation Rights. The Agency agrees that if, by
reason of its payment of real estate taxes or other monetary obligations of the Participant, or by
reason of its exercise of any other right or remedy under the Agency Agreements, it acquires by
right of subrogation or otherwise a lien on the Property which (but for this subsection) would be
senior to the lien of the Lender Deed of Trust, then, in that event, such lien shall be subject and
subordinate to the lien of the Lender Deed of Trust.
4.6 Omitted.
4.7 Payments. The Participant agrees that it will not mare any payments
under or pursuant to the Agency Agreements (including but not limited to principal, interest,
additional interest, late payment charges, default interest, attorney's fees, or' any other sums
secured by the Agency Deed of Trust) without the Lender's prior written consent. The Agency
agrees that it will not accept any payments under or pursuant to the Agency Agreements
(including but not limited to principal, interest, additional interest, late payment charges, default
interest, attorney's fees, or any other sums secured by the Agency Deed of Trust) without the
Lender's prior written consent.
4.8 Remitting Subordinate Loan Payments to Lender; Agreement Not to
Waive Certain Conditions to Extension of the Lender Loan. If the Agency receives any
payments under the Agency Agreements, the Agency agrees that such payment or other
distribution will be received and held in trust for the Lender and unless the Lender otherwise
notifies the Agency in writing, will be promptly remitted, in kind, to the sender, properly
endorsed to the Lender, to be applied to the principal of, interest on and other amounts due under
the Lender Loan Documents in accordance with the provisions of the Lender Loan Documents.
By executing this Agreement, the Participant specifically authorizes the Agency to endorse and
remit any such payments to the Lender, and specifically waives any and all rights to have such
payments returned to the Participant or credited against the Agency Agreements, Participant and
Lender acknowledge and agree that payments received by the Agency, and remitted to the
Lender under this Section 4.8, shall not be applied or otherwise credited against the Agency
Agreements, nor shall the tender of such payment to the Lender waive any Agency Agreement
default which may arise from the inability of the Agency to retain such payment or apply such
payment to the Agency Agreements. The Lender agrees with the Agency that the Lender will
not waive the conditions to extension of the maturity date of the Lender Loan set forth in
Sections 4.3(b)(iii) and (b)(vii) of that certain Construction Loan Agreement dated as of June 18,
2003 with respect to the Lender Loan.
4.9 Agreement Not to Commence Proceeding. The Agency agrees that
during the term of this Agreement it will not commence, or join with any other creditor in
commencing any bankruptcy reorganization, arrangement, insolvency or liquidation proceedings
with respect to the Participant, without the Lender's prior written consent.
2083-482514
17134niisiesc -8-
4.10 Provisions Regarding Bankruptcy. Agency agrees that, unless and until it
has obtained Lender's prior written consent (which consent may be given or withheld in
Lender's sole discretion), Agency shall take no action that may impair or otherwise adversely
affect or alter in any way Senior Lender's interests or claims in any Bankruptcy Proceeding (as
hereinafter defined), including, without limitation, in connection with any vote to accept or reject
a plan of reorganization, any cash collateral or adequate protection issues, any trustee
appointment issues, any exclusivity issues, any claim subordination issues (as between Lender
and any of Participant's creditors, including Agency), any motion to dismiss, any claim voting
entitlements (excluding the Agency's claim), or any other matters pertaining to the extent,
validity, or priority of Lender's liens, rights and entitlements. In the event of any liquidation or
dissolution of Participant, or any execution sale, receivership, insolvency, bankruptcy,
liquidation, readjustment, reorganization, or other similar proceeding relative to the Participant
or the Property (collectively, a "Bankruptcy Event"), the Agency shall not thereafter ask for,
demand, or be entitled to receive or retain any payment or prepayment thereafter made under or
with respect to the Agency Agreements and all amounts due under the Lender Loan or evidenced
and/or secured by the Lender Loan documents shall first be paid in full before any payment is
made under the Agency Agreements. In the event such a payment is nevertheless received by
Agency, such amounts shall be held in trust by Agency for the benefit of Lender and shall be
paid over to Lender for application in payment of the Lender Loan. In the event of the
occurrence of a Bankruptcy Event, any and all distributions, claims, awards or other amounts
paid or payable by Participant to Agency or on account of any claim or interest of Participant
shall be paid first to Lender, and Lender shall apply such amounts to the full and prior payment
of the Lender Loan; provided, however, that the balance of such amounts, after paying the
Lender Loan in full, shall be available for payment to Agency for application under the Agency
Agreements. In the event that an amount paid to Agency for application under the Agency
Agreements pursuant to the preceding sentence is rescinded or otherwise required to be returned
by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of
Participant, or upon or as a result of the appointment of a receiver, intervenor, custodian or
conservator of or trustee or similar officer for, Participant or any substantial part of its property,
or otherwise, Agency agrees to, within five (5) business days after written demand from Lender
to Agency, pay such amount to Lender. Junior Lender further agrees to execute and deliver to
Senior Lender such assignments or other instruments as may be required by Senior Lender in
order to enable Senior Lender to collect any and all such payments or disbursements otherwise
payable by Borrower to Junior Lender or on account of any claim or interest of Borrower.
5. Rights and Obligations of the Agency Under the Agency A r� eempnts and of the
Lender under the Lender Loan Documents.
Subject to each of the other terms of this Agreement, all of the following
provisions shall supersede any provisions of the Agency Agreements covering the same subject
matter:
5.1 Protection of Security Interest. The Agency shall not, without the prior
written consent of the Lender in each instance, take any action which has the effect of increasing
the indebtedness outstanding under, or secured by, the Agency Agreements by an amount in
excess of $500,000, except that the Agency shall have the right to advance funds to cure defaults
under the Lender Loan Documents pursuant to Section 4.8 above and to advance funds pursuant
17134:6345198.6 -9-
2003-482514
06r30 2003 08 06A
9 of 25
to the Agency Agreements for the purpose of paying real estate tares and insurance premiums,
making necessary repairs to the Property and curing other defaults by the Participant under the
Agency Agreements.
5.2 Condemnation or Casualty. In the event of a taking or threatened taking
by condemnation or other exercise of eminent domain of all or a portion 1 of the Property
(collectively, a "Taking"), or the occurrence of a fire or other casualty resulting in damage to all
or a portion of the Property (collectively, a "Casualty"), at any time or times when the Lender
Deed of Trust remains a lien on the Property the following provisions shall apply:
(a) The Agency hereby agrees that its rights (under the Agency
Agreements or otherwise) to participate in any proceeding or action relating to a Taking and/or a
Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a
Taking or a Casualty shall be and remain subordinate in all respects to the Lender's rights under
the Lender Loan Documents with respect thereto, and the Agency shall be bound by any
settlement or adjustment of a claim resulting from a Taking or a Casualty made by the Lender;
provided, however, this subsection and/or anything contained in this Agreement shall not limit
the rights of the Agency to file any pleadings, documents, claims or notices with the appropriate
court with jurisdiction over the proposed Taking and/or Casualty; and
(b) All proceeds received or to be received on account of a Taking or a
Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and
restoration or to payment of the Lender Loan) in the manner determined by the sender in its sole
discretion; provided, however, that if the Lender elects to apply such proceeds to payment of the
principal of, interest on and other amounts payable under the Lender Loan, any proceeds
remaining after the satisfaction in full of the principal of, interest on and other amounts payable
under the Lender Loan shall be paid to, and may be applied by, the Agency in accordance with
the applicable provisions of the Agency Agreements, provided however, the ..ender agrees to
consult with the Agency in determining the application of Casualty proceeds, ''provided further
however that in the event of any disagreement between the Lender and the Agency over the
application of Casualty proceeds, the decision of the Lender, in its sole discretion, shall prevail.
5.3 No Modification of AgencyAgreements. The Participant and the Agency
each agrees that, until the principal of, interest on and all other amounts payable under the
Lender Loan Documents have been paid in full, it will not, without the prior written consent of
the Lender in each instance, increase the principal amount advanced under the "Agency Note by
an amount in excess of $500,000, increase the required payments due under the Agency Note,
decrease the term of the Agency Note, increase the interest rate on the Agency Note, or
otherwise amend the Agency Note terms in a manner that creates an adverse effect upon the
Lender under the Lender Loan Documents. Any unauthorized amendment of the Agency
Agreements or assignment of the Agency's interest in the Agency Note without the Lender's
consent shall be void ab initio and of no effect whatsoever.
6. Modification or Refinanciniz of Lender Loan.
The Agency consents to any agreement or arrangement in which the Lender
waives, postpones, extends, reduces or modifies any provisions of the Lender Loan Documents,
including any provision requiring the payment of money. Agency further agrees that its
agreement to subordinate hereunder shall extend to any new mortgage debt which is for the
purpose of refinancing all or any part of the Lender Loan (including reasonable and necessary
costs associated with the closing and/or the refinancing); and that all the terms and covenants of
this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all
references to the Lender Loan, the Lender Note, the Lender Deed of Trust, the Lender Loan
Documents and Lender shall mean, respectively, the refinance loan, the refinance note, the
mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining
to the refinance note and the holder of the refinance note; provided, however, that the amount of
such refinance note shall not be in excess of the greater of (i) the aggregate amount of
indebtedness evidenced and secured by the Lender Loan Documents, and (ill) ninety percent
(90%) of the takeout lender's appraised fair market value of the Site upon completion of the
Project (based upon stabilized value).
7. Miscellaneous
7.1 Conflict.
The Participant, the Lender and the Agency each agrees that, in ',the event of any
conflict or inconsistency between the terms of the Lender Loan Documents, the Agency
Agreements and the terms of this Agreement, the terms of this Agreement shall govern and
control solely as to the following: (a) the relative priority of the security interests of the Lender
and the Agency in the Property; (b) the timing of the exercise of remedies by the Lender and the
Agency under the Lender Deed of Trust and the Agency Agreements, respectively; and (c) solely
as between the Lender and the Agency, the notice requirements, cure rights, and the other rights
and obligations which the Lender and the Agency have agreed to as expressly provided in this
Agreement. Participant acknowledges that the terms and provisions of this Agreement shall not,
and shall not be deemed to: extend Participant's time to cure any Lender Loan default or Agency
Agreement default, as the case may be; give the Participant the right to notice of any Lender
Loan default or Agency Agreement default, as the case may be other than that, if any, provided,
respectively under the Lender Loan Documents or the Agency Agreements; or create any other
right or benefit for Participant as against Lender or Agency.
7.2 Entire Agreement
This Agreement shall be the whole and only agreement with regard to the matters
set forth herein and shall supersede and cancel, but only insofar as would affect the priority
between the Lender Deed of Trust and the Agency Agreements, any prior agreement as to such
subordination including, but not limited to, those provisions, if any, contained in any of the
Agency Agreements which provide for the subordination of the lien or charge thereof to another
deed or deeds of trust or to another mortgage or mortgages, upon the Property.
7.3 Successors and Assigns
This Agreement shall inure to and bind the heirs, legatees, devisees,
administrators, executors, successors and assigns of the parties hereto.
7.4 California Law
1713+63451986-11-I IIIIII IIIIII IIIIII ill IIIIII IIIIII IIIII ill IIIIII ill 1111 es=�=;ea1 �Pe9a
California.
This Agreement shall be construed according to the lawls of the State of
7.5 Severabili!y
If any term, provision, condition or covenant of this Agreement or the
application thereof to any party or circumstances shall, to any extent, be held invalid or
unenforceable, the remainder of this instrument, or the application of such term, provision,
condition or covenant to persons or circumstances other than those as to whom or which it is
held invalid or unenforceable shall not be affected thereby, and each term and !provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
7.6 Notice
Any notice, demand, request, consent, approval or communication that
any party desires or is required to give to another party or any other person must be in writing
and may be given by personal delivery, by mailing the same by registered or certified mail,
return receipt requested, postage prepaid, or by a reputable same day or overnight delivery
service that provides a receipt showing date and time of delivery, to the party to !whom the notice
is directed at the address of such party hereinafter set forth, or such other address and to such
other persons as the parties may hereafter designate. Any such notice shall be deemed given (i)
upon receipt if by personal delivery or by delivery service, or (ii) forty-eight' (48) hours after
deposit in the United States mail, if sent by mail pursuant to the foregoing.
If to Agency: La Quinta Redevelopment Agency
Y
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Fax: (760) 777-7101
With copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626-1998
Attn: M. Katherine Jenson
Fax: (714) 546-9035
If to Participant: Apartments at La Quinta Village L.P.
1105 Quail Street
Newport Beach, CA 92655
Attn: Victor Mahoney
Fax: (949) 250-8574
With copy to: Croudace & Dietrich
5 Park Plaza, Suite 1150
Irvine, CA 92614
Attn: Debra Dietrich
Fax: (949) 794-9909
17134:6345198.6 121111111111111111111111111111111111111111111111111111111 a9=aa=0aa„�
If to Lender: KeyBank National Association
Two Walnut Creek Center
200 Pringle Avenue, Suite 400
Walnut Creek, California 94596
Attention: Real Estate Capital Client Services
Telephone: (925) 287-6630
Facsimile: (925)287-6654
7.7 Attorneys' Fees
In the event that any action, suit or other proceeding is bought to enforce
the obligations of under this Agreement, the prevailing party shall be entitled to receive all of
such party's costs and expenses of suit, including attorneys' fees, expert witness fees, and all
costs incurred in each and every action, suit or other proceeding, including any and all appeals or
petitions therefrom.
7.8 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one and the same document.
7.9 Default by the Agency or Lender.
If the Agency or Lender defaults in performing or obseirving any of the
terms, covenants or conditions to be performed or observed by it under this', Agreement, the
other, non -defaulting lender shall have the right to all available legal and equitable relief.
7.10 No Partnership or Joint Venture.
The Lender's permission for the placement of the Agency Agreements
does not constitute the Lender as a joint venturer or partner of the Agency The Agency's
permission for the placement of the Lender Loan Documents does not constitute the Agency as a
joint venturer or partner of Lender. Neither party hereto shall hold itself out as a partner, agent
or affiliate of the other party hereto.
7.11 Lender's and Agency's Consent.
Wherever the Lender's consent or approval is required by any provision of
this Agreement, such consent or approval may be granted or denied by the Lender in its sole and
absolute discretion, unless otherwise expressly provided in this Agreement.! Wherever the
Agency's consent or approval is required by any provision of this Agreement, such consent or
approval may be granted or denied by the Agency in its sole and absolute discretion, unless
otherwise expressly provided in this Agreement.
2603-482514
17134:6345198.6 -13-
7.12 Further Assurances.
The Agency, the Lender and the Participant each agree, at the Participant's expense, to
execute and deliver all additional instruments and/or documents reasonably required by any other
party to this Agreement in order to evidence that the Agency Agreements are subordinate to the
lien, covenants and conditions of the Lender Deed of Trust and the other Lender Loan
Documents, or to further evidence the intent of this Agreement.
7.13 Amendment.
This Agreement shall not be amended except by written instrument signed
by all parties hereto.
7.14 Term.
The term of this Agreement shall commence on the date's hereof and shall
continue until the earliest to occur of the following events: (i) the indefeasible payment of all of
the principal of, interest on and other amounts payable under the Lender Loans Documents; (ii)
the payment of all of the principal of, interest on and other amounts payable under the Agency
Agreements, other than by reason of payments which the Agency is obligated to remit to the
Lender pursuant to the terms hereof; (iii) the acquisition by the Lender of title to the Property
pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of, a power of sale
contained in, the Lender Deed of Trust and the termination of the Agency; Agreements in
accordance therewith; or (iv) the acquisition by the Agency of title to the Property pursuant to a
foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale (contained in, the
Agency Agreements, but only if such acquisition of title does not violate any of the terms of this
Agreement.
[end - signature page follows]
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII B6�';eaa==&°°
17134:6345198.6 -14-
IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as
of the date first written above.
NOTICE. THIS SUBO
RDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LONER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS.
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
Executive Director
ATTEST:
By:
retary
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By: -
gency ounsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA VILLAGE L.P. ,
a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California corporation
Its: Managing Member
M
SIGNED IN COUNTERPART
J.C. Gianulias, President
[Signatures Continued on Next Page]
882/015610-0063 -15 -
400649.03 a06/03/03
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII ea.3ea3=aof =ePSa19A
III
IN WITNESS WHEREOF, the parties have executed this Subordinatipn Agreement as
of the date first written above.
NOTICE: THIS SUBORDINA
TION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS.
"AGENCY"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
By:
SIGNED IN COUNTERPART'
-
Executive Director
ATTEST: SIGNED IN COUNTERPART
By:
Secretary
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
SIGNED IN COUNTERPART
Agency Counsel
"PARTICIPANT"
APARTMENTS AT LA QUINTA L.P.,
a California limited partnership
By: Apartments at La Quinta LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a California corpo
ration
Its: Managing Member
By: - , "Y'
J. tiOianulias., President
[Signatures Continued on Next Page]
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII es��seaof 25 =e� eA
17134:6345198.6 -15-
"LENDER"
II!
LENDER
KEYBANK NATIONAL ASSOCIATION
a national banking association
By:
Sue McPeak, Assistant Vice President
End of Signatures]
[Remainder of Page Intentionally Left Blank]
17134:6345198.6 -16-
State of California
County of Riverside
On June 27.2003 before me Re enia Hensley,Notary Public, personally apP�aced THOMAS
P. GENOVESE personally known to me to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized capacity, and that
by his signature on the instrument the person or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal. (Seal)
_ REGEN1A HENSL�Y
C*Mlzlcn # 127
e
-
Rhmmk
RE IA HENSLEY Nhrcc�nm- AM 9'=
Notary Public
Commission Expires: August 19, 2004
Document Description: Subordination Agreement / Apartments at La Quinta Tillage, L.P.
Under the provisions of Government Code 27361.7, I certify under penalty of
perjury that the notary seal on the document to which this statement is attach cd
reads as follows:
Name of notary:
Commission
Place of execution:
-Date commission expires:
Date:
JUN 3 0 2003
Do
Signature:
IIIIII III IIIIII III IIIIII IIIIII IIIIII III III wiae0 zee�i a,4eer.
STATE OF CALIFORNIA
SS:
COUNTY OF�A� —
me
C--
On r�..� �� 2003 before��--
Notary Public, personally appeared L-- ��w�,�i,ipersonally known to me (ems
o be the person(,0 whose namo(soi /arc'
subscribed to the within instrument and acknowledged to me that(�YsheAhey executed the same
in(j�]OerMteir authorized capacity(id), and that by it signature(k oln the instrument
the person), or the entity upon behalf of which the person(o acted, executed the instrument.
Witness my hand and official seal.
DIANE BAESMAN
Commission # 1290662
Notcay Pub5c - CoRtOMia
orange County
My Comm. Jan 13.2M5
(SEAL)
Sign Name:
Notary P blic
2903-482514
Under the provisions
of Government Code 27361.7, I certify under penalty of
perjury that the notary seal on the document to which this statement is attacl:YA
reads as follows:
Name of notary:
Commission #:
Place of execution: —
.Date commission expires:
J2003
ug � � �
Date: Sibnature:
II IIIIIII IIII IIIIII III III IIII �2�e0ie�a�ee�eea
STATE OF CALIFORNIA
)ss.
COUNTY OF CONTRA COSTA )
On June 19 2003 before me,['(26L S. personall yl
appeared
SUE MCPEAK, 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 she executed the same in her authorized capacity and that by
her signature on the instrument the person, or the entity upon behalf of whidh the person
acted, executed the instrument.
WITNESS my hand and official seal. Ll. A . QUESADA
Commission # 9 3W79
z Notary Pblic - California y
Contra, costa County .�
MY Comm. �Xoires Aug 6, 2i M
Notary Public
00 �51
IIIIII IIIII IIIIII III IIIIII IIIIII IIIII III IIIIIII II IIII ez�ae zzrcz�a
Under the provisions of Government Code 27361.7, I certify under penalty of
perjury that the notary seal on the document to .which this statement is attach -d
reads as follows:
Name of notary:
L
---
Commission #: JlX
Place of execution:
-Date commission expires:
Date:
JUN 3 0 2003
Signature:
IIII IIIIII IIIII III IIIIIIIIIIII III II III QR0L3��z�%F1
Attachment 1
Property Description
Parcel
A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 263
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B :
AN EASE
MENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC ILITY
PURPOSES AS SHOWN ON PARCEL MAP NO. 30721 RECO DED IN
BOOK 203 PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
2003-482514
Attachment 2
Lender Loan Documents
(all of the following Lender Loan Documents are dated as of June 18,12003)
1. Commitment Letter by and between Lender and Participant.
2. Construction Loan Agreement by and between Lender and Participant.
3. Promissory Note executed by Participant in favor of Lender.
4. Construction Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
executed by Participant in favor of Lender.
t executed b Participant in favor of Lender.
5. Assignment of Leases and Rents y p
6. Environmental and Hazardous Substances Indemnity Agreement executed by Participant
in favor of Lender.
I
7. Performance and Completion Guaranty executed by James C. Gianulias , '!an individual
("JCG"), James C. Gianulias as Trustee of the James Chris Gianulias 19�8 Trust
established December 22, 1998, as amended by that certain First Amendment to
Declaration of Trust dated January 3, 2002 (collectively, the "Gianulias rust"), and
Cameo Homes, a California corporation ("Cameo," and together with JC, and the
Gianulias Trust, individually and collectively, the "Guarantor") in favor of Lender.
8. Payment Guaranty executed by Guarantor in favor of Lender.
9. UCC-1 FinancingStatement (State) w/Exhibits executed by Participant in favor of
i
Lender.
10. Assignment of Construction Documents executed by Participant in favorll of Lender.
g
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII a2514
sW:
�,a«,s�
i;i»sysiaan -18-
y OOC a 2005-0495233
Requested B 06/22/2005 08:00A Fee:22.00
Page 1 of 6
�:irst Title Amerin NHS Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk 8 Recorder
WHEN RECORDED RETURN TO: IIIIIII IIIIIII IIII IIIII IIIIII III IIIIIII III IIIII IIII IIII
La Quinta Redevelopment Agency M s U PAGE SIZE DA PCOR nu n IMF MSG.
78-495 Calle Tampico
La Quinta„ CA 92253
Attn: Executive Director
A R L COPY LONG REFUND NCHG EXAM
(Space Above Line for Recorder's Use Only) _
(Exempt from Recording Fee per Gov. Code 6103) [NOTE:RECORD
AS PARTIAL RELEASE
OF AGREEMENT]
RELEASE OF CONSTRUCTION COVENANTS TC
WHEREAS, APARTMENTS AT LA QUINTA VILLAGE L.P., a California limited
14 1 partnership, is the owner of fee title to that certain real property legally described in Attachment
I No. 1 attached hereto and incorporated herein by reference (the "Site"); and
40 WHEREAS, by an Affordable Housing Agreement (hereinafter referred to as the
j
� "Agreement") dated June 4, 2003 , by and between Participant and the La Quinta
Redevelopment Agency, a public body corporate and politic ("Agency"), Participant has
�o redeveloped the Site in accordance with the Agreement; and
WHEREAS, pursuant to Section 6.4 of the Agreement, promptly after Participant's
completion of the "Project" (as that term is defined in the Agreement) upon the Site, and upon
request by Participant, Agency shall furnish Participant with a Release of Construction
Covenants in such form as to permit it to be recorded in the Official Records of the County of
Riverside; and
WHEREAS, the issuance by Agency of the Release of Construction Covenants shall be
conclusive evidence that Participant has complied with the terms of the Agreement pertaining to
the rehabilitation of the Site; and
WHEREAS, Participant has requested that Agency furnish Participant with the Release
of Construction Covenants; and
WHEREAS, Agency has conclusively determined that the rehabilitation of the Site has .
been satisfactorily completed as required by the Agreement;
NOW, THEREFORE:
1. As provided in the Agreement, Agency does hereby certify that rehabilitation of
the Site has been fully and satisfactorily performed and completed, and that such rehabilitation is
in full compliance with said Agreement.
882/015610-0063
325173.13 a05/23/03
2. This Release of Construction Covenants shall not constitute evidence of
Participant's compliance with the following agreements, the provisions of which shall continue
to run with the land until termination thereof in accordance with the terms thereof
(i) Deed of Trust with Assignment of Rents, Security Agreement and Fixture
Filing, by and between Participant as borrower and Agency as beneficiary, dated
June 4, 2003 and recorded on June > > - 2003 , as Instrument No.
2003-4266987 , in the Office of the Riverside County; and
(ii) Regulatory Agreement and Declaration of Covenants and Restrictions by
and between Participant and Agency, and recorded on June 11. 2001 _, as Instrument
No. 2003-426988 in the Office of the Riverside County Recorder.
3. This Release of Construction Covenants shall not constitute evidence of
compliance with or satisfaction of any .obligation of Participant to any holder of a mortgage, or
any insurer of a mortgage, securing money loaned to finance construction work on the Site, or
any part thereof.
4. This Release of Construction Covenants is not a Notice of Completion as referred
to in California Civil Code Section 3093.
5. Except as stated herein, nothing contained in this instrument shall modify in any
way any other provisions of the Agreement or any other provisions of any agreements or
documents referenced therein.
IN WITNESS WHEREOF, Agency has executed this Release of Construction Covenants
as of this 21 day of March , 2005•
LA QUINTA REDEVELOPMENT AGENCY,
a bo y, corporate d polit'
By:�
Executive Director
s3V015610-0063 2
325173.13 a05/23/03
CONSENT TO RECORDATION
:APARTMENTS AT LA QUINTA VILLAGE L.P. ("Owner"), owner of the fee interest in the
real property legally described in Attachment No. 1 hereto, hereby consents to the recordation of
the foregoing Release of Constriction Covenants against said real property.
APARTMENTS AT LA QUINTA VILLAGE
L.P., a California limited partnership
By: Apartments at La Quinta Village LLC,
a California limited liability company
Its: General Partner
By: Cameo Homes, a
corporation
Its: Managing Me4b,,
B.
J.C. Gianulias
Its: President
882/015610-0063 3
325173.13 a05/23103
STATE OF CALIFORtiIA
) SS'
-
COLNTY O iv��_ )
On /%%Q/ o�/ ��� , before me, ,o' Pam. / personally
appeared ,^� � personally known to me (er-
pT&ve"' to .... +- - =e) to be the person(s) whose name(s) is/ape
subscribed to the within instrument and acknowledged to me that he/sho4th@5 executed the same
in his/latCtheir authorized capacity(ies), and that by his/keAk 4T signature(s) on the instrument
the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.
seal.
Commiaaion # 1521423
Notcxy PUM '. CdROMb
Riverside CountY Notaqoublic 47
STATE OF CALIFORNIA )
ss.
COUNTY OF VAN _ )
On Mar<k Z Z•ooS , before me, JACdut 14n) A • 5651C , personally
appeared _ 1.� , i An►u AS personally known to me (ep
to be the person(&) whose name(4) is/ape
subscribed to the within instrument and acknowledged to me that he/sey executed the same
in hisAierAheir authorized capacity(ies), and that by his/heBkheir signature(s) on the instrument
the person(a) or the entity upon behalf of which the person(a) acted, executed the instrument.
Witness my hand and official seal.
*tu
blic
[SEAL]
, A:CQ-U IYN A. 5MU
CanmMsion # 1 srs7"
Nolory PU Mc — Carlomio
n Caty n
My Comm. &pkw hb 17,
8921015610-0063
325173.13 05/23/03
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
Parcel A:
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203
PAGES 30 AND 31 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA.
Parcel B:
AN EASEMENT FOR UTILITY AND INCIDENTAL
PURPOSES, RECORDED OCTOBER 24, 2002 AS
INSTRUMENT NO. 600847 OF OFFICIAL RECORDS.
Parcel C:
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC
UTILITY PURPOSES AS SHOWN ON PARCEL MAP NO.
30721 RECORDED IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
882/015610-0063
325173.13 a05/23/03
LARRY W. WARD Recorder
P.O. Box 751
COUNTY OF RIVERSIDE Riverside, CA 92502-0751
ASSESSOR -COUNTY CLERK -RECORDER (951) 486-7000
http://riverside.asrcl krec. corn
CERTIFICATION
Pursuant to the provisions of Government Code 27361.7, 1 certify under the penalty of perjury
that the following is a true copy of illegible wording found in the attached document:
(Print or type the page number(s) and wording below):
C-on svci -�o 'p-zc-oYCL+10ki
La V i
vA \We
15 Date: U
Signature:
Print Name: �ACAIV)0�n
ACR 601P-AS4RE0 (Rev. 01/2005)
'.O. Box 1504
8-495 CALLS TAMPICO
.A QUIVIA, CALIFORNIA 92253
June 16, 2005
PNC Bank, National Association
10851 Mastin, Suite 700
Overland Park, KS 66210
Attn: Closing Department
RE: LOAN NO. 94-0951875
Dear Ladies and Gentlemen:
(760) 7 7 7 - 7 0 0 0
FAX (760) 777-7101
We understand that you are making a loan (the "Loan") to Apartments at La Quinta
Village L.P. (the "Borrower") to be secured by a first deed of trust on the real
property described on Exhibit A attached to this letter (the "Property"). Borrower
and the undersigned have previously executed and delivered the following
agreements affecting the Property (collectively, the "Agency Agreements"):
(a) Affordable Housing Agreement ("Affordable Housing Agreement"),
dated as of June 4, 2003; and
(b) Regulatory Agreement and Declaration of Covenants and Restrictions
("Regulatory Agreement"), dated as of June 4, 2003 and recorded as Document
No. 426988 in the Official Records of Riverside County, California.
We further understand that as a condition to you making the Loan to Borrower, you
have required this Letter. Therefore, the undersigned confirms as follows:
(1) The Loan is a loan approved by the undersigned pursuant to Section
9.2 of the Affordable Housing Agreement and Section 9.3(b) of the Regulatory
Agreement.
(2) The undersigned will deliver copies of any notice or demand to
Borrower with respect to any breach or default by Borrower under the Agency
Agreements to you at the above address as contemplated by Section 9.4 of the
Affordable Housing Agreement.
(3) The undersigned has not delivered to Borrower any written notice
pursuant to Section 1 1.1.1 of the Affordable Housing Agreement or Section 10 of
the Regulatory Agreement and, to the undersigned's actual knowledge, without any
duty of inquiry or investigation, no event or condition currently exists which, with
the giving of notice pursuant to Section 11.1.1 of the Affordable Housing
Agreement or Section 10 of the Regulatory Agreement and the failure of Borrower
to cure such event or condition within the applicable cure period, would constitute
a default under the Affordable Housing Agreement or an Event of Default under the
Regulatory Agreement.
Executed this i t� day of o'1�.,�,�. , 2005.
Very truly yours,
LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic
By: �'✓ .
THOMAS P. GENOVESE
Executive Director
ATTEST:
By
J,E GRE _ , Agerky Secretary
EXHIBIT A
[REAL PROPERTY 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:
19.404491INe11
PARCEL 3 OF PARCEL MAP 30721 ON FILE IN BOOK 203 PAGES 30 AND 31 OF
PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B:
AN EASEMENT FOR UTILITY AND INCIDENTAL PURPOSES, RECORDED
OCTOBER 24, 2002 AS INSTRUMENT NO. 600847 OF OFFICIAL RECORDS..
PARCEL C-
AN EASEMENT RESERVED FOR ACCESS AND PUBLIC UTILITY PURPOSES AS
SHOWN ON PARCEL MAP NO. 30721 RECORDED IN BOOK 203 PAGES 30 AND
31 OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
Cameo Homes
1105 Quail St
NEWPORT BEACH, CA 92658
(949) 955-3832
May 30, 2007
LA QUINTA REDEVELOPMENT AGENCY
78495 Calle Tampico
La Quinta, CA 92253
Attn: Doug Evans
Ph:760-777-7063
RE: 48th & Adams, LLC
FAX (949) 250-8574
E C E Hd ED
JUN 01 2007
C11r �'l./, UWIV1A
COMMUNITY DEVELOPMENT
DEPARTMENT
Enclosed please find Modification Agreement between 48m & Adams and Housing Capital.
Please sign where applicable and return to our office, at the above address to my attention. If you have
any questions or require further information, please contact me at 949-955-3832 to discuss.
Thank you.
Sincerely,
006- �Cv�
Tobi Steaman
Executive Assistant
Encl.
Housing Capital Company Loan No. 1378
MODIFICATION AGREEMENT
This MODIFICATION AGREEMENT (herein called this "Agreement') is dated as of May 11, 2007,
and is made and entered into by and between 48TH & ADAMS, LLC, a California limited liability company
(herein called 'Borrower") and HOUSING CAPITAL COMPANY, a Minnesota partnership (herein called
"Lender"), with reference to the following facts and intentions of the parties:
RECITALS
A. Pursuant to the terms of a Building Loan Agreement between Borrower and Lender dated October 21, 2004
(herein called the "Loan Agreement"), and an Additional Advance Modification And Consolidation
Agreement between Borrower and Lender dated October 12, 2005 (herein called the "Additional Advance
Agreement'), Lender made a loan to Borrower in the aggregate principal amount of EIGHTEEN MILLION
FOUR HUNDRED THOUSAND AND NO/100THS DOLLARS ($18,400,000.00) (herein called the
"Loan"). The Loan is evidenced by a Promissory Note in the principal sum of $14,800,000.00 dated as of
the date of the Loan Agreement, and an Additional Advance Note in the principal sum of $3,600,000.00
dated as of the date of the Additional Advance Agreement, each executed by Borrower in favor of Lender
(which notes are herein collectively called the "Note"), and is further evidenced by the documents described
in the Loan Agreement and the Additional Advance Agreement as "Loan Documents". The Note is secured
by, among other things, a Deed of Trust (herein called the "Deed of Trust") dated October 21, 2004,
executed by Borrower, as Trustor, in favor of Lender, as Beneficiary, and that was recorded on November
15, 2004, as Instrument No. 2004-0904660 in the Official Records of Riverside County, California.
B. The Note, Deed of Trust, Loan Agreement, Additional Advance Agreement, this Agreement, the other
documents described in the Loan Agreement and in the Additional Advance Agreement as "Loan
Documents", together with all modifications and amendments thereto and any documents required
hereunder, are herein collectively called the "Loan Documents".
C. Subject to the terms and conditions of this Agreement, the parties desire and intend to further amend the
Loan Documents as provided herein.
THEREFORE, Borrower and Lender agree as follows:
CONDITIONS PRECEDENT. The following are conditions precedent to Lender's obligations under
this Agreement:
a. If required by Lender, the issuance by Commerce Title, and Lender's receipt of any endorsement
deemed necessary by Lender for attachment to Lender's ALTA Policy of Title Insurance
No. 352906, insuring the continuing priority and validity of the Deed of Trust, as modified by
this Agreement, as a fast and valid lien upon the Property subject only to such exceptions as
have been approved by Lender in writing;
b. Receipt and approval by Lender of the executed originals of this Agreement, the short form of
this Agreement and any and all other documents and agreements which are required pursuant to
HCCLA37 (Rev 5/03)
Loan No. 1378
this Agreement or which Lender has requested pursuant to the Loan Documents, in form and
content acceptable to Lender;
c. Recordation in the Official Records of the County where the Property is located of the short form
of this Agreement, in firm and content acceptable to Lender, and such other documents and
agreements required to be recorded pursuant to this Agreement or which Lender has requested to
be recorded pursuant to the Loan Documents;
d. Borrower's reimbursement to Lender of Lender's costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, including, without limitation, title
insurance costs, recording fees, attorneys' fees, appraisal, engineers' and inspection fees and
documentation cost and charges, whether such services are furnished by Lender's employees or
agents or independent contractors;
e. The representations and warranties contained herein are true and correct; and
The payment, by Borrower to Lender, of an extension fee in the amount of EIGHT THOUSAND
THIRTY NINE AND NO/100THS DOLLARS ($8,039.00).
2. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants that no
default, breach or failure of condition has occurred or exists, or would exist with notice or lapse of time
or both, under any of the Loan Documents; and that all representations and warranties of Borrower in
this Agreement and the other Loan Documents are true and correct and shall survive the execution of
this Agreement.
4.
EXTENSION OF LOAN TERM. The term of the Loan shall be extended for a period of six (6)
months, and, to that end, Lender and Borrower hereby agree that the Maturity Date of the Loan, as
defined in the Loan Documents, is postponed from May 15, 2007' to July 15, 2007.
COMPLIANCE WITH ANTI -TERRORISM LAWS. To help the government fight the funding of
terrorism and money laundering activities, Federal law requires Lender to obtain, verify, and record
information that identifies each person who opens an account. This means that Lender will ask for
Borrower's name, Tax ID number, address, date of birth, and other information, as applicable, including
identifying documents that will allow Lender to properly identify Borrower. In addition, Borrower
hereby represents and warrants to, and agrees with, Lender as follows regarding Anti -Terrorism Laws:
a. To the best of Borrower's knowledge, none of Borrower or any loan guarantor, or its or their
affiliates (collectively, the "Borrower Parties'), is in violation of any laws relating to terrorism or
money laundering, including, but not limited to, Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the "Executive Order's and the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56 ("Patriot Act'), collectively referred to herein as
"Anti Terrorism Laws";
2
HCCLA37 (Rev 5103)
Loan No. 1378
b. To the best of Borrower's knowledge, no action, proceeding, investigation, charge, claim, report,
or notice has been filed, commenced, or threatened against any Borrower Party alleging any
violation of any Anti- Terrorism Law;
C. To the best of Borrower's knowledge, no Borrower Party has knowledge or notice of any fact,
event, circumstance, situation, or condition that could reasonably be expected to result in (i) any
action, proceeding, investigation, charge, claim, report, or notice being filed, commenced, or
threatened against any of them alleging any violation of; or failure to comply with, any Anti -
Terrorism Law, or (ii) the imposition of any civil or criminal penalty against any of them for any
failure to so comply;
d. To the best of Borrower's knowledge, no Borrower Party or, to Borrower's knowledge, the
Seller of the Property (if any portion of the Property is being acquired with proceeds of the
Loan), is a "Prohibited Person." A Prohibited Person means any of the following:
O a person or entity that is listed in the Annex to, or is otherwise subject to the provisions
of, the Executive Order;
(ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or
entity that is listed in the Annex to, or is otherwise subject to the provisions of, the
Executive Order;
(iii) a person or entity with whom Lender is prohibited from dealing or otherwise engaging in
any transaction by any Anti -Terrorism Law;
(iv) a person or entity who commits, threatens, or conspires to commit or supports "terrorism"
as defined in the Executive Order; or
(v) a person or entity that is named as a "specially designated national and blocked person"
on the most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website or any replacement website or other replacement
official publication of such list;
e. To the best of Borrower's knowledge, no Borrower Party or, to Borrower's knowledge, the
Seller of the Property (if any portion of the Property is being acquired with proceeds of the Loan)
() conducts any business or engages in making or receiving any contribution of funds, goods, or
services to or for the benefit of any Prohibited Person, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant to the Executive
-Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
any Anti -Terrorism Law;
To Borrower's knowledge, Borrower shall not (i) conduct any business or engage in making or
receiving any contribution of funds, goods, or services to or for the benefit of any Prohibited
Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order or any other Anti•Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose
HCCLA37 (Rev 5M3)
Loan No. 1378
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti -
Terrorism Law;
g. Notwithstanding any other provision of this Agreement, before any assignment, mortgage,
encumbrance, pledge, hypothecation or grant of a security interest in all or any direct or indirect
ownership interest in Borrower, and before any changes in direct or indirect ownership of any
Borrower Party, Borrower shall confirm to Lender in writing that the representations and
warranties herein contained will remain true and correct following such action.
Borrower agrees to deliver to Lender any certification, other evidence requested from time to time by
Lender in its reasonable discretion, and sufficient information (including names, addresses, and where
applicable, jurisdiction of formation or organization) to reasonably permit Lender to verify and confirm
the accuracy of, and Borrower's compliance with, the foregoing representations, warranties and
agreements.
NON-EAPAIRMENT. Except as expressly provided herein, nothing in this Agreement shall alter or
affect any provision, condition or covenant contained in the Note, Deed of Trust or other Loan
Documents, or affect or impair any rights, powers, or remedies thereunder, it being the intent of the
parties hereto that the provisions of the Note, Deed of Trust and other Loan Documents shall continue in
full force and effect except as expressly modified hereby.
6. FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has previously delivered to
Lender all of the relevant formation and organizational documents of Borrower, of the partners of joint
venturers of Borrower (if any), and of all guarantors of the Loan (if any), and all such formation
documents remain in full force and effect and have not been amended or modified since they were
delivered to Lender. Borrower hereby certifies that: (i) the above documents are all of the relevant
formation and organizational documents of Borrower; (ii) they remain in full force and effect; and
(iii) they have not been amended or modified since they were previously delivered to Lender.
MISCELLANEOUS. This Agreement and the other Loan Documents shall be governed by and
interpreted in accordance with the laws of the State of California, except if preempted by Federal law. In
any action brought or arising out of this Agreement or the Loan Documents, Borrower, and the general
partners and joint venturers of Borrower, hereby consent to the jurisdiction of any Federal or State Court
having proper venue within the State of California and also consent to the service of process by any
means authorized by California or Federal law. The headings used in this Agreement are for
convenience only and shall be disregarded in interpreting the substantive provisions of this Agreement.
Except as expressly provided otherwise herein, all terms used herein shall have the meaning given to
them in the other Loan Documents. Time is of the essence of each term of the Loan Documents,
including this Agreement. If any provision of this Agreement or any of the other Loan Documents shall
be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion
shall be deemed severed therefrom and the remaining parts shall remain in full force as though the
invalid, illegal, or unenforceable portion had never been a part thereof.
8. INTEGRATION: INTERPRETATION. The Loan Documents, including this Agreement, contain or
expressly incorporate by reference the entire agreement of the parties with respect to the matters
contemplated therein and supersedes all prior negotiations. The Loan Documents shall not be modified
except by written instrument executed by all parties. Any reference in any of the Loan Documents to the
HCCLA37(R"9W)
Loan No.1378
Property or Improvements shall include all or any parts of the Property or Improvements. Any reference
to the Loan Documents in any of the Loan Documents includes any amendments, renewals or extensions
approved by Lender.
9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which
when executed and delivered to Lender will be deemed to be an original and all of which, taken
together, will be deemed to be one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be duly executed as of the day
and year first above written.
"Lender"
HOUSING CAPITAL COMPANY,
a Minnesota partnership
By: DFP FINANCIAL, INC., a California corporation,
its Managing General Partner
Its:
"Borrower"
48th & ADAMS, LLC, a California limited
liability company
By: SANTA ROSA DEVELOPMENT, INC.,
a California corporation, Manager/Member
By:
MICHAEL J. SHOVLIN, President
By: G COMPANIES HOMEBUILDING, LLC,
a California limited liability company, Member
By: CAMEO HOMES, a
California corporation,
Manager a ber
B
S GIANULiAS, President
HOCLA37 (Rev 5N3)
Loan No. 1378
GUARANTOR'S CONSENT
The undersigned ("Guarantor") consents to the foregoing Modification Agreement and the transactions
contemplated thereby and reaffirms its obligations under the Completion Guaranty and the Repayment
Guaranty "(collectively "Guaranty") dated October 21, 2004, as amended, confirms that those obligations are
separate and distinct from Borrower's obligations, and renews and restates its waivers, as set forth in the
Guaranty, of each and every one of the possible defenses to such obligations.
AGREED:
Dated: May 11, 2007
"Guarantor"
CAMEO HOMES,
a Californi ca poration
By: ,
S GIANULIAS, President
J IANUIdAS ,
CIMS GIANULUS,
Trustee of the James Chris Gianulias
Trust dated October 14, 2003
HCCLA37 (Rev M3)
Loan No. 1378
ua7ARDOUS INDEMNITOR'S CONSENT
The undersigned ("Indemnitor") consents to the foregoing Modification Agreement and the transactions
contemplated thereby and reaffirms its obligations under the Unsecured Indemnity Agreement ("Indemnity)
dated October 21, 2004, and its waivers, as set forth in the Indemnity, of each and every one of the possible
defenses to such obligations. Indemnitor further reaffirms that its obligations under the Indemnity are separate
and distinct from Borrower's obligations. .
AGREED:
Dated: May 11, 2007
"Indemnitor"
48th & ADAMS, LLC, a California limited
liability company
By: SANTA ROSA DEVELOPMENT, INC.,
a California corporation, Manager/Member
LE
MICHAEL J. SHOVLIN, President
By: G COMPANIES HOMEBUILDING, LLC,
a California limited liability company, Member
By: CAMEO HOMES, a
California corporation,
Manager/Me er
By:
GIANiILIAS, President
CAMEO H( S, a Califomia corporation
By:
S GIANULIAS, President
.ES GIANULIAS
HCCLA37 (Aev 5/D3)
Loan No. 1378
CONSENT OF OPTIONEE
AND R&AFF RMATION OF SUBORDINATION
The undersigned optionee is the holder of certain repurchase rights pertaining to the real property encumbered
by the Deed of Trust, which repurchase rights were subordinated to the Deed of Trust pursuant to that certain
Subordination Agreement (the "Subordination Agreement') that was recorded on November 15, 2004, as
Instrument No. 2004-0904661, in the Official Records of Riverside County, California, as amended. The
undersigned hereby consents to and approves the foregoing MODIFICATION AGREEMENT, and the
amendments provided for therein, and, as of the date hereof, re -affirms that the Subordination Agreement is,
and that it will remain and continue, in full force and unaffected by the transaction approved herein. The
undersigned acknowledges it understands that the willingness of Lender to extend the Loan maturity as
provided herein is induced, in material part, by this consent, approval, and re -affirmation.
Dated: May 11, 2007
LA QUINTA REDEVELOPMENT AGENCY,
a blic dy, corporate o I
By
Executive Director
MCCLA37 (Rev 5103)