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HomeMy WebLinkAbout2005-054 . RESOLUTION NO. ...l.Q.Q.i-54 2 3 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A 2005 LOAN MODIFICATION AND COLLATERAL ASSIGNMENT AGREEMENT AND CONSENT TO ASSIGNMENT BY AND AMONG 303 LLC, THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO AND APPROVING A 2005 REDEVELOPMENT LOAN AGREEMENT BY AND BETWEEN THE AGENCY AND THE CITY (303 THIRD STREET PROJECT) 4 5 6 7 8 9 WHEREAS, the City of San Bernardino (the "City") and 303, L.L.C., a Californi 10 limited liability company (the "Borrower") have previously entered into a certain agreemen 11 entitled "2000 Community Development Block Grant Program Section 108 Project Developmen 12 Loan Agreement (303 Third Street Project)", dated as of September 18, 2000, as amended (th 19 provide a source of funds to support the activities contemplated under the City Section 108 Lo 13 "City Section 108 Loan Agreement"), for the purpose of furthering the community economi 14 development goals of the City within the downtown area of the City, and contemporaneousl 15 therewith, the City entered into an agreement with the United States Department of Housing an 16 Urban Development ("HUD") entitled "Contract for Loan Guaranty Assistance Under Sectio 17 108 of the Housing and Community Development Act of 1974", as amended, 42 U.S.c. 95308 18 dated September 26, 2000, as amended (the "HUD Section 108 Loan Agreement") in order t 20 Agreement; and 21 WHEREAS, as of the date of adoption of this Resolution the outstanding principa 22 balance of the HUD Section 108 Loan is $1,740,000; and WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency" 23 24 and the Borrower have previously entered into a certain agreement entitled "2000 Owne 25 Participation and ED! Loan Agreement (303 Third Street Project)" dated as of September 18 4843-7412-3008.2 -1- P:\Agendas\Resolutioll5\Resolutions\2005\05-02-22 303 W Third $1-2005 Loan Modification MeC Reso_doc 2005-54 2000, as amended (the "OP A") in support of the activities contemplated under the City Sectio 2 108 Loan Agreement; and 3 WHEREAS, the City Section 108 Loan Agreement, the HUD Section 108 Lo 4 Agreement and the OP A have each been duly amended by the parties thereto prior to the date 0 5 this Resolution, to reflect changes in circumstances and modifications to the financing of th 6 "Borrower Improvements (Phase II)" and the "303 Third Street Project", as each of these term 7 are defined in the City Section 108 Loan Agreement, including the proposed acquisition thereo 8 by the County of San Bernardino pursuant to the terms and conditions of an agreement entitle 9 "Agreement for Purchase and Sale of Real Property", dated June 29, 2004 (the "County Purchas 10 Contract") by and between the Borrower and the County of San Bernardino; and II WHEREAS, as a result of the greater than anticipated costs required to complete th 12 redevelopment of the Borrower Improvements (Phase II) and the 303 Third Street Project by th 13 Borrower, the Borrower has requested that the City arrange for the Agency to repay the HU 14 Section 108 Loan and that in consideration thereof, the Agency accept a collateral assignmen 15 from the City of all of the "Section 108 Loan Collateral" as this term is defined in the Cit 16 Section 108 Loan Agreement, as security for the repayment by the City to the Agency of a 10 17 of Agency low- and moderate-income housing funds in an amount not to exceed $1,740,000 t 18 the City under the terms of the 2005 Agency Loan Agreement by and between the City and th 19 Agency (the "2005 Agency Loan Agreement"). The City shall use and apply the proceeds ofth 20 loan made available to it by the Agency under the 2005 Agency Loan Agreement to prepay th 21 HUD Section 108 Loan; and 22 WHEREAS, the City deems it to be in the best interests of the City that the HUD 23 Section 108 Loan be repaid by the City using the proceeds of the loan to be made by the Agency 24 to the City and that the proposed loan of Agency funds to the City for such purposes under the 25 2005 Agency Loan Agreement be secured in favor of the Agency by a collateral assignment of the City Section 108 Loan Agreement, and all security instruments thereunder. 4843-7412-3008.2 -2- P'IAgendasIResolulionslResolulions\200SIOS-02-22 303 W Third SI-2005 Loan Modification MeC Reso.doc f 2005-54 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED 2 BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 3 FOLLOWS: 4 Section 1. The Mayor and Common Council hereby approve the 2005 Lo 6 Modification Agreement") by and among the Borrower, the Agency and the City in the fo 5 Modification and Collateral Assignment Agreement and Consent to Assignment (the "2005 Lo 7 attached hereto as Exhibit "A". The Mayor and Executive Director of the Economi 8 Development Agency are hereby authorized and directed to execute the 2005 Loan Modificatio Agreement on behalf of the City, together with such technical and conforming changes as ma be approved by the Mayor upon the recommendation of the Executive Director of the Economi 9 10 11 Development Agency and special legal counsel to the City. Section 2. The Mayor and Common Council hereby approve the 2005 Agency Loa 12 Agreement in the form as attached hereto as Exhibit "B". The Mayor and Executive Director 0 13 the Economic Development Agency are hereby authorized and directed to execute the 2005 14 15 Agency Loan Agreement on behalf of the City, together with such technical and conformin changes as may be approved by the Mayor upon the recommendation of the Executive Directo of the Economic Development Agency and special legal counsel to the City. 16 17 Section 3. Subject to the execution by all parties of the 2005 Loan Modificatio 18 Agreement and the satisfaction of the conditions enumerated in Section 9(b) of the 2005 Loa 19 Modification Agreement, the Mayor and Executive Director of the Economic Developmen 20 Agency are hereby authorized and directed to prepay the HUD Section 108 Loan using th 21 proceeds of the 2005 Agency Loan at the earliest feasible time. The Mayor and Executiv Director of the Executive Director of the Economic Development Agency are hereby furthe 22 23 authorized to execute the 2005 Collateral Assignment of Section 108 Loan Documents on behal of the City in the form as included as an exhibit to the 2005 Loan Modification Agreement together with such technical and conforming changes as may be approved by the Mayor upon th 24 25 4843-7412-3008.2 -3- P:\Agendas\Resolutions\Resoh,Jtions\200S\OS-02-22303 W Th.ird St-200S Loan Modification MCC Reso.doc J 2005-54 recommendations of the Executive Director of the Economic Development Agency and specia 2 legal counsel to the City. 3 Section 4. This Resolution shall have no further force or effect forty five (45) day 4 after its adoption unless prior to such date the 2005 Loan Modification Agreement is full 5 executed by all of the parties thereto. 6 Section 5. The City Clerk shall certify to the adoption of this Resolution. Thi 7 Resolution shall take effect upon adoption. 8 III III 9 III 10 III II III 12 III 13 III 14 III 15 III 16 III 17 III 18 III 19 III 20 III 21 III 22 III 23 III 24 III 25 III 4843-7412-3008.2 -4- P:\Agendas\Resolulions\Resolutions\2005\OS-02.22 303 W Third 51-2005 Lollll Modification MCC Reso.doc . 2005-54 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A 2005 LOAN MODIFICATION AND COLLATERAL ASSIGNMENT AGREEMENT AND CONSENT TO ASSIGNMENT BY AND AMONG 303 LLC, THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO AND APPROVING A 2005 REDEVELOPMENT LOAN AGREEMENT BY AND BETWEEN THE AGENCY AND THE CITY (303 THIRD STREET PROJECT) 3 4 5 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and joint Common Council of the City of San Bernardino at a regular meeting thereof, held on the 7 8 22nd day of February , 2005, by the following vote to wit: 9 Council Members: Absent Aves x Nays Abstain 10 ESTRADA LONGVILLE MCGINNIS DERRY KELLEY JOHNSON MC CAMMACK x 11 x 12 ~ 13 ---1L- 14 -X-- X 15 16 17 ~t.lA1. ~~~ Rache G. Clark, City Clerk 18 19 20 The foregoing resolution is hereby approved this :;'1# day of ,2005. February 21 22 23 i alles, Mayor C ty of San Bernardino Approved as to form and Legal Content: 24 25 By: ~~')~~. City Attorney Sf'. f)1f~C;t; AftfI""", 4843.7412-3008.2 -5- P:\Agendas\ResolutiolulResolutions\2005\OS.OZ.22 303 W Third St.200S Loan Modification MeC Reso,doc .' Exhibit "A" to Mayor and Common Council Resolution II' 2005 LOAN MODIFICATION AND COLLATERAL ASSIGNMENT AGREEMENT AND CONSENT TO ASSIGNMENT 2000 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN AGREEMENT (303 Third Street Project) THIS 2005 LOAN MODIFICATION AND COLLATERAL ASSIGNMENT AGREEMENT AND CONSENT TO ASSIGNMENT (the "2005 Loan Modification Agreement") is dated as of February 22, 2005, and is entered into by and among the City of San Bernardino, a municipal corporation (the "City"), the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the "Agency"), and 303, L.L.C., a California limited liability company (the "Borrower"), and is made and executed in light of the facts set forth in the following recital paragraphs: RECITALS The City and the Borrower have previously entered into a certain agreement entitled "2000 Community Development Block Grant Program Section 108 Project Development Loan Agreement (303 Third Street Project)", dated as of June 1,2001, as amended (the "City Section 108 Loan Agreement"), for the purpose of furthering certain interests of the City within the downtown area of the City of San Bernardino, and the City prior thereto entered into a similar agreement with the United States Department of Housing and Urban Development ("HUD") entitled "Contract for Loan Guaranty Assistance Under Section 108 of the Housing and Community Development Act of 1974", as amended, 42 U.S.C. 95308, dated September 26, 2000, as amended (the "HUD Section 108 Loan Agreement"). The Agency and the Borrower have previously entered into a certain agreement entitled "2000 Owner Participation and EDI Loan Agreement (303 Third Street Project)" dated as of September 18, 2000, as amended (the "OPA"). The City Section 108 Loan Agreement, the HUD Section 108 Loan Agreement and the OP A have each been duly amended by the parties thereto prior to the date of this 2005 Loan Modification Agreement, to reflect changes in circumstances and modifications to the financing of the "Borrower Improvements (Phase II)" and the "303 Third Street Project", as each of these terms are defined in the City Section 108 Loan Agreement, and the proposed acquisition thereof by the County of San Bernardino pursuant to the terms and conditions of an agreement entitled "Agreement for Purchase and Sale of Real Property", dated June 29, 2004 (the "County Purchase Contract") by and between the Borrower and the County of San Bernardino. As of the date of this 2005 Loan Modification Agreement, the outstanding principal balance of the HUD Section 108 Loan is $1,740,000. 4840-9415-3216.4 2/15/05 jmm 1 I' As a result of the greater than anticipated costs required to complete the redevelopment of the Borrower Improvements (phase II) and the 303 Third Street Project by the Borrower, the Borrower has requested that the City arrange for the Agency to repay the HUD Section 108 Loan and that in consideration thereof, the Agency accept a collateral assignment from the City of all of the "Section 108 Loan Collateral" as this term is defined in the City Section 108 Loan Agreement, as security for the repayment by the City to the Agency of a loan of Agency low- and moderate-income housing funds in an amount not to exceed $1,740,000 to the City under the terms of the 2005 Agency Loan Agreement by and between the City and the Agency (the "2005 Agency Loan Agreement"). The City shall use and apply the proceeds of the loan made available to it under the 2005 Agency Loan Agreement to prepay the HUD Section 108 Loan. The Borrower acknowledges that it is not possible to obtain the necessary approvals from HUD as would be required pursuant to the HUD Section 108 Loan Agreement to allow the Borrower Improvements (Phase II) to proceed, and for that reason, the Borrower requested the Agency to provide a loan to the City to repay the existing HUD Section 108 Loan. The parties to this 2005 Loan Modification Agreement deem it to be in the best interests of the Borrower, the City and the Agency that the HUD Section 108 Loan be repaid by the City using the proceeds of the loan to be made by the Agency and that the proposed loan of Agency funds to the City for such purposes under the 2005 Agency Loan Agreement be secured in favor of the Agency by a collateral assignment of the City Section 108 Loan Agreement, and all security instruments thereunder. The Borrower acknowledges that it shall benefit from the prepayment of the HUD Section 108 Loan and the collateral assignment of the Section 108 Loan Collateral to the Agency, and the related modifications of the terms of the City Section 108 Loan Agreement, and the OP A as specifically set forth herein as evidenced by the execution of this 2005 Loan Modification Agreement by the Borrower to consent to the assignment and the modification of the terms as hereinafter set forth. NOW THEREFORE, AND FOR GOOD AND VALUABLE CONSIDERATION, THE PARTIES ENTER INTO THIS 2005 LOAN MODIFICATION AGREEMENT IN ORDER TO SATISFY CERTAIN CONDITIONS CONTAINED IN THE APPLICABLE AGREEMENTS AND CONTRACTS TO WHICH THE PARTIES TO THIS 2005 LOAN MODIFICATION AGREEMENT ARE BOUND AND TO PROVIDE FOR THE COMPLETION OF THE BORROWER IMPROVEMENTS (pHASE II) AND THE REDEVELOPMENT OF THE 303 THIRD STREET PROJECT. Section 1. Usal!e of Defined Terms. (a) To the extent practical, the meaning of defined terms as used in this 2005 Loan Modification Agreement shall have the same meaning as set forth in the City Section 108 Loan Agreement and/or the OP A, unless the context of usage of such terms in this 2005 Loan Modification Agreement shall clearly require otherwise. 4840-9415-3216.4 2/15/05jrnm 2 . .~'..c ' (b) The following defined terms as set forth in Section 1 ofthe City Section 108 Loan Agreement are hereby modified to read as follows: [and] ". Parking Lot Parcel. The words "Parking Lot Parcel": (i) prior to the date on which the conditions of Section 9(b) of the 2005 Loan Modification Agreement are satisfied, mean and refer to the lands located at the southwest corner of 2nd Street and Mountain View Avenue in the City, with respect to which the Borrower and the City have previously entered into an agreement entitled "Parking Lot Parcel Covenant", dated June 1,2001, and filed for recordation on June I, 2001, as Recorded Instrument No. 214147 Official Records of the Recorder of San Bernardino County; and (ii) after the date on which the conditions of Section 9(b) of the 2005 Loan Modification Agreement are satisfied, mean and refer to the lands located at the northwest corner of the intersection of Arrowhead Avenue and 2nd Street in the City (also described elsewhere for purposes of clarification as the "Former Southern California Edison Parcel"), with respect to which the Borrower, or its assignee, and the City shall jointly execute and file for recordation an instrument entitled "Replacement Parking Lot Covenant" as authorized in Section 5 of the Parking Lot Parcel CovenantJRecorded Instrument No. 214147, Official Records of the Recorder of San Bernardino County." Former Southern California Edison Parcel. The words "Former Southern California Edison Parcel" mean and refer to the lands located at the northwest corner of the intersection of Arrowhead Avenue and 2nd Street in the City. The Former Southern California Edison Parcel is more particularly described in that certain proposed real estate purchase and sale agreement by and between the Southern California Edison Company and the Borrower (the "Edison Parcel Purchase and Sale Agreement"). The Former Southern California Edison Parcel is located adjacent to the 303 Third Street Parcel. A copy of the draft of the Edison Parcel Purchase and Sale Agreement, dated as of February 18, 2005, is on file with the Executive Director of the Economic Development Agency." LMB Performance Deed of Trust (City"). The words "LMB Performance Deed of Trust (City)" mean and refer to the performance deed of trust executed by LMB Development, LLC, a California limited liability company, in favor of the City, which LMB Performance Deed of Trust (City) shall pledge the lands described in Recorded Instrument No. 214147 to the City as additional security for the repayment to the City by the Borrower of the City Section 108 Loan." Section 2. Assil!nment and Consent. (a) Subject to the terms and conditions of this 2005 Loan Modification Agreement, the Agency hereby agrees to provide a loan to the City in a principal amount not to exceed 4840-9415-3216.4 2/15/05 jrnm 3 .'H~>'..\, ".\'t,,:,; , $1,840,000, which the City shall use and apply solely to repay all sums owed by the City to HUD under the terms of the HUD Section 108 Loan Agreement, and in exchange therefore the City agrees to assign and transfer to the Agency all rights, title and interests that the City may have in the Section 108 Loan Collateral. (b) The Borrower, by the execution of this 2005 Loan Modification Agreement, hereby consents to the 2005 Agency Loan Agreement and the use of the proceeds of the 2005 Agency Loan by the City to prepay the HUD Section 108 Loan, and the Borrower agrees that all provisions of the City Section 108 Loan Agreement, including such modifications to the City Section 108 Loan Agreement as set forth in this 2005 Loan Modification Agreement, shall remain in full force and effect notwithstanding the prepayment of the HUD Section 108 Loan. (c) Unless specifically modified, amended or deleted by the express provisions of this 2005 Loan Modification Agreement, all of the terms, provisions and conditions of the Section 108 Agreement shall remain in full force and effect in accordance with the intent of the parties as expressed herein. Section 3. Consent to Assi!mment and Further Assurances and Documents. (a) The Borrower hereby approves the form of the instrument entitled "2005 Collateral Assigrunent of Section 108 Loan Documents by the City of San Bernardino to the Redevelopment Agency of the City of San Bernardino Arising Under a Contract for Loan Guarantee Assistance under Section 108 of the Housing and Community Development Act of 1974, As Amended, 42 U.S.C. g5308" (the "2005 Collateral Assigrunent Agreement") in the form attached hereto as Exhibit "A" and incorporated herein by this reference, together with such technical changes as may hereafter be approved by the City and the Agency. (b) The City agrees to execute any and all additional assurances, assigrunents or any other documents reasonably requested by the Agency to evidence the assigrunent to the Agency of the Section 108 Loan Collateral by the City pursuant to this 2005 Loan Modification Agreement, including, but not limited to the letters of credit, the promissory note and the deed of trust as specified in the Section 108 Agreement. (c) The Borrower agrees to execute any and all additional assurances, assigrunents or any other documents reasonably requested by the City or the Agency to evidence the assigrunent to the Agency of the Section 108 Loan Collateral by the City to the Agency pursuant to the 2005 Collateral Assigrunent Agreement upon its execution by the Borrower, the City and the Agency, including, but not limited to the letters of credit, the Borrower Section 108 Promissory Note and the City Deed of Trust, all as specified in the City Section 108 Agreement. Section 4. Specific Amendments to City Section 108 Loan Al!reement and Certain Related 303 Third Street Proiect Documents. The term "Effective Date of this 2005 Loan Modification Agreement" is defined in Section 9, below. The City Section 108 Loan Agreement and the corresponding Borrower Section 108 Promissory Note and the City Deed of Trust are hereby amended by the Borrower and the City to reflect the following changes in the 4840-9415-3216.4 2/15/05 jrnm 4 . transaction as between the City and the Borrower as of the "Effective Date of this 2005 Loan Modification Agreement". (a) The provisions of Section 3.0(a)(4) of the City Section 108 Loan Agreement shall not be applicable to the repayment by the City and/or the Agency of the amounts owed by the City to HOD pursuant to the HOD Section 108 Loan Agreement; and Section 3.0(a)(4) of the City Section 108 Loan Agreement shall continue to be applicable solely to any prepayments of the Section 108 Loan that are remitted by the Borrower directly to the City or the Agency in accordance with this 2005 Loan Modification Agreement. (b) The Borrower acknowledges that no additional funds shall be disbursed to the Borrower pursuant to the City Section 108 Agreement except for an amount presently estimated to be $45,000.00 which shall be transferred from the Funded Interest Reserve Fund to the City for the repayment of the HOD Section 108 Loan. The precise amount of the sum as shall be transferred from the Funded Interest Reserve Fund to the City upon the satisfaction of the conditions set forth in Section 9(b) shall be subject to a mutual verification and final accounting of the City and the Borrower. (c) The principal repayment schedule for the Section 108 Loan set forth in Section 5.0(a) of the Section 108 Loan Agreement shall not be applicable as to the Borrower and the Agency pursuant to this 2005 Loan Modification Agreement. In lieu thereof, the full outstanding principal balance of the Section 108 Loan shall be due and payable upon the earlier to occur of: (i) the transfer of title of the 303 Third Street Parcel by the Borrower to the County of San Bernardino, or its nominee, under the terms of the County Purchase Contract, or (ii) December 31,2006. (d) Interest on the principal amount of the Section 108 Loan shall accrue for the benefit of the Agency commencing on the Effective Date of the 2005 Loan Modification Agreement at the annual rate of three percent (3%) per annum. Such accrued interest shall be due and payable by the Borrower to the City on each February 1, May 1, August 1 and November 1, commencing on August 1, 2005, and quarterly thereafter, until the principal amount of the Section 108 Loan has been repaid in full to the City. Such interest shall be calculated based upon the actual number of days for which any principal balance of the City Section 108 Loan was then outstanding during each such quarterly period. Notwithstanding any other provision of the City Section 108 Loan Agreement or the Borrower Section 108 Promissory Note to the contrary, in the event of the occurrence of an Event of Default under the City Section 108 Loan Agreement, or in the event of the occurrence of an Event of Default under the OPA, or in the event that the City Section 108 Loan is not repaid when due, then in any such event, the rate of interest which shall be payable by the Borrower under the Borrower Section 108 Promissory Note shall be increased to a default rate of ten percent (10%) per annum, commencing on the date of such Event of Default until such time as the Event of Default is cured or the outstanding principal balance of the City Section 108 Loan, and all accrued and unpaid interest thereon is paid in full. 4840-9415.3216.4 2/15/05 jrnrn 5 In r ( e) The City shall assign to the Agency the letters of credit as are required to be provided by certain individuals of the Borrower in accordance with the City Section 108 Agreement, and, if necessary, the City may retain such letters of credit but the City agrees to present such letters of credit for payment and to seek any extensions or modifications thereto as may be requested by the Agency if it is deemed advisable for the letters of credit to remain in the name of the City. The Borrower agrees that the individuals of the Borrower who have obtained such letters of credit shall cooperate with the City and the Agency to assure that the Section 108 Loan security as previously made available to the City in the form of the letters of credit shall continue to be available for the benefit of the City and the Agency in accordance with this 2005 Loan Modification Agreement. (f) Subject to the satisfaction of the conditions set forth in Section 9(b) of the 2005 Loan Modification Agreement, the City hereby agrees to execute a quitclaim deed in favor of the Borrower, releasing the interest of the City in the Parking Lot Parcel under the terms of the Parking Lot Covenant in exchange for the Borrower, or its assignee under the Edison Parcel Purchase and Sale Agreement, executing the Replacement Parking Lot Covenant which shall substitute the lands described in Recorded Instrument No. 214147 for the lands described in the Edison Parcel Purchase and Sale Agreement. The form of the Replacement Parking Lot Covenant shall be substantially similar in the form to the Parking Lot Covenant (as provided in Section 5 of the Parking Lot Covenant), except that the lands subject to the Replacement Parking Lot Covenant shall be the Former Southern California Edison Parcel. The Mayor and Executive Director of the Economic Development Agency are hereby authorized and directed to execute the final form of the Replacement Parking Lot Covenant, together with such technical and conforming changes as may be recommended by the Executive Director of the Economic Development Agency and City Attorney concurrently upon the satisfaction of the conditions set forth in Section 9(b) of this 2005 Loan Modification Agreement. (g) Subject to the satisfaction of the conditions set forth in Section 9(b) of this 2005 Loan Modification Agreement, the City hereby agrees to execute and deliver for recordation a partial release and reconveyance of its security interest in the Parking Lot Parcel under the terms of the City Deed of Trust. The Mayor and the Executive Director of the Economic Development Agency are hereby authorized to execute such an instrument in the form as approved by the Executive Director of the Economic Development Agency in consultation with the City Attorney (h) The City and the Agency each agree to subordinate their respective security interests under the City Deed of Trust, and any of the other Section 108 Loan Collateral (excluding however from such subordination, the letters of credit and the Borrower Guaranty) to any construction financing from a commercial lender that is equal to not more than $17,500,000 for the financings of the improvements to the 303 Third Street Project as required by the County of San Bernardino pursuant to the County Purchase Contract. The provisions of Section 15.0 of the City Section 108 Loan Agreement are hereby deleted and neither the City or the Agency shall subordinate their respective security interests in the City Deed of Trust or any of the other Section 108 Loan Collateral to any other financing of the Borrower as otherwise described in Section 15.0 ofthe City Section 108 Loan Agreement. 4840-9415-3216.4 211 5/05 jrnm 6 r (i) On the Effective Date, all funds as may then be held by First American Title Insurance Company under the Fiscal Agent Agreement shall be paid to the City for the account of the Borrower, and the Borrower and the City shall jointly execute a notice of termination of the Fiscal Agent Agreement. G) All prior amendments to the City Section 108 Agreement shall remain in full force and effect unless specifically modified by this 2005 Loan Modification Agreement. Section 5. Soecific Amendments to OPA. Subject to the terms and conditions of this 2005 Loan Modification Agreement, the OPA, as previously amended, is hereby further amended by the Borrower and the Agency to the extent as set forth below. (a) The ED! Loan together with the ED! Loan Promissory Note and the ED! Loan Deed of Trust as provided in Section 4 of the OP A shall be modified to have a maturity date of the earlier to occur of: (i) the date of the transfer of title for the 303 Third Street Parcel by the Borrower to the County of San Bernardino or its nominee under the terms of the County Purchase Contract; or (ii) December 31, 2006. (b) Section 5 of the 2004 Amendment to the OP A shall be modified to reflect the date upon which the Participation Fee shall be due and payable to be the earlier to occur of: (i) the date of the transfer of title for the 303 Third Street Parcel from the Borrower to the County of San Bernardino; or (ii) December 31,2006. (c) The ED! Promissory Loan Note, the ED! Loan Performance Deed of Trust and the Notice of Memorandum of Agreement shall be modified to reflect all changes as required by this 2005 Loan Modification Agreement, and the Borrower shall cooperate with the Agency to execute any and all documents reasonably required by the Agency to implement the provisions of this 2005 Loan Modification Agreement. (d) Subject to the satisfaction of the conditions of Section 9(b) of the 2005 Loan Modification Agreement, the Agency hereby agrees to execute and deliver for recordation a partial release and reconveyance of its security interest in the Parking Lot Parcel under the terms of the EDI Loan Performance Deed of Trust and the Notice of memorandum of Agreement. The Chair of the Community Development Commission of the City of San Bernardino and the Executive Director of the Agency are hereby authorized to execute such instruments of partial release in the form as shall be approved by the Executive Director of the Agency and Agency Counsel. (e) All prior amendments to the OP A shall remain in full force and effect unless specifically modified by this 2005 Loan Modification Agreement. Section 6. Reoresentations of the Parties. (a) The City represents and warrants to the Agency that it is not aware of any default on its part nor has any notice of any default by the City either under the HUD Section 108 Loan 4840-9415-3216.4 2/15/05 jmm 7 t Agreement or the City Section 108 Loan Agreement, nor has the City failed to perform any duty or other obligation required of the City pursuant to either of said agreements. (b) The Borrower represents and warrants to the Agency that it is not aware of any default on its part nor has any notice of any default by the Borrower under the City Section 108 Loan Agreement nor has the Borrower failed to perform any duty or other obligation required of the Borrower pursuant to the City Section 108 Loan Agreement. (c) The Borrower represents and warrants to the City and the Agency that it is not aware of any default on its part nor has any notice of default been issued under the Mezzanine Financing. (d) The Borrower represents and warrants to the City and the Agency that it is not aware of any default on its part nor has any notice of default been issued under the County Purchase Contract and that the County Purchase Contract is in full force and effect and is enforceable in accordance with its terms. (e) The Borrower represents and warrants to the City and the Agency that it is aware of no basis on which the makers of the Borrower Guaranties, or any of them, may assert any defense against the City or the Agency to the payment of such Borrower Guaranties upon proper presentation of demand thereof by the City or the Agency, as applicable, and the Borrower shall cause the makers of the Borrower Guaranties, and each of them, to execute and deliver to the City and the Agency the Affirmation of Guaranty in the form attached hereto as Exhibit "B" and incorporated herein by this reference. Section 7. Closine and Fundine of HUD Section 108 Loan Reuavment. The parties agree that the City and the Agency shall establish an escrow to be held at a location and by a person selected by the Agency for the administration of the repayment of the HUD Section 108 Loan and the acceptance and recordation of all documents required pursuant to this 2005 Loan Modification Agreement. The 2005 Collateral Assigrunent Agreement shall be recorded against the 303 Third Street Property concurrently upon the repayment in full of the HUD Section 108 Loan to provide notice to all persons and lenders regarding the agreements and commitments of the parties hereto. Section 8. Further Reuresentations and Warranties of Borrower. The undersigned individuals on behalf of the Borrower represent and warrant that the Borrower has taken all requisite actions and has obtained all necessary approvals to cause this 2005 Loan Modification Agreement to be executed and delivered and that the letters of credit as required by the Section 108 Agreement shall continue to be provided to the Agency either directly or indirectly through the City for the benefit of the Agency. Section 9. Effective Date and Listine of Auulicable Conditions to Fundine of HUD Section 108 Loan Reuavment. 4840-9415-3216.4 2/15/05 jmm 8 I' (a) This 2005 Loan Modification Agreement shall take effect upon execution of all parties hereto. It is recognized by the Borrower that the execution of this 2005 Loan Modification Agreement by the City is subject to the approval of the Mayor and Common Council of the City at a duly noticed and held public meeting and the execution of this 2005 Loan Modification Agreement by the Agency is subject to the approval of the Community Development Commission of the City of San Bemardino at a duly noticed and held public meeting. (b) The Effective Date of this 2005 Loan Modification Agreement shall occur on the date when each of the following conditions has been satisfied: (i) the 2005 Loan Modification Agreement has been fully executed by the parties: (ii) the Borrower has provided the City and the Agency with appropriate evidence of comprehensive general liability insurance coverage as required under the City Section 108 Loan Agreement and the OP A; (iii) the City and the Agency have each taken appropriate affirmed action to approve the 2005 Agency Loan Agreement; (iv) the City has obtained an appropriate update of its lender's policy of title insurance insuring its security interest in the 303 Third Street Property, including the instrument describe below in (viii), in form reasonably acceptable to the City; (v) the Borrower has delivered an approving opinion of its legal counsel in form reasonably acceptable to the City and the Agency to the effect that the Borrower has taken all necessary action to enter into this 2005 Loan Modification Agreement and that the City Section 108 Loan Agreement and the OP A, as modified by this 2005 Loan Modification Agreement, when fully executed by the parties shall be enforceable in accordance with its terms; (vi) the Borrower has caused to be delivered an approving legal opinion of legal counsel to LMB Development, LLC, in a form reasonably acceptable to the City that LMB Development, LLC, has taken all necessary action to execute the LMB Performance Deed of Trust (City) pledging the Parking Lot Parcel as additional security to the City for repayment of the City Section 108 Loan by the Borrower and that such LMB Performance Deed of Trust, when executed and delivered by LMB Development, LLC, to the City shall be enforceable in accordance with its terms; (vii) the Edison Parcel Purchase and Sale Agreement has been fully executed by the parties thereto, and is enforceable in accordance with its terms; (viii) the Borrower has executed in recordable form the Replacement Parking Lot Covenant and such instrument shall be recorded against the Former Southern 4840-9415-3216.4 2/15/05jrnm 9 If California Edison Parcel concurrently with the other documents described in this Section 9(b); (ix) the City has executed in recordable form its release of the Parking Lot Covenant in consideration for the recordation of the Replacement Parking Lot Covenant; (x) the City has executed its partial release and reconveyance of the Parking Lot Covenant from the City Deed of Trust; (xi) the Agency has executed its partial release and reconveyance of the Parking Lot Parcel from the EDI Loan Performance Deed of Trust and the Notice of Memorandum of Agreement; (xii) the Borrower has caused LMB Development, LLC, to deliver its Related Borrower Guaranty to the City in a form approved by the City; (xiii) the Borrower has caused LMB Development, LLC, to execute in recordable form the LMB Performance Deed of Trust in a form acceptable to the City. Such LMB Performance Deed of Trust may be subordinate to the security interest, if any, of the Construction Lender in the Parking Lot Parcel on the same terms and conditions set forth in Section 1.40 of the City Section 108 Loan Agreement; (xiv) if requested by the City, LMB Development, LLC, shall have executed an acknowledgment of its consent to a security assigmnent by the City in favor of the Agency of the City's security interest in the Related Borrower Guaranty in a form reasonably acceptable to the City and the Agency; (xv) the Borrower has delivered a fully executed form of the Affirmation of Personal Guaranty; (xvi) there shall be no default under the County Purchase Contract and the County shall have waived its right under the County Purchase Contract to terminate the County Purchase Contract, and the Borrower shall have provided the City and the Agency with written evidence of such County waiver in a form reasonably satisfactory to the Executive Director of the Agency; (xvii) the Borrower has paid in immediate funds to the Agency the following sums: (A) a loan origination charge of one percent (I %) of the outstanding principal balance of the illJD Section 108 Loan as of the day immediately preceding the Effective Date of the 2005 Loan Modification Agreement; and (B) a loan modification administrative charge of Twelve Thousand Dollars ($12,000); 4840-9415-3216.4 10 2/15/05 jrnm " (xviii) the Borrower shall have paid the City all accrued and unpaid interest under the Borrower Section 108 Promissory Note through the Effective Date; (xix) the parties have executed all ancillary or related documents as may be reasonably requested by the City, the Agency or HUD; (xx) the proceeds of the 2005 Agency Loan, together with the funds transferred to the City by the Borrower under Section 4(b) and the funds payable by the Borrower to the City under Section 9(b) (ix), are disbursed or collected for the account of the City in immediate funds to pay in full the principal balance and all accrued and unpaid interest due to HUD as of the Effective Date under the HUD Section 108 Loan. II II II II II II II II II II II II II 4840-9415-3216.4 2/15/05 jrnm 11 r IN WITNESS WHEREOF, the parties heret.o have duly executed this 2005 L.oan M.odificati.on Agreement as evidenced by the signatures .of their members and .officers as .of the dates which appear next t.o such signatures. This 2005 L.oan M.odificati.on Agreement may be executed in c.ounterparts and when fully executed by the parties, each such c.ounterpart shall be deemed t.o be .one .original instrument. CITY City .of San Bernardin.o By: At.~ Date: By: Rachel G. Clark City Clerk APPROVED AS TO FORM: BY:~ City Att.orney ~ .O~ c,'tyAfft~ BORROWER 303, L.L.C., a Calif.ornia limited liability c.ompany Date: By: Martin A. Matich, Manager By: CCJ, Inc., a Calif.ornia c.orp.orati.on, Manager By: J. Kevin Brunk, its President APPROVED AS TO FORM: By: Att.orneys f.orB.orrower 4840-9415-)216.4 2/15/05 jmm 12 IN WITNESS WHEREOF, the parties hereto have duly executed this 2005 Loan Modification Agreement as evidenced by the signatures of their members and officers as of the dates which appear next to such signatures. This 2005 Loan Modification Agreement may be executed in counterparts and when fully executed by the parties, each such counterpart shall be deemed to be one original instrument. CITY Date: By: City of San Bernardino ~4~ Ju h Valles Mayor By: ~ Iot.~ - Ra el G. Clark City Clerk APPROVED AS TO FORM: BY:~~~' City Attorney SnIJMCiftNnY'4'f BORROWER 303, L.L.C., a California limited liability company Date: By: Martin A. Matich, Manager By: CCJ, Inc., a California corporation, Manager By: J. Kevin Brunk, its President APPROVED AS TO FORM: By: Attorneys for Borrower 4840-9415-3216.4 2/] 5/05 jmm 12 .. IN WITNESS WHEREOF, the parties hereto have duly executed this 2005 Loan Modification Agreement as evidenced by the signatures of their members and officers as of the dates which appear next to such signatures. This 2005 Loan Modification Agreement may be executed in counterparts and when fully executed by the parties, each such counterpart shall be deemed to be one original instrument. CITY Date: City of San Bernardino ()~~~ By: ':f!!:. tJldith Valles Mayor By: 9...-.e.Ju.J_ k. ~ Ra~ark City Clerk APPROVED AS TO FORM: BY:~~' City Attorney 'Sr.bfJJy C.,,~,,~ BORROWER 303, L.L.C., a California limited liability company Date: By: Martin A. Matich, Manager By: CCJ, Inc., a California corporation, Manager By: J. Kevin Brunk, its President APPROVED AS TO FORM: By: Attorneys for Borrower 4840-9415-3216.4 2/15/05 jrnm 12 AGENCY Redevelopment Agency of the City of San Bernardino By: / Date: a es of the Community Development ission of the City of San Bernardino By: Gary Van Osdel Executive Director APPROVED AS TO FORM: By: ~~~~ Agency Co sel 4840-9415-3216.4 2115105 jrnm 13 ,- Date: APPROVED AS TO FORM: By: ~~"a()~ Agency C sel 4840-9415-3216.4 2/15/05 jmm AGENCY Redevelopment Agency ofthe City of San Bernardino By: By: Jud C ir of the Community Development ommission of the City of San Bernardino Gary Van Osdel Executive Director 13 If Date: APPROVED AS TO FORM: BY:Ag~~IIMk 4840-9415-3216.4 2/15/05 jnnn AGENCY Redevelopment Agency ofthe City of San Bernardino By: By: 1th Valles air of the Community Development Commission of the City of San Bernardino Gary Van Osdel Executive Director 13 .. Exhibit "A" to 2005 Loan Modification " RECORDING REQUESTED AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, California 92401 (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 2005 COLLATERAL ASSIGNMENT OF SECTION 108 LOAN DOCUMENTS BY THE CITY OF SAN BERNARDINO TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ARISING UNDER A CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. ~5308 (Former HUD Section 108 Loan Contract No. B-94-MC-06-0539-A) THIS 2005 COLLATERAL ASSIGNMENT OF SECTION 108 LOAN DOCUMENTS BY THE CITY OF SAN BERNARDINO TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ARISING UNDER A CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. g5308 (the "2005 Collateral Assignment Agreement") is dated as of February 22, 2005, by the City of San Bernardino, a municipal corporation (the "City") in favor of the Redevelopment Agency of the City of San Bernardino (the "Agency"). RECITALS A. The Secretary of Housing and Urban Development (the "Secretary of HUD") and the City were previously parties to that certain Contract For Loan Guarantee Assistance dated as of September 26, 2000, as amended by First Amendment To Contract For Loan Guarantee Assistance, dated March 5, 2001, as further amended by an instrument dated as of July I, 2003, and as further amended by an instrument, dated as of August 16, 2004 (collectively, the original contract by and between the City and HUD, together with all of the amendments, are referred to as the "HUD Section 108 Loan Contract") pursuant to which the City was authorized to loan up to One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00) of Community Development Block Grant Program Section 108 monies to 303, L.L.C., a California limited liability company (the "Borrower") in connection with the development of that community development project referred to as the "303 Third Street Project". 4830-9341-8496.2 2/7/05 jrnm P:\Agendas\Agenda Attachments\Exhibits\200S\OS-OZ.22 30) LLC-2ooS Collateral Assignment (Exhibit A to 200S Loan Mod),doc Page I . Ul B. The City has used the proceeds of the loan made by the Secretary of HUD to the City under the HUD Section 108 Loan Contract (the "HUD Section 108 Loan") to originate a $1,840,000 loan by the City to the Borrower (the "City Section 108 Loan") under the terms of that certain loan agreement entitled "2000 Community Development Block Grant Program Section 108 Project Development Loan Agreement (303 Third Street Project), dated as of September 18, 2000, as amended (the "City Section 108 Loan Agreement") by and between the City and the Borrower. C. The Borrower intends to proceed with the completion of the "Borrower Improvements Phase II", as this term is defined in the City Section 108 Loan Agreement, and to install certain improvements, and thereafter transfer title in the completed "303 Third Street Project" as this term is defined in the City Section 108 Loan Agreement, to the County of San Bernardino, in accordance with the terms of that agreement entitled "Agreement for Purchase and Sale of Real Property", dated as of June 29, 2004 (the "County Purchase Contract") by and between the Borrower and the County of San Bernardino. D. In order to complete the 303 Third Street Project the Borrower has requested that the City provide further accommodation to the Borrower and the Borrower has requested that the City approve a further amendment to the City Section 108 Loan Agreement which would authorize the Borrower to obtain senior construction loan financing for the 303 Third Street Project in an original principal senior construction loan amount not to exceed Seventeen Million Five Hundred Thousand Dollars ($17,500,000). . E. In order to accommodate the request of the Borrower relating to the proposed $17,500,000 senior construction loan for the completion of the 303 Third Street Project and the satisfaction of the Borrower's obligations under the County Purchase Contract, the City has made arrangements with the Agency for the Agency to prepay the HUD Section 108 Loan in full, in consideration for the collateral assignment by the City of the "2005 Section 108 Assigned Collateral Documents", described in Section 1 of this collateral assignment of Section 108 Loan Documents. NOW, THEREFORE, WITH REFERENCE TO THE ABOVE RECITALS AND IN RELIANCE THEREON, AND FOR SUCH OTHER GOOD AND VALUABLE CONSIDERATION THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE CITY AGREES AS FOLLOWS: Section 1. (a) This 2005 Collateral Assignment Agreement is being executed and delivered by the parties in furtherance of the terms and conditions of that certain agreement entitled "2005 Loan Modification and Collateral Assignment Agreement and Consent to Assignment", dated as of February 22, 2005, by and among the Borrower, the City and the Agency. (b) This 2005 Collateral Assignment Agreement affects the real property more particularly described in Exhibit "A" attached hereto. 4830-9341-8496.2 2!7105jrnrn P:\Agendas\Agenda Atlachments\Exhibits\2005\OS-02-22 303 LLC-2005 Collateral Assignment (Exhibit A 10 2005 Ulan Mod)_doc Page 2 r , (c) The Borrower has previously delivered to the City the City Section 108 Loan Collateral Documents, including without limitation the following: (I) Loan Agreement, including modification letters, dated May 24, 2001, and May 31, 2001 and amended dated as of July I, 2003, and August 16,2004 (the "City Section 108 Loan Agreement"); (2) $1,840,000.00 Promissory Note Payable To A Public Entity (the "Borrower Section 108 Promissory Note"); (3) $1,840,000.00 Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing (the "City Deed of Trust"); (4) Environmental Indemnity; (5) Assignment ofInterest in Contracts and Permits; (6) Personal Guarantee (Matich, Lemann and Brunk, as individuals, jointly and severally); (7) $100,000 U.S. Bank National Association Irrevocable Standby Letter of Credit Number SLCPPDXOI064; (8) $100,000.00 U.S. Bank National Association Irrevocable Standby Letter of Credit Number SLCPPDXOI065; (9) 2005 Affirmation of Personal Guaranty A fully executed original copy of each of the documents identified above is hereby delivered to the Agency concurrently with the execution and recordation of this 2005 Collateral Assignment. Collectively, the documents described above and as hereby delivered to the Agency are referred to as the "2005 Section 108 Assigned Collateral Documents". True and correct copies of each of the 2005 Section 108 Assigned Collateral Documents are also on file with the City as official records of the City. Section 2. The City hereby grants, assigns and transfers to the Agency as collateral for the payment by the City of the obligation as arise in favor of the Agency under the 2005 Agency Loan Agreement as approved by City Council Resolution No. dated February 22, 2005, each of the 2005 Section 108 Assigned Collateral Documents. The City intends and declares that by this 2005 Collateral Assignment Agreement, the Agency, and its successors and assigns, shall have the rights and powers and shall be entitled to all of the benefits under the 2005 Section 108 Assigned Collateral Documents, to the same degree and extent as though the 2005 Section 108 Assigned Collateral Documents, and each of them, had been originally made between the Borrower and the Agency. 4830-9341-8496.2 Page 3 2/7/05jmm P:\Agendas\Agenda Anachments\Exhibits\2005\OS-02.22 303 LLC-200S Collateral Assignment (Exhibit A to 2005 Loan Mod)_doc , Section 3. For so long as no breach by the City has occurred under the 2005 Agency Loan Agreement as approved by City Council Resolution No. , the City reserves the right to make necessary or appropriate amendments and/or revisions to certain of the 2005 Section 108 Assigned Collateral Documents identified below; provided, however, that the City shall not make or agree to any amendment or revision to the instruments identified below which in the opinion of legal counsel acceptable to the Agency materially alters the term or materially diminishes the value of any of such instruments as security for the repayment by the City to the Agency of the Agency's loan to the City under the terms of the 2005 Agency Loan Agreement: City Section 108 Loan Agreement; Borrower Section 108 Promissory Note; City Deed of Trust; Personal Guaranty; Assignment of Interests in Contracts and Permits [including without limitation modifications to Exhibit "C" of the Assignment of Interests in Contracts and Permits: County Purchase Contract] Section 4. The City represents and warrants to the Agency that the City is (and as to any other 2005 Section 108 Assigned Collateral Documents acquired hereafter, the City shall be) and remain the sole owner of the 2005 Section 108 Assigned Collateral Documents, excepting only the security interest of the Agency therein as granted by this 2005 Collateral Assignment Agreement, and further excepting the senior security interest of the "Construction Lender", in certain of the 2005 Section 1 08 Assigned Collateral Documents, as may hereafter arise under Section 14.0 of the City Section 108 Loan Agreement. Section 5. This 2005 Collateral Assignment Agreement shall be a conditional assigrunent of the 2005 Section 108 Assigned Collateral Documents, and the Agency shall not exercise its rights hereunder unless the Agency shall first give and serve upon the City written notice that there has been a default under the 2005 Agency Loan Agreement beyond any applicable cure period. The City expressly acknowledges and agrees that the Agency may exercise its rights hereunder with or without: (i) taking possession of the property described in the City Deed of Trust; (ii) initiating foreclosure proceedings with respect to the 2005 Section 108 Assigned Collateral Documents; or (iii) taking any other action with respect to the 2005 Section 108 Assigned Collateral Documents, including without limitation the receipt of the proceeds of either of the Borrower letters of credit as assigned by the City to the Agency. Section 6. Upon the delivery to the City by the Agency of the notice of default described in Section 5, the City shall not have any further interest in or with respect to the 2005 Section 108 Assigned Collateral Documents, or any of them; provided however, that if the City: (i) repays in full its obligation to the Agency under the 2005 Agency Loan Agreement; or 4830-9341-8496.2 2/7/05jmm P:\Agendas\Agenda Attachments\Exhibits\200S\OS-02-22 303 LLC-2005 Collateral Assignment (Exhibit A 10 zooS Loan Mod)_doc Page 4 .. (ii) if the Agency elects to permit the City to cure a default under the 2005 Agency Loan Agreement, then in either such case, the rights and interests of the City under the 2005 Section 108 Assigned Collateral Documents, and each of them, shall be reinstated. Section 7. In the event of the occurrence of any default by the Borrower under the 2005 Section 108 Assigned Collateral Documents, the City shall have the right, but not the obligation, upon written notice to the Agency, to cure any such default of the Borrower and take any action under the 2005 Section 108 Assigned Collateral Documents to preserve the City's rights under such 2005 Section 108 Assigned Collateral Documents. Section 8. The City agrees to provide prompt written notice to the Agency of any default by the Borrower under any of the 2005 Section 108 Assigned Collateral Documents. Section 9. The City agrees that the Agency shall not be obligated to perform or discharge any obligation, duty or liability under the 2005 Section 108 Assigned Collateral Documents by reason of this 2005 Collateral Assignment Agreement until such time as the Agency may exercise its election as provided in Section 5 hereof. Section 10. The City agrees not to do, or suffer to be done, any of the following acts without obtaining the prior written consent of the Agency: (i) cancel any of the 2005 Section 108 Assigned Collateral Documents; (ii) surrender of the 2005 Section 108 Assigned Collateral Documents; (iii) waive or forgive any 2005 Section 108 Assigned Collateral Documents; (iv) further assign any 2005 Section 108 Assigned Collateral Documents; (v) modify any of the 2005 Section 108 Assigned Collateral Documents, except as set forth in Section 3, without the prior consent of the Agency which consent shall not be unreasonably withheld, conditioned or denied; or (vi) fail to perform any obligation of the City under the 2005 Section 108 Assigned Collateral Documents. Section 11. All notices, requests, demands, and other communications under this 2005 Collateral Assignment Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally to the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and telephonic confirmation or receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier service or the Express Mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, retum receipt requested, to the party as follows: Ifto City: Office of the Mayor City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Tel: 909-384-5133 Fax: 909-384-5067 4830-9341-8496.2 2/7/0Sjmm P\Agendas\Agenda Attachmems\Exhibils\2005\OS-02-22 303 LLC-2005 Collateral Assignment (Elthibil A to 2005 WlIll Mod) doc Page 5 . ji" If to the Agency: Economic Development Agency ofthe City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, CA 92401 Tel: 909-663-1044 Fax: 909-888-9413 Section 12. From and after a default by the City under the 2005 Agency Loan Agreement, the City hereby irrevocably appoints the Agency as the City's attorney-in-fact to exercise any and all of the City's rights in and or under any of the 2005 Section 108 Assigned Collateral Documents, to give appropriate receipts, releases and satisfactions on behalf of the City in connection with the City's rights or delegations under any of the 2005 Section 108 Assigned Collateral Documents, and to do any and all other acts in the name of the City or in its own name with the same force and effect as if this 2005 Collateral Assignment Agreement had not been made. This power of attorney is coupled with an interest. II II II II II II II II II II II II II II II 4830-9341-8496.2 2/7/05 jmm P:\Agendas\Agcnda Attachrnents\Exhibits\2005\OS-02~22 30] UC-2005 CollaleraJ Assignment (Exhibit A to 2005 Loan Mod).OOc Page 6 . ;r";'C,. THIS 2005 COLLATERAL ASSIGNMENT OF BORROWER SECTION 108 LOAN DOCUMENTS BY THE CITY OF SAN BERNARDINO TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ARISING UNDER A CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. 95308 is dated as of February 22, 2005, and is executed on behalf of the City by its authorized officers whose signatures appear below. CITY City of San Bernardino, California Date: ATTEST: ~ ~.(!.l~ Racn 1 G. Clark, City Clerk APPROVED AS TO FORM: ~/t~~~~. City A orney S /J C,l..AfI.."A" r. 'III"'" {CONSENT OF THE BORROWER 303, L.L.C., a California limited liability company hereby consents to the foregoing terms of the 2005 Collateral Assignment of Borrower Documents Agreement Date: By: Martin A. Matich, Manager -- and -- CJJ, Inc., a California corporation, manager By: J, Kevin Brunk, its President [NOTARY ACKNOWLEDGEMENT OF ALL SIGNATURES ATTACHED] 4830-9341-84%.2 2nt05 jmm P:\Agendas\Agenda AttacIunents\Exhibitsl1005\05-02-22 303 LLC-2005 CoIlatcnI A.IIipmIat (Bldltil A. to 2llIO:S I..- WolQ.cIoc Page 7 .' Date: APPROVED AS TO FORM: _ A~~j/~ ACCEPTANCE OF DELIVERY OF BORROWER SECTION 108 LOAN COLLATERAL AGENCY Redevelopment Agency of the City of San Bernardino By: Executive Director 4830-9341-8496.2 2n105 jmm P:\Agendas\Agenda Attachments\Exhibits\200S\OS-02-22 303 LLC-ZOOS QI]latCl1l.! Assignment (Exhibit A to 2005 Loan Mod).doc Page 8 . :, ~;_,.: i' ; 'i ~~I: , THIS 2005 COLLATERAL ASSIGNMENT OF BORROWER SECTION 108 LOAN DOCUMENTS BY THE CITY OF SAN BERNARDINO TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ARISING UNDER A CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. 95308 is dated as of February 22, 2005, and is executed on behalf of the City by its authorized officers whose signatures appear below. CITY City of San Bernardino, California ~~ Date: By: ATTEST: ~~1u.L h.~ Rachel G. Clark, City Clerk APPROVED AS TO FORM: . C,."AI1a~ CONSENT OF THE BORROWER 303, L.L.C., a California limited liability company hereby consents to the foregoing terms of the 2005 Collateral Assignment of Borrower Documents Agreement Date: By: Martin A. Matich, Manager -- and -- cn, Inc., a California corporation, manager By: J, Kevin Brunk, its President [NOTARY ACKNOWLEDGEMENT OF ALL SIGNATURES ATTACHED] 4830-9341-8496.2 2n105 jmm P:\Agendas\Agenda Attachmcms\ExhibitsUOO5\OS.02-22 303 LLC-200S Collateral Assignment (Elchibit A to 2005 Loan Mod).doc Page 7 ~ ""il"'" ACCEPTANCE OF DELIVERY OF BORROWER SECTION 108 LOAN COLLATERAL AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Executive Director APPROVED AS TO FORM: ~Q':f'dfll ~ 4830-9341-8496.2 zn 105 jrnrn P:\Agendas\Agcnda Attachments\Exhibits\200S\OS..oZ-22 303 LLC-ZOOS Collateral Assignment (Exhibit A to 2005 Loan Mod).OOc Page 8 I' -'," ... ~ ; :~'; i.,'t THIS 2005 COLLATERAL ASSIGNMENT OF BORROWER SECTION 108 LOAN DOCUMENTS BY THE CITY OF SAN BERNARDINO TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ARISING UNDER A CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. 95308 is dated as of February 22, 2005, and is executed on behalf of the City by its authorized officers whose signatures appear below. CITY City of San Bernardino, California Date: By: ATTEST: ~h.~ Rac e G. Clark, City Clerk APPROVED AS TO FORM: City ~'1 CONSENT OF THE BORROWER 303, L.L.C., a California limited liability company hereby consents to the foregoing terms of the 2005 Collateral Assignment of Borrower Documents Agreement Date: By: Martin A. Matich, Manager -- and -- cn, Inc., a California corporation, manager By: J, Kevin Brunk, its President [NOTARY ACKNOWLEDGEMENT OF ALL SIGNATURES ATTACHED] 4830-9341-84%.2 2nJ05 jrnm P:\Agendas\Agenda Attachments\Exhibils\2005\05-02-22 303 LtC-2ooS Collateral Assignment (Exhibit A to 2005 Loan Mod).doc Page 7 ACCEPTANCE OF DELIVERY OF BORROWER SECTION 108 LOAN COLLATERAL AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Executive Director APPROVED AS TO FORM: JJtxJ,d~".~ Agency tC6unsel 4830-9341-84%.2 2n/05 jrnm P:\Agcndas\Agenda Attachments\Exhibitsl2005\OS-02+22 303 LLC-2ooS Collateral Assignment (Exhibit A 10 2005 Loan Mod).doc Page 8 . Exhibit "A" to 2005 Collateral Assignment IT o~r. -" UU\JV~I 10'00 r, UUl '........, '-" .:rI-d...-+e.. BId) EXHIBIT "An PARCEL NO.1: THE WEST 22 FEET OF WT 7, BWCK 14, CITY OF SAN BERNARDINO, TN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) I, RECORDS OF SAID COUNTY. EXCEPTING THE NORTH 3S FEET THEREOF. ALSO EXCEPTING RIGHT OF WAY OF SAN BERNARDINO. ARROWHEAD AND WATERMAN RAILWAY CO., IF SAME BE FOUND TO INCLUDE ANY PORTION OF SAID LOT 7. PARCEL NO, 2: THAT PORTION OF LOT 6, BLOCK 14, CITY OF SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA. AS PER PLAT RBCORDET.l1N BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY. DBSCRffiED AS FOLLOWS; BEGINNING AT A POINT 22 FEET EAST OF THE NORTHWEST CORNER OF WT 6; THENCE SOUTH 148-1/2 FEET, MORE OR LESS, TO THE SOUTH LINE OF WT 6; THENCE EAST ALONG THE SOUTH UNE OF SAID WT 6, SJ.87 FEET. MORE OR LESS. TO THE WEST LINE OF LAND BELONGING TO THE SAN BERNARDINO LODGE NO. Wi OF THE INDEPENDENT ORDER OF ODD FELLOWS AS PER DEED RECORDED IN BOOK 'U' OF DEEDS, PAGE 415; THENCE NORTH 148- 112, MORE OR LESS, TO THE NORTH LINE OF LOT 6; THENCE WEST 51.87 FEET, MORE OR LESS. TO THE POINT OF BEGINNING. PARCEL NO.3: THAT PORTION OF LOT 6, BLOCK 14, OF THE CITY OF SAN BERNARDINO, IN THE CITY OF SAN BER..'IAJUlINO, COUNTY OF SAN BERNARDINO, STATE OF CAUFOlUllA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) I, RECORDS OF SAID COUNTY, DESCRmED AS FOLLOWS; BEGINNING AT A POINT 229.23 FEET WEST OF A POINT 41.25 FEET SOUTH OF THE INTERSECTION OF THE CENTER UNE OF 'C" STREET AND THIRD STREET OF SAID CITY; THENCE SOUTH 148.54 FEET; THENCE WEST 37.75 FEET; THENCE NORTH 148.54 FEET: THENCE EAST 37.75 FEET TO THE POINT OF BEGINNING. PARCEL NO.4 PARCEL A: ALL THAT PORTION OF WTS 6 AND 7, IN BLOCK 14. CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) I. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: rfW ~€. lo ~4 acr. -1' UU\lUCI la:aO r. UUJ '-' '--' COMMENCING AT A POINT 87 FEET WEST AND 100.70 FEET SOUTH OF THE NORTHEAST CORNER OF SAID LOT 6; THENCE WEST 100.83 FEET. PAR.A!l.EL wrm THE NORTH LINE Of SAID LOT 6; THENCE SOUTH 47.84 FEET. PARALLEL WITH THE EAST UNE OF SAID LOT 6; TlfENCE WEST ALONG THE NO~TH LINE OF LOT 7; 85.35 FEET TO A POINT WHJCH IS 25.5 FEET BAST OF THE NORTHWEST CORNER OF SAID LOT 7; THENCE SmITH PARALLEL WITH THE WEST LINE OF SAID LOT. 35 FEET; THENCE W'CSr 3.5 FEET; THENCE SOUTH PARALLEL WITH THE WEST LINE OF SAID LOT. 88,54 FEET TO A POINT 25 FEET NORTH OF THE SOUfH LINE OF SAID LOT; THENCE EAST PARALLEL wrnt THE SOUTH LINE OF SAID LOT. 190.45 FEET TO A POINT WHICH IS 87 FEET WEST OF THE EAST UNE OF SAID LOT: THENCE NORm PARA.LI.EL WITH THE EAST UNE OF LOTS 7 AND 6. 171.22 FEET. MORE OR LESS. TO THE POINT OF BEGINNING. PARCEL D: A PERPETUAL RIGHT OF WAY FOR PASSAGE OF FOOT PASSENGERS. TEAMS. AUTOMOBILES. TRUCKS AND OTHER VEHICLES OVER AND ACROSS THE FOLLOWING PROPERTY: THAT PORTION OF LOT 7, BLOCK 14. CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CAUFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 1. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST UNE OF LOT 7. WHERE SAID EAST LINE IS INTERSECTED BY THE NORTH LINE OF THE EXlSTING RIGHT OF WAY OF P ACIFlC ELECTRIC RAILWAY CO.; THENCE WEST ALONG THE NORTH LINE OF SAID RIGHT OF WAY 87 FEET. MORE OR LESS. TO THE EAST UNE OF THE PROPERTY DESCRIBED AS PARCEL NO.3 ABOVE; THENCE NORTH 30 FEET; THENCE EAST 87 FEET, MORE OR LESS. TO THE BAST UNE OF SAID LOT 7; THENCE SOUTH 30 FEET. TO THE POINT OF BEGlNNlNG. AS CONVEYED BY MARTHA L. KlPllNGER. Ef AL., TO GEORGE M. COOLEY AS TRUSTEE. BY DEED RECORDED IN BOOK: 719, PAGE 130. OF DEEDS. PARCEL NO.5: ALL THAT PORTION OF LOTS 6 AND 7. BLOCK 14. OF THE CITY OF SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) I, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT 81 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 6. BEING THE NORTHEAST CORNER OF WHAT WAS KNOWN AS THE COX BUILDING; THENCE WEST ALONG THE NORTH LINE OF SAID LOT 6, 100 FEET 10 INCHES TO THE NORTHEAST CORNER OF THE BillLDING FORMERLY OWNED BY THE INDEPENDENT ORDER OF OOD FELLOWS; THENCE SOUfH 100.70 FEET: THENCE EAST 100.83 FEET PARALLEL WITH THE NORTH llNE OF SAID LOT 6; THENCE NORTH 100.70 FEET TO THE POINT OF BEGINNING. PARCEL NO.6; THAT PORTION OF LOTS 6 AND 7. BLOCK 14. CITY OF SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) I, RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: @' ~~t 'VO f f tJu!. 1] UUllUGI (.J..JI ~. UU4 ......... ......... COMMENCING AT THE NORTHEAST CORNER OF SAID LOT 6; TIIalCE WEST 86 FEET. MORE OR LESS. TO THE NORTHEAST COItNBR OF THE COX DunnING. 80 CALlED. AlSO KNOWN lIS THE CREAMERY BunnING; THIlNCE SOUTH TO THB 80UTH UNE OF SAID LOT 7; THENCE EAST TO THE SOUTHEAST CORNER OF SAID LOT 7; THENCE NORTH TO THE POINT OF BEGINNING. SAVING AND mcCEP1'ING THEREFROM THAT pORTION EMBRACED WITHIN RIGHT OF WAY OF PACIFIC RAILWAY COMPANY. PARCEL NO.7; THE EAST 3.S FEET OF THE WEST 25.5 FEET OF THE NORTH 3S FEET OF LOT 7, BLOCK 14. CITY OF SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CAlJPORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAG'E(S) I. RECORDS OF SAID COUNTY. (iiiJd ~~~\=4- -. ....... s-w~ 7.......l - - " EXHIBIT" A" THAT PORTION OF BLOCK 2 OF THE CITY OF SAN BERNARDINO. COUNTY OF SAN' BERNARDINO. STATE OF CA1.JFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1. RECORDS OF SAID COUNTY. LYING SOUTHE.RLY OF 2ND STlEET. 82.S FBET WIDE, EASTERLY OF AlWlWHEAD AVENUE. 82.S FEET WIDe. (FORMEllLY CRAFTOILSTREEn. wesTERLY OF MOUNTAIN VIEW AVENUE. 82.S FEET WIDE. (FORMERLY CAMEL STREET) AS SHOWN ON SAID PLAT DESCRIBED ABOVE AND NOIlTHmU.Y OF ICING STIlEET. (FORMElU.Y BRIDGE STREEn AS SHOWN ON BEDFOIlD BROTHEIlS SUBDMSlON PER. PLAT RECORDED IN BOOK 8 OF MAPS, PAGE 30. RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF SAlD BLOCK 2, DESCRlBED IN THE QUITCLAIM DEED FROM ROY T. COE AND HBLIiN C. COE, HUSBAND AND WIFE TO GEOR.GE EDWARD COB AND ROYNA MAE COBB RECORDED AUGUST 24. 1967 IN BOOK 6873. PAGE 738, OFFICIAL RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: THAT UNSUBDIVIDED PORTION OF LOTS 4 AND s. IN CITY BLOCK 2. AS RECORDED IN BOOK 7 OF MAl'S. PAGE I. OFFICIAL RECORDS OF SAN BERNARDINO COUNTY. CAIlFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT S, THENCE SOUTH 225 FEET; THENCE NORTIiEASTERL Y TO A POINT SO FEET SOUTH AND 184 FEET EAST OF THE POINT OF BEGINNING: THENCE NORTHEASTBRL Y TO THE NORTHEAST CORNER OF SAID LOT 5; THENCE WEST TO THE POINT OF BEGINNING. A PORTION OF SAlD LAND [S ALSO SHOWN AS LOTS I THROUGH 10. INCLUSIVE. OF BLOCK 4, AND THE ALLEY VACATED ADJACENT TO SAID LOTS, OF BEDFORD BROTHERS SUBDIVISION. AS PER PLAT RECORDED IN BOOK 3 OF MAPS, PAGE 84 ~D BOOK 8 OF MAPS. PAGE 30, RECORDS OF SAlD COUNTY. ~ 8t; I~'~ p~ <+ () ~<C- , - Exhibit "B" to 2005 Loan Modification AFFIRMATION OF PERSONAL GUARANTEE THIS AFFIRMATION OF PERSONAL GUARANTEE (the "Affirmation of Personal Guarantee")ls made this of February, 2005 by J. Kevin Brunk, an individual, Wilfrid C. Lemann, an individual, and Martin A. Matich, an individual (collectively, the "Guarantors" and individually a "Guarantor") in favor of the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic, (the "Agency"). RECITALS A. 303, L.L.C., a California limited liability company (the "Borrower"), has entered into that certain agreement with the City of San Bernardino, a body corporate and politic (the "City") entitled "2000 Community Development Block Grant Program Section 108 Program Development Loan Agreement (303 Third Street Project)", dated as of June 1,2001, as amended (the "City Section 108 Loan Agreement"), for the purpose of furthering certain interests of the City within the downtown area of the City of San Bernardino, and the City prior thereto entered into a sirnilar agreement with the U.S. Department of Housing and Urban Development ("BUD") entitled "Contract for Loan Guaranty Assistance Under Section 108 of the Housing and Community Development Act of 1974", as amended, 42 U.S.C. 95308, dated September 26, 2000, as amended (the "HUD Section 108 Loan Agreement"). As a condition of the City approving a loan of $1,840,000 to the Borrower, the City required Guarantors, and each of them, to execute and deliver to City that Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C., executed by said Guarantors, and each of them, on May 25, 2001. ' B. The Agency and the Borrower have previously entered into that certain agreement entitled "2000 Owner Participation and EDI Loan Agreement (303 Third Street Project)" dated as of September 18, 2000 (the "OPA"). C. The City Section 108 Loan Agreement, the BUD Section 108 Loan Agreement, and the OP A have been duly amended by the respective parties prior to the date hereof to reflect changes in circumstances and modifications to the financing and development of the project. D. As a result of the greater than anticipated costs required to cause the redevelopment of the 303 Third Street Project by the Borrower, the Borrower has requested that the City arrange for the Agency to repay the BUD Section 108 Loan and that in consideration thereof, the Agency accept a collateral assigrunent from the City of all of the "Section 108 Loan Collateral" as this term is defined in the City Section 108 Loan Agreement, as security for the repayment by the City to the Agency of a loan of Agency low- and moderate-income housing funds in the amount of $ to the City under the terms of the 2005 Agency Loan Agreement by and between the City and the Agency (the "2005 Agency Loan Agreement") which the City shall use and apply to prepay the BUD Section 108 Loan. Accordingly, an agreement entitled "2005 Loan Modification and Collateral Assignment Agreement and Consent to Assigrunent (the "2005 Loan Modification Agreement") is entered into by and between the Borrower, Agency, and the City. 4837-3069-0560.1 1 P:\Agendas\Agenda AttacIunenU\Exhibits\2005\05-02-22 303 LLC.AfflJTIllltion of Personal Quafantee (Exhibit B to 200s Loan Mod).doc E. As a condition to entering into said 2005 Loan Modification Agreement, City and Agency have required that Guarantors, and each of them, execute and deliver this Affirmation of Personal Guarantee re-affirming the Guarantors' obligations under said Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C. in favor of both the City and the Agency, should the City assign or otherwise transfer its rights and benefits in said Personal Guarantee of $1 ,840,000 to the Agency. NOW THEREFORE, in order to induce the City and the Agency to enter into said 2005 Loan Modification Agreement, Guarantors, and each of them, warrant, covenant and affirm as follows: I. Guarantors, and each of them hereby covenant, affirm and warrant that the obligations, warranties, covenants and conditions set forth in the Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C. are true and correct as of the date of this Affirmation of Personal Guarantee, and will also inure to the benefit of the Agency should the City elect to assign or otherwise transfer its rights and benefits under said Personal Guarantee to the Agency. 2. Guarantors, and each of them, certify and affirm that Guarantors, and each of them, are not in default of any of the terms, conditions or obligations set forth in the Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C. as of the date of this Affirmation of Personal Guarantee. 3. All of the terms, obligations and conditions set forth in said Personal Guarantee shall remain in full force and effect. GUARANTORS J. Kevin Brunk an individual Wilfrid C. Lemann, an individual Martin A. Matich, an individual (Notary Acknowledgment) 4837.3069-0560.1 2 P:\Agendas\Agenda Attachmellts\Exhibits\2005\05-02-22 303 LLC-Affirmation of Personal Guarantee (Exllibil B to 2005 Loan Mod),doc ~ E. As a condition to entering into said 2005 Loan Modification Agreement, City and Agency have required that Guarantors, and each of them, execute and deliver this Affirmation of Personal Guarantee re-affirming the Guarantors' obligations under said Personal Guarantee of $1,840,000 Promissory Note of303, L.L.C. in favor of both the City and the Agency, should the City assign or otherwise transfer its rights and benefits in said Personal Guarantee of $1,840,000 to the Agency. NOW THEREFORE, in order to induce the City and the Agency to enter into said 2005 Loan Modification Agreement, Guarantors, and each of them, warrant, covenant and affirm as follows: I. Guarantors, and each of them hereby covenant, affirm and warrant that the obligations, warranties, covenants and conditions set forth in the Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C. are true and correct as of the date of this Affirmation of Personal Guarantee, and will also inure to the benefit of the Agency should the City elect to assign or otherwise transfer its rights and benefits under said Personal Guarantee to the Agency. 2. Guarantors, and each of them, certify and affirm that Guarantors, and each of them, are not in default of any of the terms, conditions or obligations set forth in the Personal Guarantee of $1,840,000 Promissory Note of 303, L.L.C. as of the date of this Affirmation of Personal Guarantee. 3. All of the terms, obligations and conditions set forth in said Personal Guarantee shall remain in full force and effect. GUARANTORS J. Kevin Brunk an individual Wilfrid C. Lemann, an individual Martin A. Matich, an individual (Notary Acknowledgment) 4837-3069-0560.1 2 P:\Agendas\Agenda AttachmenlslExhibils\200S\OS-OZ-22 303 LLC-Affirmation of Personal Guarantee (Exhibit B to 2005 Loan Mod)_doc PERSONAL GUARANTEE OF $1,840,000 PROMISSORY NOTE COVENANT OF SPOUSE I, , as the wife of hereby expressly guarantee the obligations of and I jointly and severally guarantee the obligations of , a married man. I, the undersigned, as a married woman executing the Personal Guarantee, hereby expressly agree that recourse may be had against my community property only, and not against my sole and separate property, for all my obligations under the Personal Guarantee. Sign: Date: 4837-3069-0560.1 . 3 P:\Agendas\Agenda Attachments\Exhiblls\2005\OS-02-22 303 LLC-Affirmation of Personal Guarantee (Exhibit B to 2005 Loan Mod)doc F PERSONAL GUARANTEE OF $1,840,000 PROMISSORY NOTE COVENANT OF SPOUSE I, , as the wife of hereby expressly guarantee the obligations of and I jointly and severally guarantee the obligations of , a married man. I, the undersigned, as a married woman executing the Personal Guarantee, hereby expressly agree that recourse may be had against my community property only, and not against my sole and separate property, for all my obligations under the Personal Guarantee. Sign: Date: 4837-3069-0560.1 4 P:\Agendas\Agenda Attachments\Exhibils\2005\05-02-22 303 LLC-Affirmation of Personal Guarantee (Exhibit B to 2005 Loan Mod).doc PERSONAL GUARANTEE OF $1,840,000 PROMISSORY NOTE COVENANT OF SPOUSE I, , as the wife of hereby expressly guarantee the obligations of and I jointly and severally guarantee the obligations of , a married man. I, the undersigned, as a married woman executing the Personal Guarantee, hereby expressly agree that recourse may be had against my community property only, and not against my sole and separate property, for all my obligations under the Personal Guarantee. Sign: Date: 4837-3069-0560.1 5 P:\Agendas\Agenda Attachmenls\Exliibits\2005\05-02-22 303 LLC-Affirmation of Personal Guarantee (Exhibit B to 2005 Loan Mod).doc Exhibit "B" to Mayor and Common Council Resolution CITY OF SAN BERNARDINO AND REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 2005 AGENCY LOAN AGREEMENT (303 THIRD STREET PROJECT) THIS 2005 AGENCY LOAN AGREEMENT (303 THIRD STREET PROJECT) is dated as of February 22,2005 (the "2005 Agency Loan Agreement") by and between the City of San Bernardino, a municipal corporation (the "City") and the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the "Agency") and is entered into in light of the facts set forth in the following Recital paragraphs: -- RECITALS -- WHEREAS, the City and the Secretary of Housing and Urban Development (the "Secretary of HUD") were previously parties to that certain Contract For Loan Guarantee Assistance dated as of September 26, 2000, as amended by First Amendment To Contract For Loan Guarantee Assistance, dated March 5, 2001, as further amended by an instrument dated as of July I, 2003, and as further amended by an instrument, dated as of August 16, 2004 (collectively, the original contract by and between the City and HUD, together with all of the amendments, are referred to as the "HUD Section 1 08 Loan Contract") pursuant to which the Secretary of HUD authorized the issuance of a "Section 108 Loan guarantee" in favor of the City and authorized the City to enter into a separate agreement to loan the proceeds of the HUD Section 108 Loan in a maximum principal amount not to exceed One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00) to 303, L.L.C., a California limited liability company (the "Borrower") in connection with the development of the community development project referred to as the "303 Third Street Project"; and WHEREAS, the City has used the proceeds of the loan made by the Secretary ofHUD to the City under the HUD Section 108 Loan Contract (the "HUD Section 1 08 Loan") to originate a loan to the Borrower of One Million Eight Hundred Forty Thousand Dollar ($1,840,000) under the terms of that certain loan agreement entitled "2000 Community Development Block Grant Program Section 108 Project Development Loan Agreement (303 Third Street Project), dated as of September 18,2000, as amended (the "City Section 108 Loan Agreement") by and between the City and the Borrower; and WHEREAS, as of the date of this 2005 Agency Loan Agreement the outstanding principal balance ofthe HUD Section 108 Loan is $1,740,000; and WHEREAS, the Borrower intends to proceed with the completion of the "Borrower Improvements Phase II", as this term is defined in the City Section 108 Loan Agreement, and to install certain improvements, and thereafter transfer title in the completed "303 Third Street Project" as this term is defined in the City Section 108 Loan Agreement, to the County of San 4848-0574-3104.1 1 2/8/05 jmm P:\Agendas\Agenda Attachments\Exhibits\200S\OS-02-22 303 LLC.Loan Agreement (Exhibit A & B)doc '" Bernardino (the "County"), in accordance with the terms of that agreement entitled "Agreement for Purchase and Sale of Real Property", dated as of June 29, 2004 (the "County Purchase Contract") by and between the Borrower and the County; and WHEREAS, in order to complete the 303 Third Street Project the Borrower has requested that the City provide further accommodation to the Borrower and the Borrower has requested that the City approve a further amendment to the City Section 108 Loan Agreement which would authorize the Borrower to obtain senior construction loan financing for the 303 Third Street Project in an original principal senior construction loan amount not to exceed Seventeen Million Five Hundred Thousand Dollars ($17,500,000) (the "Senior Construction Loan"); and WHEREAS, in order to accommodate the request of the Borrower relating to the proposed Senior Construction Loan for the completion of the 303 Third Street Project and the satisfaction of the Borrower's obligations under the County Purchase Contract, the City has made arrangements with the Agency for the Agency to prepay the HUD Section 108 Loan in full, and in consideration thereof, the Agency shall accept a collateral assignment from the City of all of the "Section 108 Loan Collateral" as this term is defined in the City Section 108 Loan Agreement, as security for the repayment by the City to the Agency of a loan of Agency low- and moderate-income housing funds in an amount not to exceed One Million Seven Hundred Thousand Dollars ($1,740,000) under the terms of this 2005 Agency Loan Agreement. The City shall use and apply the proceeds of the loan made available to it under the 2005 Agency Loan Agreement to prepay the HUD Section 108 Loan. The Borrower has acknowledged that it is not possible to obtain the necessary approvals directly from HUD as would be required pursuant to the HUD Section 108 Loan Agreement to allow the Borrower Improvements (Phase II) to proceed, and for that reason, the Borrower requested the Agency to provide a loan to the City to repay the existing HUD Section 108 Loan; and WHEREAS, the City and the Agency deem it to be in the best interests of the Borrower, the City and the Agency that the HUD Section 108 Loan be repaid by the City using the proceeds of the loan to be made by the Agency as set forth herein and that the proposed loan of Agency funds to the City for such purposes under this 2005 Agency Loan Agreement be secured in favor of the Agency by a collateral assignment of the Section 108 Loan Collateral, and all security instruments thereunder; and WHEREAS, the Borrower has acknowledged that it will benefit from the prepayment of the HUD Section 108 Loan and the collateral assignment of the Section 108 Loan Collateral to the Agency, and the related modifications of the terms of the City Section 108 Loan Agreement, and the OPA and has consented to the assignment and the modification of certain terms and conditions pursuant to the 2005 Loan Modification and Collateral Assignment Agreement and Consent to Assignment -- 2000 Community Development Block Grant Program Section 108 Project Development Loan Agreement, dated as of February 22, 2005 (the "2005 Loan Modification Agreement"); and WHEREAS, the City, the Agency, and the Borrower have prepared the 2005 Loan Modification Agreement, which contains the following pertinent provisions: 4848-0574-3104.1 2 2/8105 jmm P:\Agendas\Agenda Attacbments\Exhibits\2005\05..Q2-22 303 LLC-Loan Agreement (Exliibit A & B).doc (i) Agency agrees to provide a loan to City in principal amount not to exceed One Million Seven Hundred Forty Thousand Dollars ($1,740,000), which the City shall use and apply solely to repay the HOD Section 108 Loan; , (ii) City agrees to assign and transfer to Agency all rights, title and interest that the City may have in the Section 108 Loan Collateral; (iii) various amendments to the text of the City Section 108 Loan Agreement and the text of the corresponding Borrower Section 108 Promissory Note and City Deed of Trust to reflect, among other things, that the outstanding principal balance of the City Section 108 Loan shall be due and payable upon the earlier to occur of: (a) the transfer of title of the 303 Third Street Parcel by the Borrower to the County, or its nominee, under the terms of the County Purchase Contract, or (b) December 31,2006; (iv) various amendments to the Owner Participation Agreement (the "OPA"), dated as of September 18, 2000, as amended, by and between the Borrower and the Agency to reflect, among other things, a modification to maturity date of EDI Loan, ED! Loan Promissory Note and ED! Loan Deed of Trust to the earlier to occur of: (a) the transfer oftitle of the 303 Third Street Parcel by the Borrower to the County, or its nominee, under the terms of the County Purchase Contract, or (b) December 31,2006; (v) City and Agency to establish an escrow for the administration of the repayment of the HOD Section 108 Loan and the documentation of this 2005 Agency Loan Agreement and the acceptance and recordation of all necessary documents to consununate the transaction. NOW THEREFORE, (THE CITY AND THE AGENCY DO HEREBY AGREE AS FOLLOWS: Section 1. In addition to the usage of the defined terms set forth in the Recital paragraphs of this 2005 Agency Loan Agreement, the following words and phrases shall have the meaning as provided below: . 2005 Agency Note means and refers to the promissol)' note issued by the City and payable to Agency, or its assignee, in the original principal amount not to exceed One Million Seven Hundred Thousand Dollars ($1,740,000). The 2005 Agency Note evidences the indebtedness of the City to Agency under this 2005 Agency Loan Agreement. The form of 2005 Agency Note is attached hereto as Exhibit "A". . 2005 Loan means and refers to the loan in the original principal sum not to exceed One Million Seven Hundred Thousand Dollars ($1,740,000) to be made by the Agency to the City as provided in Section 2 of this 2005 Agency Loan Agreement. 4848-0574-3104.1 3 218/05 jrnrn P:\AgeOOas\Agenda Attachmcnts\Exhibits\200S\OS-02-22 303 LLC-Loan Aueement (Exhibit A & B).doc " . Low-and Moderate-Income Housing Fund means and refers to a portion of the property tax increment revenues of the Agency which the Agency is legally obligated to deposit in such fiscal year for the Low and Moderate Income Housing Fund of the Project Area. Section 2. 2005 Loan. (a) The Agency hereby agrees to loan to the City a principal amount not to exceed One Million Seven Hundred Thousand Dollars ($1,740,000), as the 2005 Loan, subject to the terms of this 2005 Agency Loan Agreement. The 2005 Loan shall be evidenced by the 2005 Agency Note which shall be executed by the City and delivered to the Agency at the time of disbursement of the proceeds of the 2005 Loan to the City, upon the satisfaction of each of the conditions of this 2005 Agency Loan Agreement and Section 9(b) of the 2005 Loan Modification Agreement. The form of 2005 Agency Note is attached hereto and incorporated herein by reference. (b) The date of 2005 Agency Note shall be the date on which all of conditions for the disbursement of the proceeds of 2005 Loan to the City under Section 9(a) of the 2005 Loan Modification Agreement have been satisfied and the outstanding principal balance and all accrued and unpaid interest due under the HUD Section 108 Loan has in fact been paid by City to HUD. Such date shall be indicated the face of 2005 Agency Note and such date shall also be the date of the 2005 Agency Note. The 2005 Agency Note shall mature, and the outstanding principal balance and all accrued and unpaid interest shall be due and payable on the date (the "Maturity Date") provided in the 2005 Agency Note. (c) Interest shall accrue on the outstanding principal balance of Agency Note from its date until paid in full at a rate per annum as set forth in Agency Note, and accrued and unpaid interest shall be payable in quality installments to the Agency prior to the Maturity Date at the times provided in the 2005 Agency Note. (d) The City hereby pledges to make payments and ,allocate proceeds to the Agency under Agency Note prior to its Maturity Date solely the from the collateral assigmnent from the City of all of the Section 108 Loan Collateral, as more fully set forth below, in Section 3. The 2005 Agency Note is a special and limited obligation of the City and the sole source of funds as pledged for the repayment thereof is as provided in Section 3, herein. Neither the taxing power of the City or any other agency is pledged to repay the principal or accrued interest under 2005 Agency Note. Section 3. Special Pledge of Certain Citv Funds For Repayment of the 2005 Loan. The City hereby agrees to assign and transfer all of the payments which the City may receive from the Borrower after the date of the 2005 Agency Note as shall be due and payable under the City Section 108 Loan and the City hereby further agrees to assign and transfer all of the City's rights, title and interest in the Section 108 Loan Collateral pursuant to the terms and conditions of this 2005 Agency Loan Agreement, the 2005 Loan Modification Agreement, and the 2005 4848-0574-3104.1 4 2/8/05 jrnrn P:\Agendas\Agenda AUachments\Exhibits\2005\OS.02.22 303 LLC-Loan Agreement (Exhibit A & B)_doc Collateral Assignment of Section 108 Loan Documents by the City to the Agency arising under a contract for Loan Guarantee Assistance under Section 108 of the Housing and Community Act of 1974, as amended, 42 U.S.C. Section 5304 (the "2005 Collateral Assignment Agreement") as security for the payment when due of the 2005 Loan. No other source of funds of the City are pledged or made available therefore and the obligation of the City to repay the 2005 Loan is not a general obligation of the City. Section 4. Conditions for Disbursement of Proceeds of2005 Loan. (a) The City shall use and apply the proceeds of the 2005 Loan to prepay the HUD Section 108 Loan, in full, pursuant to the terms and conditions of this 2005 Agency Loan Agreement, and for no other purpose. (b) The following conditions precedent shall be satisfied prior to the disbursement by the Agency of the proceeds of the 2005 Agency Loan to the City: (i) the City shall have assigned all Section 108 Loan Collateral and shall have satisfied all of its obligations to the Agency under the 2005 Loan Modification Agreement and 2005 Collateral Assignment Agreement and there shall be no default by the City under the HUD Section 108 Loan; (ii) all of the conditions of Section 9(b) of the 2005 Loan Modification Agreement shall have been satisfied; and (iii) HUD shall have accepted the prepayment of the HUD Section 108 Loan in accordance with this 2005 Agency Loan Agreement, 2005 Loan Modification Agreement, and 2005 Collateral Assignment Agreement. (c) The Mayor is authorized and directed to execute such ancillary loan security documents as Agency may reasonably request to evidence the collateral assignment by the City of the Section 108 Loan Collateral Documents. Section 5. Protection of Securitv. The City hereby agrees to take all reasonable action to protect any of the security pledged to the Agency for the repayment of the 2005 Loan. For so long as any unpaid balance of the 2005 Loan may exist, the City further agrees and covenants to enforce the rights of the City under the City Section 108 Loan Agreement and each of the Section 108 Loan Collateral Documents. Section 6. Further Assurances. The City shall upon the request of the Agency adopt, make, execute and deliver to the Agency all such further resolutions, instruments and assurances as may be reasonably necessary to carry out the intention of this 2005 Agency Loan Agreement. Section 7. Amendment. This 2005 Agency Loan Agreement may be amended by the mutual, written, consent of the City and the Agency. 4848-0574-3104.1 5 2/8/05 jrnrn P:\Agendas\Agenda Attachments\Exhibit5\2005\05.02.22 303 LLC-Loan Agreement (EKhibit A & B).doc ;- Section 8. Waiver of Personal Liabilitv. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of or interest on the 2005 Agency Note; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 9. Pavment of Business Davs. Whenever in this 2005 Agency Loan Agreement any amount is required to be paid on a day, which is not a business day of the Agency, such payment shall be required to be made on the business day of the Agency immediately following such day. Section 10. Notices. All written notices to be given under this 2005 Agency Loan Agreement shall be given by first class mail or personal delivery or by telecopier and promptly confirmed by mail, to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective 48 hours after deposit in the United States mail, postage prepaid or, in the case of personal delivery to any person, upon actual receipt at the address set forth below: To the Agency: Economic Development Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, CA 92401 Tel: (909) 663-1044 Fax: (909) 888-9413 To the City: Office of the Mayor City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Tel: (909) 384-5133 Fax: (909) 384-5067 Section 11. Partial Invaliditv. If any Section, paragraph, sentence, clause or phrase of this 2005 Agency Loan Agreement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this 2005 Agency Loan Agreement. The City hereby declares that it would have adopted and approved this 2005 Agency Loan Agreement and each and every other section, paragraph, sentence, clause or phrase hereof irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses, or phrases of this 2005 Agency Loan Agreement may be held illegal, invalid or unenforceable. Section 12. Governing Law. This 2005 Agency Loan Agreement shall be construed and governed in accordance with the laws of the State of California. [SIGNATURES ON SUBSEQUENT PAGE] 4848.0574-3104.1 6 2/8/05 jrnm P:\Agendas\Agenda Atlacbmenls\Exhibils\2005\05-02-22 303 LLC-Loan Agreement (Exhibit A & B).doc IN WITNESS WHEREOF, the undersigned officers of the parties have executed this 2005 Agency Loan Agreement as of the date indicated next to the signatures of each of them. CITY City of San Bernardino Date: Rachel Clark, City Clerk APPROVED AS TO FORM ~ Z~"iii-:f. City Attorney SI"'P'lI4'1y C1y A#W"., AGENCY Redevelopment Agency of the City of San Bernardino By: Chair of the Community Development Commission of the City of San Bernardino, its governing board Date: By: Executive Director APPROVED AS TO FORM AJ2~11! aJW 4848-0574-3104.1 7 2/8/05 jmm P\Agendas\Agenda Attachmellts\Exhibits\2005\OS-02-22 303 LLC-Loan Agreement (Exhibit A & B),doc ~ IN WITNESS WHEREOF, the undersigned officers of the parties have executed this 2005 Agency Loan Agreement as of the date indicated next to the signatures of each of them. CITY City of San Bernardino / Date: APPROVED AS TO FORM ~~~. City Attorney Sf! f)'I~tAf,At1u'4t, AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Chair of the Community Development Commission of the City of San Bernardino, its governing board By: Executive Director APPROVED AS TO FORM jjOt~1I ~ Agency unsel 4848-0574-3104.1 7 2/8/05 jmm P:\Agendas\Agenda AttacltmentslE"hibits\200S\05.oZ.22 303 LLC-Loan Agreement (Exhibit A & B).doc IN WITNESS WHEREOF, the undersigned officers of the parties have executed this 2005 Agency Loan Agreement as of the date indicated next to the signatures of each of them. CITY City of San Bernardino Date: Rachel Clark, City Clerk APPROVED AS TO FORM ~~Q. City Att mey >t:~'I"~ C" Ahan,t/ AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Chair of the Community Development Commission of the City of San Bernardino, its governing board By: Executive Director APPROVED AS TO FORM . >>~~/I {~ Agency C sel 4848-0574-3104.1 2/8/05 jrnrn P:\Agendas\Agenda Attaclunents\El<hibiu\2005\05-02-22 303 LLC-Loan Agreement (Exhibit A & B),doc 7 '~ Exhibit "A" to 200S Loan Agreement 2005 CITY OF SAN BERNARDINO, CALIFORNIA CITY PROMISSORY NOTE (303 Third Street Project) THIS PROMISSORY NOTE IS A SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM THE SOURCE OF CITY FUNDS DESCRIBED HEREIN AND NEITHER THE FAITH NOR CREDIT NOR TAXING POWER OF ANY OTHER LOCAL AGENCY, INCLUDING THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, IS PLEDGED HEREUNDER Principal Amount: Not to Exceed: $1,740,000 Date: ,2005 Interest Rate: annual rate of three percent (3%) per annum THIS CITY PROMISSORY NOTE (the "Note") evidences an indebtedness of the City of San Bernardino, California (the "City") to the City of San Bernardino Redevelopment Agency (the "Agency"). For value received, the City hereby promises to pay to the order of the Agency at such address as the Agency shall designate, the principal sum of Dollars ($ ) at the time specified herein, together with interest thereon in accordance with the terms hereof. This Note is hereby tendered in accordance with the terms of the 2005 Agency Loan Agreement, dated as of February 22, 2005 (the "2005 Agency Loan Agreement"), by and between the City and the Agency and is subject to the following provisions: SECTION I. This Note is tendered by the City to the Agency as evidence of the indebtedness of the City to the Agency incurred in connection with the disbursement of the proceeds of 2005 Agency Loan Agreement made by the Agency to the City. The terms and provisions of the 2005 Agency Loan Agreement are hereby incorporated into this Note by this reference. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the 2005 Agency Loan Agreement. SECTION 2. Interest on the outstanding principal balance of this Note, shall accrue from its date as indicated, above, as follows: (i) Interest on the outstanding principal amount of this Note shall accrue commencing on the Effective Date of the 2005 Agency Loan Agreement at the annual rate of three percent (3%) per annum. Such accrued interest shall be due and payable by the City to the Agency on each February I, May I, August I and November I, commencing with the first installment on August 1,2005, and quarterly thereafter, until the principal amount of this Note has been repaid in full to the Agency. Such interest shall be calculated based upon the actual 4848-0574-3104.1 I 2/8/05 jrnrn P:\Agelldas\Agenda Attacllments\Exhibits\2005\OS-{)2-Z2 303 LLC-Promissory Note (Exhibit A to Loan Agrmt)_doc . nwnber of days for which any principal balance of this Note was then outstanding during each such quarterly period. (ii) Notwithstanding any other provision of the 2005 Agency Loan Agreement to the contrary, in the event of the occurrence of an event of default under the 2005 Agency Loan Agreement, or in the event of the occurrence of an event of default under the City Section 108 Loan Agreement, or any of the Section 108 Loan Collateral Docwnents, or in the event that this Note is not repaid in full when due, then in any such event, the rate of interest which shall be payable by the City under this Note shall be increased to a default rate of ten percent (10%) per annwn, commencing on the date of such event of default until such time as the event of default is cured or the outstanding principal balance of this Note, and all accrued and unpaid interest thereon is paid in full. SECTION 3. The outstanding principal balance of this Note shall be due and payable upon the earlier to occur of: (i) the transfer of title of the 303 Third Street Parcel by the Borrower to the County of San Bernardino, or its nominee, under the terms of the County Purchase Contract, or (ii) December 31, 2006. SECTION 4. The City hereby pledges to make payments hereunder prior to the Maturity Date solely and exclusively from the proceeds of payments which the City receives from the Borrower under the Borrower Section 108 Promissory Note and from any other source of the Section 108 Loan Collateral, as more fully set forth in the 2005 Agency Loan Agreement. This Note is a special and limited obligation of the City and the sole source of funds as pledged for the repayment thereof is as provided in the 2005 Agency Loan Agreement. Neither the taxing power of the City or any other agency is pledged to repay the principal balance or accrued interest hereunder. SECTION 5. This Note shall mature as of December 31, 2006, unless prepaid in full before such date. SECTION 6. The City may prepay the principal amount of this Note and accrued interest thereon, at any time without penalty upon thirty (30) days prior written notice to the Agency. 4848-0574-3104.1 2 2/8/05 jmm P,\Agendu\Agenda Anachments\Exhibiu\200S\OS-02-22 303 LLC-Promissory Note (Exhibit A 10 Loan Agrmt),doc SECTION 7. The Agency shall have no power to transfer or assign its right to receive the payment of principal and payments of accrued interest under this Note unless the City has first granted written approval to the Agency for such a proposed assignment in its sole and absolute discretion; provided, however, that the City agrees to cooperate with the Agency as necessary or appropriate to provide the Agency with additional documentation to evidence the indebtedness of the City to the Agency under this Note and to perfect or protect the pledge of City funds as set forth in Section 4 to secure the payments of the City to the Agency under this Note. CITY City of San Bernardino By: By: ~ t.J..d h. (!~ Rac el G. Clark, City Clerk 4848-0574-3104.1 2/8/05jrnrn P:\Agendas\Agenda Allachments\Exhibits\200S\OS.02-22 303 LLC-promissory Note (Exhibit A to Loan Agrmt),doc 3 SECTION 7. The Agency shall have no power to transfer or assign its right to receive the payment of principal and payments of accrued interest under this Note unless the City has first granted written approval to the Agency for such a proposed assignment in its sole and absolute discretion; provided, however, that the City agrees to cooperate with the Agency as necessary or appropriate to provide the Agency with additional documentation to evidence the indebtedness of the City to the Agency under this Note and to perfect or protect the pledge of City funds as set forth in Section 4 to secure the payments of the City to the Agency under this Note. CITY City of San Bernardino By: By: ~e.~h.~ Rachel G. Clark, City Clerk , 4848-0574-3104.1 3 2/8/05 jrnrn P:\Agendas\Agenda Attachments\Exhibits\2005\05-02-22 303 LLC-Pmmissory Note (Exhibit A to Loan Agrml).doc SECTION 7. The Agency shall have no power to transfer or assign its right to receive the payment of principal and payments of accrued interest under this Note unless the City has first granted written approval to the Agency for such a proposed assignment in its sole and absolute discretion; provided, however, that the City agrees to cooperate with the Agency as necessary or appropriate to provide the Agency with additional documentation to evidence the indebtedness of the City to the Agency under this Note and to perfect or protect the pledge of City funds as set forth in Section 4 to secure the payments of the City to the Agency under this Note. CITY City of San Bernardino By: By: Rachel G. Clark, City Clerk , 4848-0574.3104.1 3 2/8/05 jmm P:\Agendas\Agenda Auaehments\Exhibits\200S\OS-02.22 303 LLC-Promissory Note (Exhibit A to Loan Agrmt) doc