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HomeMy WebLinkAboutCDC/2001-02 2 3 RESOLUTION NO. CDC/2001-2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE AGENCY CHAIRPERSON AND SECRETARY TO EXECUTE THE LOAN AGREEMENT IN THE AMOUNT OF $550,000, TO BE FUNDED FROM AGENCY HOUSING FUND, BY AND BETWEEN THE REDEVELOPMENT AGENCY AND THE SAN BERNARDINO MOBILE HOME PARK CORPORATION 4 5 6 7 8 WHEREAS, San Bernardino Mobile Home Park Corporation, a California non-profit 9 corporation (the "Borrower") has requested that the Redevelopment Agency of the City of San 10 Bernardino (the "Agency") provide a loan to the Borrower in an amount not to exceed $550,000 11 (the "2001 Agency Loan") for the purpose of providing financing for the rehabilitation proposed 12 by the Borrower for two (2) mobile home parks which it owns, located at 721 East Ninth Street, 13 San Bernardino ("Tropicana") and 2160 West Rialto Avenue, San Bernardino ("Orangewood"), 14 and a proposed manufactured homebuyer down payment assistance program to be 15 administered by the Borrower for the benefit of qualifying households and persons of low-and 16 moderate-income who purchase manufactured homes in the mobilehome parks owned by the 17 Borrower in the City of San Bernardino; and 18 WHEREAS, the proposed activities of the Borrower as it relates to the Agency Loan and 19 the operation of the mobilehome parks under the ownership and control of the Borrower are 20 consistent with the goals of the City of San Bernardino Housing Element, the Consolidated Plan 21 and the Affordable Housing Implementation Plan of the Agency; and 22 WHEREAS, the Borrower's use of the proceeds of the Agency Loan will result in the 23 preservation of affordable housing units, of which not less than 20% will be exclusively reserved 24 for households earning 120%, or less, of the median household income for San Bernardino 25 County and further assist the Agency in the accomplishment of its affordable housing and manufactured home ownership goals pursuant to Redevelopment Law; and 01-08-01 "r\l\AUr ^'U, ",.....4 -1- CDC/2001-2 2 WHEREAS, the form of the loan agreement by and between the Borrower and the Agency 3 which shall evidence the proposed Agency Loan (the "2001 Agency Loan Agreement") contains 4 loan security provisions in favor of the Agency which shall be: (A) subordinate to the lien and 5 charge of the security interest of the Housing Authority of the County of San Bernardino (the 6 "Housing Authority") in mobilehome parks of the Borrower, which arise under that certain loan 7 agreement by and between the Borrower and the Housing Authority, dated September 15, 1999 8 (the "1999 Housing Authority Loan Agreement") and (B) subordinate to any refinancings of the 9 1999 Housing Authority Loan Agreement and/or (C) subordinate to certain FHA insured 10 mortgage loans which may be secured by the mobilehome parks of the Borrower, as part of a 11 long-term financing program of the Borrower to discharge the lien of the 1999 Housing Authority 12 Loan Agreement; and 13 14 NOW, THEREFORE, BE IT RESOLVED BY THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 15 Section 1. The above recitals are true and correct. 16 Section 2. The Community Development Commission of the City of San Bernardino 17 (the "Commission") as the governing board of the Agency, hereby finds and determines pursuant 18 to Health and Safety Code Section 33334.l4(a)(1) and (4), that by virtue of the restrictions on the 19 Borrower with respect to incurring certain types of new indebtedness under the 1999 Housing 20 Authority Loan Agreement and the federal mortgage insurance underwriting standards applicable 21 to the Borrower under the terms of the proposed FHA insured long-term mortgage regulatory 22 agreement for the partial release of the security interest of the Housing Authority in the 23 mobilehome parks as presently owned by the Borrower, shall require the Agency to acknowledge 24 and agree that the 2001 Agency Loan to the Borrower shall be subject to and subordinate to the 25 1999 Housing Authority Loan Agreement and an FHA insured permanent mortgage loan which shall be subject to the terms of a regulatory agreement by and between the Borrower and the 01-08-01 550 MH Loan.wpd -2- CDCj2001-2 2 Secretary of the United States Department of Housing and Urban Development (the "Secretary"), 3 as applicable. The Commission further finds and determines that in the absence of the 4 acknowledgment of the Agency to subordinate its security interest in the 2001 Agency Loan to the 5 lien and the Housing Authority under the 1999 Housing Authority Loan Agreement, and later to 6 the FHA insured senior lender and its successors and assigns, including the Secretary, under an 7 FHA insured permanent mortgage, that the source of funds available to the Borrower in support of 8 the affordable mobilehome park rental housing program goals of the Borrower, and the 9 refinancing of the 1999 Housing Authority Loan Agreement, would not otherwise be available. 10 The Commission hereby agrees that the Agency's security interest in the 2001 Agency Loan shall 11 be subordinate to: (A) the lien of the Housing Authority in Tropicana and Orangewood (the 12 "Parks") of the Borrower; and (B) upon the release of the security interest of the Housing 13 Authority in such Parks, then it shall be subordinate to the senior lender in such Parks under the 14 terms of an FHA insured permanent mortgage regulatory agreement. 15 Section 3. The Commission hereby finds and determines that the 2001 Agency Loan 16 shall be used and applied by the Borrower for the preservation of its affordable Parks which it 17 owns in the City, and that accordingly the categorical exception of Title 14 of California Code of 18 Regulations Section 15301 (CEQA Guidelines for the California Environmental Quality Act of 19 1970, as amended) is applicable to the approval by the Commission of the 2001 Agency Loan in 20 support of the Borrower's affordable mobilehome park program. 21 Section 4. The Commission hereby approves the 2001 Agency Loan to the Borrower 22 and the form of the 2001 Agency Loan Agreement by and between the Borrower and the Agency 23 in the form attached hereto as Exhibit "A". The Chairperson of the Commission and the 24 Executive Director of the Agency are hereby authorized and directed to execute the 2001 Agency 25 Loan Agreement (and the Agency regulatory agreement attached as Exhibit "G" to the Loan Agreement) on behalf of the Agency, together with technical and conforming changes to the 2001 01-08-01 550 MH Loan.wpd -3- CDC/2001-2 2 Agency Loan Agreement as may be approved by the Executive Director in consultation with legal 3 counsel for the Agency, in order to accommodate the terms and conditions of the 1999 Housing 4 Authority Loan Agreement and any proposed FHA insured permanent mortgage regulatory 5 agreement affecting the Parks. The Executive Director of the Agency is further authorized, in 6 consultation with legal counsel to the Agency, to make minor corrections, additions, and 7 clarifications to various exhibits, and instruments attached to the 2001 Agency Loan Agreement, 8 provided said changes are not substantive in nature, and do not increase the principal amount of 9 the 200 I Agency Loan or materially change its terms as hereby approved. The Executive 10 Director is further authorized and directed, on behalf of the Agency, to provide such certification 11 and supplemental instruments to the Borrower and/or one or more "Phase II FHA Senior Lenders" 12 or the Housing Authority as provided under the 200 I Agency Loan Agreement, in order to fund 13 the 2001 Agency Loan for the account ofthe Borrower. 14 Section 5. The approval of the 200 I Agency Loan Agreement by the Commission as 15 contemplated in Section 4 of this Resolution shall have no further force or effect in the event that 16 the 2001 Agency Loan Agreement may not be fully executed by the Borrower for any reason 17 within sixty (60) days following the adoption of this Resolution. 18 Section 6. 19 IIII 20 IIII 21 22 23 24 25 This Resolution shall take effect immediately upon its passage. 01-08-01 550 MH Loan.wpd -4- CDC/2001-2 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE AGENCY CHAIRPERSON AND SECRETARY TO EXECUTE THE LOAN AGREEMENT IN THE AMOUNT OF $550,000, TO BE FUNDED FROM AGENCY HOUSING FUND, BY AND BETWEEN THE REDEVELOPMENT AGENCY AND THE SAN BERNARDINO MOBILE HOME PARK CORPORATION 4 5 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Joint Development Commission of the City of San Bernardino at a Regular meeting thereof, 8 9 held on the 8th day of January ,2001, by the following vote to wit: 10 Commission Members: Ayes Nays 11 ESTRADA X 12 LIEN X - 13 MCGINNIS X SCHNETZ -L 14 SUAREZ X 15 ANDERSON X 16 MC CAMMACK Abstain Absent X 17 18 ~h.~ Racli G. Clark, City Clerk 19 20 The foregoing resolution is hereby approved this 10"111 day of January ,2001. By: --- 21 22 23 a es, Chairperson nity Development Commission f San Bernardino Approved as to form and Legal Content: 24 James F. P man City Au 25 01-08-01 550 MH Loan.wpd -5- CDC/2001-2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 2001 ACQUISITION, WORKING CAPITAL AND HOMEBUYER GRANT ASSISTANCE LOAN AGREEMENT THIS 2000 ACQUISITION, WORKING CAPITAL AND HOME BUYER GRANT ASSISTANCE LOAN AGREEMENT (the "Agreement") is dated as of January __, 2001 by and between the San Bernardino Mobilehome Park Corporation, a California non-profit corporation (the "Borrower") and the Redevelopment Agency of the City of San Bernardino (the "Agency") and is made and executed in light of the factors set forth in the following Recitals: - RECITALS - 1. Borrower has requested the Agency to provide a loan in a total principal amount not to exceed the sum of Five Hundred Fifty Thousand Dollars ($550,000.00) in support of the mobilehome park affordable rental housing operations program of the Borrower and the obligations of the Borrower as arise under that certain 1999 Housing Authority Loan Agreement, dated as of September 15, 1999 by and between the Borrower and the Housing Authority of San Bernardino County. 2. As part of its mobilehome park affordable rental housing operations program, the Borrower has, concurrently with this Agreement, initiated an application to obtain a commitment for mortgage loan insurance from the Secretary of the United States Department of Housing and Urban Development (the "Secretary"), and the Borrower presently intends (or shall as of the close of the "FHA Escrow", described in Section 12 below) enter into a regulatory agreement for multifamily manufactured housing project (the "FHA Agreement") by and between the Borrower and the Secretary with respect to the mobilehome park properties commonly referred to as "Sequoia Mobilehome Park" and "Rancho Meridian Mobilehome Park". under 3. the The mortgage loan to be insured by the terms of the FHA Agreement shall be or a comparable lending institution Secretary made by (the "FHA Senior Lender") . 4. The Agency is willing to lend such an amount to Borrower under the terms and conditions specified in this Agreement and in the Related Documents. 5. Borrower understands and agrees that: (A) in granting the loan as set forth in this Agreement, the Agency is relying upon Borrowers's representations, warranties, and agreements as provided below, and (B) such loan of the Agency shall SBEO/0124/DOC/931-1 1/3/00 1040 jmm 1 be and remain subject to the terms and conditions of this Agreement. THE BORROWER AND THE AGENCY HEREBY AGREE AS FOLLOWS: Section 1. EFFECTIVE DATE AND TERM. This Agreement shall be dated as of January __, 2001, and shall be effective as of the specific date provided in Section 13(18), below, and shall continue thereafter until the indebtedness of the Borrower to the Agency has been paid in full, but solely from the special source of funds available to the Borrower described herein, and the parties terminate this Agreement in writing. Section 2. DEFINITIONS. In addition to the usage of the defined terms set forth in the caption and recitals of this Agreement, the following words shall have the following meanings when used in this Agreement. All references to dollar amounts shall mean amounts in lawful money of the United States of America. . 1999 Housing Authority Loan Agreement. The w 0 r d s "1999 Housing Authority Loan Agreement" mean and refer to that certain $27,195,000 Loan Agreement, dated as of September 15, 1999, by and between the Borrower and the Housing Authority of the County of San Bernardino. . 1999 Project. The words "1999 Project" mean and refer to each of the seven (7) separate mobilehome park properties which are subject to the terms and provisions of the 1999 Housing Authority Loan Agreement, and these mobilehome parks are also known as: Sequoia Mobilehome Park; Rancho Meridian Mobilehome Park; Friendly Village Mobilehome Park; Orangewood Mobilehome Park; Tropicana Mobilehome Park; Glen Aire Mobilehome Park and Pacific Palms Mobilehome Park; The words "1999 Project" does not include any item of personal property or manufactured homes (mobilehomes) which may be situated now, or hereafter be situated in the 1999 Project and which is owned by a third party, including the Manager. SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 2 . 2001 Project. The words "2001 Project" mean and refer to the mobilehome park affordable rental housing program activities to be undertaken by the Borrower using the proceeds of the Loan. The 2001 Project includes the following: (i) the best efforts of the Borrower to cause the security interests of the trustee, U.S. Bank Trust National Association, and the security interest of the Housing Authority under the 1999 Housing Authority Loan Agreement to be released and discharged from Rancho Meridian Mobilehome Park and from Sequoia Mobilehome Park at the earliest feasible time and the best efforts of the Borrower to cause the Secretary to confirm its commitment to issue mortgage insurance in favor of the FHA Senior Lender under the FHA Agreement and the FHA Documents for the Rancho Meridian and Sequoia Mobilehome Park at the earliest feasible time; (ii) the best efforts of the Borrower to prepare and submit to the Secretary one or more applications for FHA insured permanent mortgage loan financing in favor of one or more Phase II FHA Senior Lenders in Pacific Palms Mobilehome Park, Santiago Mobilehome Park and Glen Aire Mobilehome Park in order to discharge the security interest of Housing Authority in such mobilehome parks at the earliest feasible time; (iii) the best efforts of the Borrower to cause the Secretary to confirm its commitment to issue mortgage insurance in favor of one or more Phase II FHA Senior Lender's with respect to obtaining the discharge of the security interest of the Housing Authority under the 1999 Housing Authority Loan Agreement in one or both of the Mobilehome Park Properties, subject to the condition that the Secretary expressly approve the security interest of the Agency in the Mobilehome Park Properties as FHA permitted secondary financing; (iv) the best efforts of the Borrower to undertake the mobilehome park operational activities described in the Budget and to satisfy its obligations as arise under the 1999 Housing Authority Loan Agreement including any refinancings of the 1999 Housing Authority Agreement in one or more mobilehome parks for which an FHA insured permanent mortgage loan under subparagraph (ii) or (iii) above has not been obtained; and (v) the best efforts of the Borrower to originate Affordable Home Grants to Homebuyers. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 3 The words "2001 projectH do not include any item of personal property or manufactured home (mobilehome) which may be situated now, or hereafter be situated in the Mobilehome Park Properties and which is owned by a third party, including the Manager. . Advance. The word "AdvanceH refers to a disbursement by the Agency of the proceeds of the Loan to the Borrower. The Agency shall make Advances to the Borrower from time-to-time upon submission by the Borrower to the Agency of written applications for an Advance, including the appropriate documents and verifications of the information relating to the Budget and business activity scheduled by the Borrower for the Mobilehome Park Properties. . Affordable Home Grant. The words "Affordable Home GrantH mean and refer to the affordable housing assistance grant program administered by the Borrower in each of the 1999 proj ect. This affordable housing assistance grant program (the "Affordable Home Grant programH) is described in Exhibit "GH. The maximum amount of a Homebuyer Affordable Home Grant which may be provided by the Borrower to any individual Homebuyer and funded in part with the proceeds of and Advance under Section 5 (c), shall not exceed Six Thousand Dollars ($6,000.00). For each such Affordable Home Grant the Borrower shall contribute a portion of the total amount of the Affordable Home Grant from sources available to it, in a ratio of: $2.00 of Loan funds disbursed under an Advance to $1.00 of other funds contributed by the Borrower. The elements of the eligible requests and documentation in support of each Affordable Home Grant are described in Exhibit "GH. . Agreement. The word "AgreementH means this 2001 Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement, together with all exhibits and schedules attached to this Agreement from time to time. . Borrower. The word "BorrowerH means the San Bernardino Mobilehome Park Corporation, and each and every entity signing the Promissory Note, jointly and severally (herein collectively referred to as the "BorrowerH). . Budget. The word "BudgetH means and refers to the Program Budget and Expense Schedule prepared by the Borrower and attached to this Agreement as Exhibit "BH. . Collateral. The without limitation collateral security word all for "CollateralH means and includes property and assets granted as the Loan, whether real or personal SBEO/0124/DOC/931-1 1/3/00 1040 jnun 4 property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust received, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. . Collateral Documents. The words "Collateral Documents" mean and refer to each of the following: (i) the Deed of Trust; (ii) the Collateral Assignment of Leases and Rents and (iii) the Regulatory Agreement, and any substitute collateral for the Loan which the Agency may hereafter accept under the provisions of Section 12. . Environmental Conditions. The words "Hazardous Substance," mean (1) any chemical, compound, material, mixture or substance that is now or hereafter defined or listed in, or otherwise classified pursuant to, any Environmental Laws (defined below) as a "hazardous substance," "hazardous material," "hazardous waste," "extremely hazardous waste," "infectious waste," "toxic substance," "toxic pollutant" or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity or "EP toxicity" and (2) any petroleum product, natural gas, natural gas liquids, liquified natural gas and synthetic gas usable for fuel (or mixtures of natural gas such as synthetic gas) which is not stored in a motor vehicle for use in the regular course of operation of such motor vehicle; and the words "Hazardous Waste" mean any Hazardous Substance which has been released as waste on or at the Property or which has been disposed of, burned or incinerated, accumulated, stored, treated, recycled on or at the Property; and the words "Environmental Laws" as used herein mean any and all present and future federal, state and local laws (whether under common law, statute, rule, regulation or otherwise), requirements of permits issued with respect thereto, and other requirements of governmental authorities relating to the environmental regulation of any Hazardous Substance or Hazardous Waste (including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 V.S.C. Sections 9601, et ~.) ("CERCLA") and the applicable provisions of the California Health and Safety Code and the California Water Code, all as heretofore or hereafter amended from time to time) . SBEO/0124/DOC/931-1 1/3/00 1040 jmm 5 . Event of Default. The words "Event of Default" mean and include without limitation any of the Events of Default set forth below in Section 9, titled "Events of Defaults." . FHA Agreement. The words "FHA Agreement" mean and refer to the commitment for mortgage loan insurance affecting the Mobilehome Park Properties to be issued by the Secretary in favor of one or more Phase II FHA Senior Lenders under the terms of an FHA mortgage insurance commitment agreement by and between the Borrower and the Secretary. . FHA Documents. The words" FHA Documents" mean and refer to the instruments identified in an FHA Agreement, including without limitation the mortgage note to be delivered by the Borrower to the Phase II FHA Senior Lender together with the deed of trust executed by the Borrower in favor of the FHA Senior Lender and the related FHA-insured mortgage loan security documents at the close of the FHA Escrow. . Home Grant Program. The words "Home Grant Program" mean and refer to an affordable housing grant program administered by the Borrower. The general eligibility requirements for a Homebuyer to participate in the Home Grant Program are set forth in Exhibit "G". The Borrower may use and apply a portion of the proceeds of the Loan in an aggregate amount not to exceed Two Hundred Thousand Dollars ($200,000.00) to originate Homebuyer Affordable Housing Grants to Homebuyers. . Homebuyer. The word "Homebuyer" means mobilehome park tenant of the Borrower who proceeds of a Homebuyer Affordable Home Borrower. and refers to a has accepted the Grant from the . Homebuyer Escrow. The words "Homebuyer Escrow" mean and refer to the manufactured home purchase escrow transaction by and among the Homebuyer, the seller of such manufactured home, and the Borrower as the originator of the Homebuyer Affordable Home Grant to such Homebuyer under the affordable housing assistance program administered by the Borrower. . Housing Authority. The words "Housing Authority" mean and refer to the Housing Authority of San Bernardino County. . Improvements. The word "Improvements" means and includes without limitation all existing structures, facilities, fixtures, additions and similar construction on any of the Mobilehome Park Properties which are owned by the Borrower. SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 6 The word "Improvements" does not include any manufactured home or other personal property owned by a third party or the Manager in the Mobilehome Park Properties. . Indebtedness. The word "Indebtedness" means and Promissory Note described in Section 3 and disbursed by the Agency under the Loan. includes the all amounts . Loan. The word "Loan" means the loan to be made to Borrower by the Agency under this Agreement and the Related Documents as described below in a maximum principal amount not to exceed Five Hundred Fifty Thousand Dollars ($550,000.00). . Manager. The word "Manager" means and refers to or any permitted successor to under (A) the terms of the 1999 Housing Authority Loan Agreement; or (B) after the recordation of the FHA Documents, the Manager of the Mobilehome Park Properties. . Mobilehome Park Properties. The word "Mobilehome Park Properties" means each of the mobilehome park properties identified in Exhibit "B", (also known as "Orangewood Mobilehome Park" and "Tropicana Mobilehome Park") together wi th all Improvements, all equipment, fixtures and other articles of personal property owned or hereafter acquired by the Borrower and attached or affixed to the any of the Mobilehome Park Properties, together with all accessions, parts, and additions to, all replacements of, and all substitutions for any of such property, and all proceeds (including insurance proceeds and refunds of premiums) from any sale, casualty loss, condemnation or other disposition of such property. The Mobilehome Park Properties do not include any items of personal property or manufactured homes (mobilehomes) which may be situated now or hereafter in the Mobilehome Park Properties which is owned by a third party, including the Manager. . Phase II FHA Senior Lender. The words "Phase II FHA Senior Lender" mean and refer to one or more lending institutions which may hereafter provide one or more permanent mortgage loans to the Borrower for the purpose of obtaining the discharge and release of the security interest in favor of the Housing Authority in a particular Mobilehome Park Property as arise under the 1999 Housing Authority Loan Agreement (or any authorized refinancing of the 1999 Housing Authority Loan Agreement) SBEO/0124/DOC/931-1 1/3/00 1040 jnun 7 . Project Operati.ng Expenses. The words "Project Operating Expenses" mean and include for any period of time, expenses of the Borrower including the payment of property taxes, all insurance premiums and reasonably and customary fees and expenses paid to the Manager in connection with: (A) the operation of the 1999 Project, or (B) after the recordation of the FHA Documents affecting one or both of the Mobilehome Park Properties, the operation of the Mobilehome Park Properties. "Project Operating Expenses" are exclusive of debt service requirements payable by the Borrower under the 1999 Housing Authority Loan Agreement, or after the recordation of the FHA Documents, exclusive of debt service requirements payable by the Borrower to the Phase II FHA Senior Lender under the FHA Documents. . Promi.ssory Note. The words "Promissory Note" mean the promissory note, described below in Section 3, in an original principal amount not to exceed the sum of $550,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the Promissory Note. The form of the Promissory Note is attached as Exhibit "0". . Regulatory Agreement. The words "Regulatory Agreement" mean and refer to the affordable manufactured home regulatory agreement by and between the Borrower and the Agency. The Regulatory Agreement evidences the covenant of the Borrower to provide certain affordable housing units in the Mobilehome Park Properties available to persons and households of low- and moderate-income for the longest feasible period as required by the California Redevelopment Law. The form of the Regulatory Agreement is attached to this Agreement as Exhibit "F" . . Related Documents. The words "Related Documents" mean and include without limitation all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. . Surplus Cash. The words "Surplus Cash" mean and refer to any cash of the Borrower remaining on any payment date under the Promissory Note after: 1. (A) at all times during which the Housing Authority has a security interest in the Mobilehome Park Properties under the 1999 Housing Authority Loan Agreement, after the payment of: SBEO/0124/DOC/931-1 1/3/00 1040 jmrn 8 (i) all sums due or to be paid by the Borrower under the terms of the 1999 Housing Authority Loan Agreement and the 1999 Housing Authority Note; (ii) all amounts required to be deposited Borrower in the reserve funds established 1999 Housing Authority Loan Agreement; by the under the (iii) all amounts required to be paid as Operating Expenses" under the 1999 Authority Loan Agreement; and "Project Housing (B) the segregation of: (i) an amount equal to funds required to Project under the Agreement; and the aggregate of all special be maintained for the 1999 1999 Housing Authority Loan (ii) all tenant security deposits for the 1999 Project. 2. (A) at all times during which the FHA Documents are in effect with respect to one or more of the Mobilehome Park Properties, after the payment of: (i) all sums due or to be paid by the Borrower under the terms of any mortgage or note insured or held by the Secretary under the FHA Documents; (ii) all amounts required to be deposited by the Borrower in the reserve funds for the Mobilehome Park Properties as required under the FHA Agreement; (iii) all amounts required to be paid as Project Operating Expenses which have been approved by the Secretary under the FHA Documents; and (B) the segregation of: (i) an amount equal to the aggregate of all special funds required to be maintained for the Mobilehome Park Properties under the FHA Agreement and the FHA Documents; (ii) all tenant security deposits for the Mobilehome Park Properties then held by the Borrower; and (iii) 50% of Surplus Cash. SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 9 . Tit1e Company. The words "Title Company" mean and refer to a title insurance company escrow department designated by the Agency which shall serve as the loan escrow accommodation agent of the parties for the exchange and recordation of the various Collateral Documents and the disbursement of the proceeds of the initial Advance of Loan to the Borrower under as set forth in Section 5(b) Section 3. LOAN. (a) The Loan shall be in a principal amount not to exceed the sum of Five Hundred Fifty Five Thousand Dollars ($550,000.00), and the Loan, or so much of the Loan as may be disbursed to the Borrower, shall be evidenced by the Promissory Note in the form attached hereto as Exhibit "0". The date of the Promissory Note shall be the date on which the Agency makes the ini tial Advance of proceeds under the Loan to the Borrower as provided in Section 5(b). The Promissory Note shall be secured by the Deed of Trust in the form attached as Exhibit "E" and the Collateral Assignment of Leases and Rents in the form attached as Exhibit "E-l", pursuant to which the Borrower grants to the Agency a junior lien in the Mobilehome Park Properties which is subordinate to: (i) initially the 1999 Housing Authority Loan Agreement and (ii) at the time of recordation of the FHA Documents, subordinate to the lien in favor of the Phase II FHA Senior Lender under the FHA Documents and its assignees, including without limitation, the Secretary. (b) The payment of principal and interest by the Borrower to the Agency under the Loan and the Promissory Note shall be due and payable solely from the special source of funds defined in this Agreement as "Surplus Cash". (c) No interest shall accrue on the outstanding principal balance of the Loan from the date of the Promissory Note to August 21, 2002. Commencing on September 1, 2002, interest shall accrue on the outstanding balance of the Loan at a rate per annum of three percent (3%) until the Loan in repaid in full. (d) The outstanding principal balance of the Loan, and all accrued and unpaid interest shall mature and be due and payable solely from Surplus Cash on the twentieth (20th) anniversary following the date of the Promissory Note. Prior to its maturity date, the outstanding principal balance and accrued and unpaid interest on the Loan shall be payable by the Borrower to the Agency in annual level-debt installments of principal and interest, but solely from Surplus Cash to the extent such Surplus Cash is available, with the first such installment due on the fifth (5th) anni versary following the date of the Promissory Note. Unpaid SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 10 interest on the outstanding principal balance of the Loan which has accrued between September 1, 2002, shall be capitalized on the day immediately preceding the fifth (5th) anniversary following the date of the Promissory Note, and shall be added to the outstanding principal balance of the Loan. Provided that Surplus Cash is available therefore, each annual installment of principal and interest under the Loan shall be in an amount sufficient to amortize the balance of the Loan in twenty (20) years, with a balloon payment of principal and accrued and unpaid interest due on the maturity date of the Promissory Note. (e) The Borrower shall use the proceeds of the Loan solely for the following purposes: (i) an amount not to exceed the sum of Three Hundred Fifty Thousand Dollars ($350,000.00) for the payment of the affordable rental housing operational costs of the Borrower, including its obligations under the 1999 Housing Authority Loan Agreement at the times and in the amounts set forth in Exhibit "BH and Section 5(b), below; and (ii) an amount which in the aggregate shall not exceed Two Hundred Thousand Dollars ($200,000.00) for the purpose of assisting the Borrower's origination of "Affordable Home GrantsH to qualifying Homebuyers under the Home Grant Program, as set forth in Exhibit "GH and Section 5(c), below. Section 4. GENERAL REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the Agency, as of the date of this Agreement and the date of the Promissory Note and at all times that any balance of the Loan is outstanding: (1) Organization. Borrower is a California non-profit corporation and is qualified to do business in the State. (2) Authorization. The execution, delivery, and performance of this Agreement by Borrower, to the extent to be executed, delivered or performed by Borrower, have been duly authorized by all necessary action by the governing board of the Borrower; do not require the consent or approval of any other person, regulation, authority or governmental body including without limitation the Housing Authority; and do not conflict with, result in a violation of, or constitute a default under (A) any provision of its non-profit corporate charter, its bylaws or other rules, or (B) the terms of any trust agreement or other encumbrance affecting any of the Mobilehome Park SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 11 Properties including without limitation the 1999 Housing Authority Loan Agreement; or (C) any other agreement or other instrument binding upon Borrower or (D) any law, governmental regulation, court decree, or order applicable to Borrower. (3) Financial Information. Each financial statement of Borrower supplied to the Agency truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to the Agency. Borrower has no material contingent obligations except as disclosed in such financial statements. (4) 1999 Housing Authority Loan Agreement and Affordable Housing Regulatory Agreements. The provisions of this Agreement are not in conflict with any provision of the 1999 Housing Authority Loan Agreement and no provision of the 1999 Housing Authority Loan Agreement prohibits the Borrower from entering into this Agreement or pledging any of the Mobilehome Park Properties to the Agency as security for the Loan. As of the date of this Agreement and as of the date of each Advance under the Promissory Note, the Borrower is not in default nor are there facts which with the giving of notice and the passage of time would constitute a default under the 1999 Housing Authority Loan Agreement (including each tax exempt financing trust indenture and affordable housing regulatory agreement) which affects the 1999 Project, including the Mobilehome Park Properties. (5) FHA Agreement and Affordable Housing Regulatory Agreements. To the best knowledge and belief of the Borrower based upon due and diligent inquiry, the provisions of this Agreement appear to be permitted under an FHA Agreement for any proposed Phase II FHA Senior Lender; provided that the provisions of this Agreement, and the Collateral Documents shall be expressly subordinate to such a FHA Agreement and FHA Documents for such proposed Phase II FHA Senior Lender and that at the time of the recordation of such FHA Documents, the Secretary has approved the Agreement. (6) Environmental Conditions. The Borrower has conducted a due and diligent inquiry of the environmental condition of the Mobilehome Park Properties relating to the potential presence of Hazardous Waste and the use thereon of Hazardous Substances and based upon such inquiry the Borrower represent to the Agency that as of the date of the Promissory Note, the Borrower is unaware of any adverse environmental conditions SBEO/0124/DOC/931-1 1/3/00 1040 jmm 12 relating to the presence or potential presence of Hazardous Substances. ( 7 ) Li tiga tion and Claims. N 0 lit i gat ion, c I aim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened and no other event has occurred which may materially adversely affect Borrower's financial condition of the Mobilehome Park Properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by the Agency in writing. (8) Title to Property. Borrower has on the date of the Promissory Note good and marketable title to the Mobilehome Park Properties free and clear of all defects, liens, and encumbrances, excepting only liens for taxes, assessment, or governmental charges or levies not yet delinquent or payable without penalty or interest and such liens and encumbrances as may be approved in writing by the Agency prior to the date of the initial Advance. (9) Budget. The information set forth in the Budget generally describes the proposed affordable housing program activities to be undertaken by the Borrower in the Mobilehome Park Properties during the period of time when the Borrower may submit applications for disbursements of Advances under Section 5(b) to the Agency. The Borrower shall not materially alter or modify the programs set forth in the Budget without first notifying the Agency. (10) Borrower Reasonably Believes That Surplus Cash Shall Be Available to Pay Installments of Principal and Interest Under the Promissory Note. The Borrower presently believes based upon due and diligent inquiry that Surplus Cash will be available to the Borrower to make payments of principal and interest to the Agency when due under the Loan beginning as of the fifth (5th) anniversary following the date of the Promissory Note. ( 11 ) Survival of Represen ta tion and Warranties. B 0 r rower understands and agrees that the Agency is relying upon the above representations and warranties in extending the Loan to Borrower. Borrower further agrees that the foregoing representations and warranties shall be continuing in nature and shall remain in full force and effect until such time as the Loan and Promissory Note shall be paid in full, or until the Agreement is terminated, whichever is the last to occur. SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 13 Section 5. CONDITIONS PRECEDENT TO THE LOAN AND DISBURSEMENT OF ADVANCES. (a) The proceeds of the Loan shall be disbursed to the Borrower as Advances. The aggregate amount of all Advances under Section 5(b) shall not exceed the sum of $350,000.00. The aggregate amount of all Advances under Section 5 (c) shall not exceed $200,000.00. No Advance under Section 5(b) shall be made by the Agency to the Borrower after December 31, 2001. No Advance under Section 5 (c) shall be made by the Agency to the Borrower after December 31, 2002. The Agency's obligation to make the Loan and provide any Advance under either Section 5(b) of Section 5(c) shall be subject to the fulfillment to satisfaction of all of the conditions set forth in this Agreement: (1) Title Insurance. Borrower shall have provided to the Agency an ALTA lender's extended coverage policy of title insurance with such endorsement as the Agency may require, issued by a title insurance company acceptable to the Agency and in a form, amount, and content satisfactory to the Executi ve Director of the Agency insuring or agreeing to insure that the Agency's Deed of Trust on the Mobilehome Park Properties is or will be upon recordation a valid lien on the Mobilehome Park Properties free and clear of all defects, liens, encumbrances, and exceptions except as to those security lien obligations approved by the Executive director of the Agency in writing. (2) Insurance. Unless waived by the Agency in writing, Borrower shall have delivered to the Agency the insurance policies or evidence thereof as described in the Deed of Trust. ( 3 ) Opinion of Legal Counsel to Borrower. P r i 0 r tot h e disbursement of the initial Advance, the Borrower shall have delivered to the Loan Escrow Agent a legal opinion of its counsel addressed to the Agency in a form acceptable to the Executive Director of the Agency, which addresses each of the matters set forth in Section 4 (1), (2), (4), (5) and (7) and which legal opinion shall state upon due and diligent inquiry that the Agreement, the Promissory Note and the Collateral Documents are valid, lawful and binding obligations of the Borrower, enforceable in accordance with their terms. (4) Delivery of Documents. Borrower shall have delivered to the Agency a copy of its most recent accredited financial statement and a statement by its authorized officer in a form reasonably acceptable to the Executive Director of the Agency that Surplus Cash is presently forecast to be available to the SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 14 Borrower to repay the Loan, an original copy of the Agreement fully executed by the Borrower and the Borrower shall have also delivered to the Title Company the Promissory Note, the Deed of Trust, the Collateral Assignment of Leases and Rents and the Regulatory Agreement in recordable form duly executed by the Borrower and otherwise in a form acceptable to the Agency. (5) Lack of Default. There shall not exist on the date of the Promissory Note and the initial Advance under the Loan (or on the date of any subsequent Advance under the Loan) a condition which would constitute an Event of Default under this Agreement. ( 6) Approval By Agency of General Form of Affordable Home Grant Documents. Prior to the date on which the Borrower may request the Agency to make any Advance of the proceeds of the Loan under Section 3 (d) (iii) and Section 5 (c) for the origination of Affordable Home Grants, the Borrower shall have delivered, and the Executive Director of the Agency shall have approved the general form of the Affordable Home Grant documents and the grant indemnity criteria to be used and applied by the Borrower in its Home Grant Program. The Home Grant Program shall comply with all applicable provisions of the Community Redevelopment Loan as relate to the use of Agency low- and moderate-income housing funds for the acquisition of manufactured homes by qualifying residents in the 1999 Project. After the Borrower has obtained the approval of the Executive Director as to the form of such Affordable Home Grant documents, the Borrower shall not make material changes to the form of the Affordable Home Grant documents without first obtaining the approval of the Executive Director and such approval shall not be unreasonably withheld. (b) The Agency shall disburse in the aggregate, an amount not to exceed $350,000.00 of the proceeds of the Loan to the Borrower in six (6) separate Advances as provided in this Section 5(b). The amounts of each such Advance are as follows: Advance No. 1 $ 75,000.00 Advance No. 2 $ 55,000.00 Advance No. 3 $ 55,000.00 Advance No. 4 $ 55,000.00 Advance No. 5 $ 55,000.00 Advance No. 6 $ 55,000.00 Total of all Advances under Section 5 (b) : $350,000.00 SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 15 Each Advance under this Section 5(b) shall be disbursed to the Borrower within thirty (30) days following receipt from the Borrower of a written application for an Advance subject to confirmation by the Executive Director that as of the date of each of the Borrower's submission of a written application for an Advance, the Borrower is making satisfactory progress in accomplishing the affordable housing programs set forth in the Budget. The first such Advance shall be Advance No. 1 in the amount of $75,000.00. After the proceeds of the Advance No. 1 have been disbursed to the Borrower, each of the following five (5) Advances shall be made at approximately thirty (30) to forty-five (45) day intervals, subject to receipt by the Agency of a completed application for each such Advance submitted by the Borrower. No application for an Advance under this Section 5(b) shall be accepted by the Agency from the Borrower if the Borrower is in default or if the application for an Advance under this Section 5(b) is submitted to the Agency after December 31, 2001. Advances under this Section 5 (b) are subj ect to the satisfaction of the following conditions: (A) on or before the date of disbursement of the proceeds of the Advance No.1, the Borrower shall have delivered to the Agency executed copies of each of the following documents: (i) Promissory Note; (ii) Deed of Trust; (iii) Regulatory Agreement; (iv) each of the documents described under Section 5 (a) (2), (3) and (4); (v) written evidence reasonably acceptable to Executive Director that the Borrower acquired the lands located , San Bernardino; the has at (vi) an operating budget for the next twelve (12) months of business operations following the date of Advance No. 1 of the Borrower in a form reasonably acceptable to the Executive Director. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 16 (B) The Borrower has submitted a written application to the Agency requesting an Advance. Each application following the disbursement of the proceeds of Advance No. 1 shall contain a suitably detailed written description of the activities described in the Budget which the Borrower proposes to undertake promptly upon receipt of the proceeds of the Advance, and shall also contain a suitably detailed written summary of the activities as set forth in the Budget which have been accomplished by the Borrower since the date of the previous application for an Advance. (C) Within ten (10) days following receipt by the Agency, the Executive Director shall review the information contained in each application for an Advance, and the Executive Director may reduce the amount of the proceeds of the Loan as scheduled to be disbursed to the Borrower under any Advance in Section 5(b), if the Executive Director determines, that since the time of the prior application, the Borrower is not making satisfactory progress to accomplish the tasks set forth in the Budget. The amount of any such reduction by the Executive Director shall be based upon the information set forth in the Budget and the Executive Director's reasonable estimate of the cost of the various items, if any, which have not been accomplished by the Borrower as contemplated in the Budget. Any amount which the Executive Director may determine to withhold from a particular Advance, shall be available for disbursement to the Borrower under a subsequent application for an Advance after the Borrower shows, to the reasonable satisfaction of the Executive Director that the Borrower is in substantial compliance with the activity schedule set forth in the Budget. (D) The discretion of the Executive Director to reduce the amount of any disbursement of an Advance, as provided in Section 5 (b) (C), shall be in addition and cumulative with any right or remedy reserved to the Agency in the event that the Borrower may be in default under this Agreement. (c) The Agency shall disburse in the aggregate an amount not to exceed $200,000.00 of the proceeds of the Loan to be used and applied the Borrower for the origination of Affordable Home Grants to Homebuyers as provided in this Section 5 (c) . Each SBEO/0124/DOC/931-1 1/3/00 1040 jmm 17 Advance under this Section 5(c) shall be disbursed by the Agency within fifteen (15) days following receipt from the Borrower of a written application for an Advance under this Section 5(c), subject to confirmation by the Executive Director, that the written Homebuyer household income eligibility information and other relevant information pertaining to the Affordable Home Grant is on file with the holder of the Homebuyer Escrow, and is in satisfactory form. No application for an Advance under this Section 5(c) shall be accepted by the Agency from the Borrower if the Borrower is in default or if the application for an Advance under this Section 5(c) is submitted to the Agency after December 31, 2002. Advances under this Section 5(c) satisfaction of the following conditions: are subject to (A) the Borrower has completed an application for an Advance under Section 5(b) and the Agency has disbursed the proceeds of Advance No. 1 to the Borrower under Section 5(b); (B) the Borrower has submitted to the Agency and the Executive Director has approved a complete set of Homebuyer/Home Grant Program documents for use in the Home Grant Program of the Borrower as set forth in Exhibit "F". The approval by the Executive Director of the form of the Home Grant Program documents shall not be unreasonably withheld; provided however, that such documents shall contain affordable housing program compliance provisions which are enforced by the Agency in accordance with applicable provisions of the Community Redevelopment Law. (d) Each disbursement of an Advance by the Agency to the Borrower under Section 5(b) shall be paid by a check or warrant issued by the Agency and made payable to the order of the Borrower. (e) Each disbursement of an Advance by the Agency for the credit of the Borrower under Section 5(c) shall be paid by a check or warrant issued by the Agency and made payable to the holder of the Homebuyer Escrow for the account of the Borrower. In the event that a Homebuyer Escrow may fail to close for any reason within thirty (30) days following the disbursement of an Advance to such Homebuyer Escrow, then in such event the holder of such Homebuyer Escrow shall be deemed to be irrevocably instructed to return the Advance to the Agency without further instruction from the Borrower or the Homebuyer. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 18 Section 6. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with the Agency that, while this Agreement is in effect, Borrower will: (1) Litiqation: promptly inform the Agency in writing of (A) all material adverse changes in Borrower's financial condition, and (B) all existing and threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower which could materially affect the financial condition of Borrower. (2) Financial Records: maintain its books and records in accordance with generally accepted accounting principles, applied on a consistent basis and permit the Agency to examine and audit Borrower's books and records at all reasonable times. (3) Additional Information: furnish such addi tional information and statements, list of assets and liabilities, agings of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations the Agency may request from time to time. (4) Compliance With Governmental Requirements: comply with all laws, ordinances, and regulations, now or hereafter in effect of governmental authorities applicable to the use or occupancy of the Mobilehome Park Properties including without limi tation "Environmental Laws" as defined in Section 2, above. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified the Agency in writing prior to doing so and so long as, in the Agency's sole opinion, the Agency's interests in the Mobilehome Park Properties are not jeopardized. The Agency may require Borrower to post adequate security or a surety bond, reasonably satisfactory to the Agency, to protect the Agency's interest. (5) Loan Proceeds: use the proceeds of the Loan solely for the purposes set forth in Section 3 and for expenses directly related to the Loan and the execution and deli very of the Promissory Note and the Deed of Trust and the Collateral Documents. (6) Taxes and Claims: pay and discharge when due all of Borrower's indebtedness, obligations, and claims that, if unpaid, might become a lien or charge upon the Mobilehome Park SBEO/0124/00C/931-1 1/3/00 1040 jmm 19 Properties; provided, however, that Borrower shall not be required to pay and discharge any such indebtedness, obligation, or claim so long as (A) its legality shall be contested in good faith by appropriate proceedings, (B) the indebtedness, obligation, or claim does not become a lien or charge upon any of the Mobilehome Park Properties, and (C) Borrower shall have established on its books adequate reserves wi th respect to the amount contested in accordance with generally accepted accounting practices. If the indebtedness, obligation, or claim does become a lien or charge upon any of the Mobilehome Park Properties, Borrower shall remove the lien or charge as provided in the preceding paragraph. (7) Performance: perform and comply with all terms, conditions, and provisions set forth in this Agreement and in all other instruments and agreements between Borrower and the Agency, and in all other loan agreements now or hereafter existing between Borrower and any other party. Borrower shall notify the Agency immediately in writing of any default in connection with any such agreement. (8) Compliance With 1999 Housing Authority Loan Agreement: comply with the provisions of the 1999 Housing Authority Loan Agreement. (9) Compliance With FHA Documents: from and after the when the FHA Documents are recorded, comply with provisions of the FHA Documents, if applicable. time the (10) Additional Assurances: make, execute, and deliver to Lender such security agreements, instruments, documents, and other agreements reasonably necessary to document and secure the Loan and to perfect the security interest of the Agency in any of the Mobilehome Park Properties. ( 11) Annual Reports Regarding Homebuyer Mortgage: s ubmi t affordable housing continuous compliance reports regarding each Affordable Home Grant as provided in Exhibit "Gu. Section 7. NEGATIVE COVENANTS. Borrower covenants and agrees with the Agency that while this Agreement is in effect, Borrower shall not, without the prior written consent of the Agency: (I) Indebtedness and Liens. (A) except for the loan of funds under the FHA Agreement and FHA Documents, if applicable and trade debt incurred in the normal course of business as may be permitted under the FHA Agreement and FHA Documents, if SBEO/0124/DOC/931-1 1/3100 1040 jmm 20 applicable, create, incur or assume indebtedness for borrowed money, including capital leases, (B) sell, transfer, mortgage, assign, pledge, lease (except for leases of spaces in the Mobilehome Park Properties to tenants), grant a security interest in, or encumber any of Borrower's assets, or (C) sell with recourse any of Borrower's accounts. (2) Continuity of Operations. (A) engage in any business activities substantially different than those in which Borrower is presently engaged, (B) cease operations, liquidate, ;merge, transfer, acquire or consolidate with any other entity, change ownership, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (C) make any distribution with respect to any capital account, whether by reduction of capital or otherwise. (3) Loans, Acquisitions and Guaranties. (A) loan, invest in or advance money or assets, (B) purchase, create or acquire any interest in any other enterprise or entity, or (C) incur any obligation as surety or guarantor other than in the ordinary course of business. (4) Liens. create or allow to be created any other new lien or charge upon any of the Mobilehome Park Properties. Section 8. GENERAL LOAN PROVISIONS. The following provisions relate to the Loan: (1) General Indemnity. Borrower shall indemnify, defend with counsel selected by the Agency, protect and hold the Agency, its officials, officers, employees, agents and successors harmless from any and all claims asserted against the Agency or any of the Mobilehome Park Properties by any person, entity, or governmental body, or arising out of or in connection with any of the Mobilehome Park Properties by the Borrower. The Agency shall be entitled to appear in any action or proceeding to defend itself against such claims, and all costs incurred by the Agency in connection with such defense, including attorneys' fees, shall be paid by Borrower to the Agency. The Agency shall, in its sole discretion, be entitled to settle or compromise any asserted claims against it, and such settlement shall be binding upon Borrower for purposes of the indemnification under this Section 8 (1). All amounts paid by the Agency under this Section 8(1), if any, shall be secured by the Deed of Trust payable upon demand, and shall bear interest at the rate applicable to the Loan. SBEO/0124/DOC/931-1 1/3/00 1040 jrnrn 21 (2) Special Environmental Indemnity. Borrower shall indemnify, defend with counsel selected by the Agency, protect and hold harmless the Agency, its officials, officers, employees, agents and successors (collectively, "Environmental Conditions Indemnified Parties" or singularly, "Environmental Conditions Indemnified Party") from and against all claims, actual damages (including without limitation, special and consequential damages), punitive damages, injuries, costs, response costs, losses, demands, debts, liens, liabilities, causes of action, suits, legal and administrative proceedings, interest, fines, charges, penalties and expenses (including without limitation (A) attorneys', engineers', consultants' and expert witness fees and costs incurred in defending against any of the foregoing or in enforcing this indemnity and (B) any diminution in the value of the property) of any kind whatsoever paid, incurred or suffered by any Environmental Conditions Indemnified Party, or asserted against any of the property, directly or indirectly arising from or attributable to (i) any breach by the Borrower of any of its agreements, representations or warranties set forth in Section 4(5), or (ii) any repair, cleanup, remediation, detoxification, closure or preparation and implementation of any plan therefor undertaken by any Environmental Conditions Indemnified Party concerning Hazardous Waste on, under or about any of the Mobilehome Park Properties. The foregoing indemnity shall apply whether acts of any Environmental Conditions Indemnified Party are undertaken because of proceedings initiated by any federal, state or other government authority or by any private persons (s) . The foregoing indemnity is intended by the parties to be an agreement pursuant to Section l07(e) of CERCLA, 42 U.S.C. Section 9607(e) and California Health and Safety Code Section 25364. (3) Special Covenant to Give Notice to the Agency. The Borrower shall promptly give the Agency (i) a copy of any notice, correspondence or information the Borrower receives from any federal, state or other government authority regarding Hazardous Waste on, under or about any of the Mobilehome Park Properties or regarding any actions, instituted, completed or threatened by any such governmental authori ty concerning Hazardous Waste which affects or may affect any of the Mobilehome Park Properties, (ii) written notice of any knowledge or information the Borrower obtains regarding Hazardous Waste on, under or about any of the Mobilehome Park Properties or expenses or losses incurred or expected to be incurred by the Borrower, third party or any government agency to study, assess, contain or remove any Hazardous Waste on, under or about the Mobilehome Park SBEO/0124/DOC/931-1 1/3/00 1040 jmm 22 Properties for which expense or loss the Borrower may be liable or for which a lien may be imposed on any of the Mobilehome Park Properties, (iii) written notice of all claims made or threatened by any third party (other than government authority) against the Borrower or any of the Mobilehome Park Properties relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Waste and (iv) written notice of the Borrower's discovery of any occurrence or condition on any land adjacent to any of the Mobilehome Park Properties that could cause any of the Mobilehome Park Properties to be classified as "border-zone property" under the provisions of California Health and Safety Code Sections 25220, et ~., or any regulation adopted in accordance therewith, or to be otherwise subj ect to any restrictions on the ownership, occupancy, transferability or use of any of the Mobilehome Park Properties under any of the statutes referred to in the preceding paragraph or any regulation adopted pursuant thereto. (4) Actions. The Agency shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties to this Agreement. In connection with this right, the Agency may incur and pay reasonable costs and expenses, including, but not limited to, attorneys' fees, for both trial and appellate proceedings. Borrower covenants to pay to the Agency on demand all such expenses, together with interest from the date the Agency may incur the expense at the rate specified in the Promissory Note. Section 9. EVENTS OF DEFAULT. (a) Default By Agency. The following shall constitute a default by the Agency: failure to fund the Loan as provided in Section 5(b) and Section 5(c) of this Agreement. (b) Default By Borrower. Each of the following shall constitute a default by the Borrower: (i) failure by the Borrower to perform or a delay in performance or a failure to comply with any term of provision of the 1999 Housing Authority Loan Agreement at any time during which the Mobilehome Park Properties may be pledged by the Borrower as security for the loan under the 1999 Housing Authority Agreement when such failure or delay or non-compliance is not corrected within the period of time set forth in the 1999 Housing Authority Agreement. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 23 (ii) if applicable, failure by the Borrower to perform or a delay in performance or a failure to comply with any term or provision of an FHA Agreement and such failure or delay or non-compliance is not corrected within the period of time set forth in the FHA Agreement at any time during which the Mobilehome Park Properties may be pledged by the Borrower as security for the loan from the FHA Senior Lender under the FHA Documents when such failure or delay or non-compliance is not corrected wi thin the period of time set forth in the FHA Documents. (iii) if applicable, failure by the Borrower to perform or a delay in performing or a failure to comply with any term or provision of this Agreement including the failure to implement the 2001 Project, or a default or breach under the Promissory Note where such failure or delay or noncompliance is not corrected within thirty (30) days of notice thereof by the Agency. (iv) failure by the Borrower to perform or a delay in performing or a failure to comply with any term or provision of the Deed of Trust and such failure or delay or noncompliance is not corrected within thirty (30) days of notice thereof by the Agency. Section 10. REMEDIES BY BORROWER OR AGENCY - EXERCISE OF AGENCY REMEDIES ARE SUBJECT TO 1999 HOUSING AUTHORITY LOAN AGREEMENT AND TO FHA AGREEMENT AND FHA DOCUMENTS OF PHASE II SENIOR LENDER, AS APPLICABLE. (a) Remedies of Borrower. Upon a default by the Agency, (i) the Borrower shall be released from any further obligation under this Agreement or the Promissory Note and (ii) the Borrower may seek appropriate legal or equitable relief. (b) Remedies of Agency. Upon a default by the Borrower, the Agency may, at its option and subj ect to the terms and conditions of the 1999 Housing Authority Loan Agreement or the FHA Documents, as applicable: (i) declare all sums due under the Promissory Note immediately due and payable; (ii) institute suit for the foreclosure of the Deed of Trust or deliver to the trustee under the Deed of Trust a written declaration of default by Borrower and of election to cause the Mobilehome Park Properties to be sold, all as provided in the Deed of Trust; (iii) institute any proceeding at law or in equity to enforce the obligations and SBEO/0124/DOC/931-1 1/3/00 1040 jrrun 24 covenants of the Borrower under this Agreement, the Promissory Note and the Deed of Trust. (c) In any action brought under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its costs and expenses (including reasonable attorney's fees) in bringing such action. Additionally, the Agency shall be entitled to any costs, including reasonable attorney's fees, incurred in collecting amounts due the Agency under the Promissory Note. (d) The Loan and this Agreement shall conditionally terminate if the Housing Authority or its trustee under the 1999 Housing Authority Loan Agreement, or the assignee of either of them, acquires title to the Mobilehome Park Properties by foreclosure, deed in lieu of foreclosure or comparable means under the 1999 Housing Authority Loan Agreement. (e) Notwithstanding any other provision of this Agreement, or any related instrument executed by the Borrower and delivered to the Agency upon close of the FHA Escrow as provided in Section 12 hereof, the Loan and this Agreement shall automatically terminate if the Secretary or the FHA Senior Lender, or the assignees of either of them, acquires title to the Mobilehome Park Properties by foreclosure, deed in lieu of foreclosure or comparable means under the FHA Documents. Section 11. TERMINATION OF AGREEMENT. This Agreement shall terminate upon the payment in full by the Borrower of all amounts due under the Promissory Note. This Agreement shall also terminate prior to the payment in full of the Promissory Note if: (i) Housing Authority or the trustee under the bonds issued by the Housing Authority as referenced in the 1999 Housing Authority Loan Agreement, or the assignee of either of them, acquires title in the Mobilehome Park Properties and/or the 1999 Project through foreclosure, deed in lieu of foreclosure or comparable means; or (ii) if the Secretary or the FHA Senior Lender or the assignee of either of them, acquires title in the Mobilehome Park Properties through foreclosure, deed in lieu of foreclosure or comparable means under the FHA Documents. Section 12. COORDINATION OF ADVANCES UNDER THE LOAN AND AGENCY ACKNOWLEDGMENT OF SUBORDINATION IN SUPPORT OF FHA AGREEMENT, FHA DOCUMENTS AND THE MORTGAGE INSURANCE COMMITMENT REQUIREMENTS OF THE SECRETARY FOR ONE OR MORE PHASE II SENIOR LENDERS AND SUBSTITUTE COLLATERAL. SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 25 (a) The Agency acknowledges that the Borrower presently intends to submit an application to the Secretary for the issuance by the Secretary of a commitment of insurance in favor of one or more Phase II FHA Senior Lenders pursuant to the terms of an FHA Agreement affecting one or more of the Mobilehome Park Properties. The Agency further acknowledges that as of the date of this Agreement, the Secretary has not approved such an FHA Agreement. The Borrower agrees that in its application to obtain a commitment for the issuance of an FHA insured long-term permanent mortgage loan for the Mobilehome Park Properties, that the Borrower shall request the Secretary to consent to the Agency's Collateral in the Mobilehome Park Properties remaining as a permanent "secondary financingH under the FHA insured mortgage underwriting standards of the Secretary. Subj ect to the best efforts of the Borrower to complete the submission of all necessary information to the Secretary in support of an FHA Agreement for the long-term FHA insured mortgage financing affecting one or more of the Mobilehome Park Properties, the Agency hereby agrees to reasonably cooperate wi th the Borrower in considering specific amendments or modifications to this Agreement, the Promissory Note, the Deed of Trust and the Regulatory Agreement which the Secretary and the Phase II FHA Senior Lender may reasonably request in order to accommodate the FHA insurance mortgage loan underwriting standards of the Secretary with the Agency's security interest in the Mobilehome Park Properties under this Agreement; provided however, the Agency shall assume no obligation as a term or condition to such an accommodation to make any Advance under the Loan except for the purposes authorized in Section 3 or payor otherwise guarantee any cost or expense of the Borrower or the Phase II FHA Senior Lender in connection with the recordation of such FHA Documents. (b) Upon the written request of the Borrower, the Agency shall execute and deliver in recordable form a copy of an acknowledgment of subordination of the Loan to the Phase II FHA Senior Lender, substantially in the form attached hereto as Exhibit "HH within fifteen (15) days written notice from the Borrower that the FHA Senior Lender is prepared to originate its mortgage loan in favor of the Borrower, secured by the Mobilehome Park Properties. (c) In the event that despite the due and diligent efforts of the Borrower to obtain the approval and consent of the Secretary to authorize the Agency collateral to be permitted secondary financing affecting the Mobilehome Park Properties following the discharge and release of the security interest of the Housing Authority and the recordation of the FHA Documents in favor of the Phase II Senior Lender in either of such Mobilehome Park Properties, the Agency shall upon the written notice of the Borrower consider whether to accept as substitute Collateral for the Loan, other property or security which the Borrower may then offer to the SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 26 Agency. The Agency shall accept as substitute Collateral for the Loan such property or other security which has an estimated value established by a restricted appraisal report addressed to the Agency by an MAl certified real property appraiser of not less than the current value of the Mobilehome Park Properties. Section 13. HOUSING AFFORDABILITY COVENANT OF THE BORROWER AND MISCELLANEOUS PROVISIONS. The following provisions are a part of this Agreement: (1) Housing Affordability Covenant. The Agency is using its low- and moderate-income housing funds to make the Loan in favor of the Borrower. Accordingly the following housing affordability covenants are included as part of the terms and conditions of the Regulatory Agreement and shall remain in effect on the Mobilehome Park Properties for a term of twenty (20) years following the date of the Promissory Note: (i) percent ( %) of the Manufactured Home Spaces in the Mobilehome Park Properties, for a subtotal of at least ( ) such Manufactured Home Spaces, shall at all times be occupied or reserved for occupancy by persons who have a household income which is not more than percent (__%) of median income, adjusted for family size, as determined by HUD for the San Bernardino-Riverside PMSA area ("Median Income"); and (ii) percent ( %) of the Manufactured Home Spaces in the Mobilehome Park Properties, for a subtotal of at least ( ) such Manufactured Home Spaces, shall at all times be occupied or reserved for occupancy by persons who have a household income which is not more than percent ( %) of Median Income adjusted for family size; and (iii) each person, or household which qualifies for occupancy in the Mobilehome Park Properties under ei ther subparagraph (i) or (ii) above, (each a "Qualifying Resident") shall pay no more as rent than an "Affordable Rent" as defined below. (2) Discrimination Prohibited. The Borrower covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, an SBEO/0124/DOC/931-1 1/3/00 1040 jrrun 27 account of sex, marital status, race, ethnic affiliation, family status, religion, creed, national origin or ancestry in the use, operation, occupation, lease, sublease, transfer or sale of the mobilehome Park Properties, nor shall the Borrower, or the Manager or any third party related to the Borrower establish or permit any such practice of discrimination or segregation to occur on the Mobilehome Park Properties in connection wi th the selection, location, number or occupancy of residents on any manufactured home space in the Mobilehome Park Properties. The text of Health and Safety Code Section 33375 which sets forth the general form of non-discrimination clauses to be included in each lease or contract entered into by the Borrower with respect to the Mobilehome Park Properties, is hereby incorporated in this Agreement by this reference. (3) No Joint Venture. Nothing in this Agreement shall be construed to constitute the creation of a partnership or j oint venture between the Agency and Borrower. The Agency is not an agent or representative of Borrower. This Agreement does not create a contractual relationship with and shall not be construed to benefit or bind the Agency in any way with or create any contractual duties by the Agency to any contractor, subcontractor, materialman, laborer, or any other person. (4) Amendment. This Agreement may be amended as deemed necessary by written instruments duly approved by the Borrower and the Agency; provided however that for so long as the Mobilehome Park Properties are pledged by the Borrower as security for the loan from the Housing Authority under the 1999 Housing Authority Loan Agreement, any such proposed amendment shall be subject to the deli very to the Agency of an approving legal opinion of comment to the Borrower that such proposed amendment is permitted under the 1999 Housing Authority Loan Agreement. Any such amendments or modifications shall be valid, binding and legally enforceable only if in written form and executed by the parties hereto and only after the approval thereof by official action of the Agency; provided however, that the Executive Director of the Agency in consultation with legal counsel for the Agency, is authorized to make non-substantive revisions and changes to the text of any instrument attached hereto as an exhibit in order to accommodate the final form of the FHA Documents or the requirements of the Secretary under an FHA Agreement for the Phase II Senior Lender, as applicable. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 28 (5) Applicable Law. This Agreement has been delivered to the Agency and accepted by the Agency in the State of California. If there is a lawsuit arising under this Agreement, the Superior Court of San Bernardino County, State of California shall have jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California. (6) Authority to File Notices. Bor r owe r appo i n t sand designates the Agency as its attorney-in-fact to file for record any notice that the Agency deems necessary to protect its interest under this Agreement. This power shall be deemed coupled with an interest and shall be irrevocable while any sum or performance remains due and owing under the Promissory Note. (7) Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. (8) Consent to Sale of Loan and Promissory Note by the Agency. Borrower agrees and consents to the sale or transfer whether now or later by the Agency of the Loan, the Promissory Note and the Deed of Trust (or to any participating interest therein) to a third party. Borrower further waives all right of offset or counterclaim that it may have now or later against the Agency or against any purchaser of the Loan, the Promissory Note and the Deed of Trust (or a participating interest therein) and Borrower unconditionally agrees that either the Agency or such purchaser may enforce Borrower's obligations hereunder. Borrower further agrees that such purchaser from the Agency may enforce its interests irrespective of any personal claim or defense that Borrower may have against the Agency. (9) Costs and Expenses. The Agency may pay someone else to help collect the Loan and to enforce this Agreement, and Borrower will pay that amount. This includes, subject to any limits under applicable law, attorneys' fees and legal expenses of the Agency, whether or not there is a lawsuit, including reasonable attorneys' fees for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also will pay any court costs, in addition to all other sums provided by law. For the purposes hereof, the words, "reasonable attorney's feesu in the case of the Agency means and includes the salaries and benefits SBEO/0124/DOC/931-1 1/3/00 1040 jmm 29 payable to the lawyers employed in the office of the City Attorney of the City of San Bernardino, as allocated on an hourly basis for any such legal services performed on behalf of the Agency hereunder. (10) Entire Agreement. This Agreement and the Related Documents constitute all of the agreements between the parties relating to the Loan and supersedes all other prior or concurrent oral or written agreements or understandings. The Agency has no obligation to extend any additional credit to the Borrower for redevelopment, planning and assistance, homebuyer mortgage loan assistance or for any other purpose. (11) Notices. All notices required to be given under this Agreement shall be given in writing, may be sent by facsimile, and shall be effective when actually delivered or when deposited with a nationally recognized overnight courier or deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the address shown above. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. To the extent permitted by applicable law, if there is more than one Borrower, notice to any Borrower will constitute notice to all Borrowers. For notice purposes, Borrower will keep the Agency informed at all times of Borrower's current address (es) . (12) Successors and Assigns. All covenants and agreements contained by or on behalf of Borrower shall bind its successors and assigns and shall inure to the benefit of the Agency, its successors and assigns. Borrower shall not, however, have the right to assign its rights under this Agreement or any interest therein, without the prior written consent of the Agency. (13) Severability. If a court of competent jurisdiction finds any provision of this Agreement to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 30 provisions of this Agreement in all other respects shall remain valid and enforceable. (14) Survival. All warranties, representations, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to the Agency under this Agreement shall be considered to have been relied upon by the Agency and will survive the making of the Loan and delivery to the Agency of the Related Documents, regardless of any investigation made by the Agency. (15) Time is of Essence. Time is of the essence in the performance of this Agreement. (16) Waiver. The Agency shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by the Agency. No delay or omission on the part of the Agency in exercising any right shall operate as waiver of such right or any other right. A waiver by the Agency of a provision of this Agreement shall not prejudice or constitute a waiver of the right of the Agency otherwise demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by the Agency, nor any course of dealing between the Agency and Borrower shall constitute a waiver of any of the rights of the Agency or of any obligations of Borrower as to any future transactions. Whenever the consent of the Agency is required under this Agreement, the granting of such consent by the Agency in any instance shall not consti tute continuing consent in subsequent instances where such consent is required, and in all cases, such consent may be granted or withheld in the sole discretion of the Agency. (17) List of Exhibits. Each of the following attached as an exhibit to the Agreement incorporated herein by this reference: documents is and each in Exhibit "A" Legal Description of the 1999 Project Exhibi t "B" Legal Description of Mobilehome Park Properties Exhibit "e" Program Budget and Expense Schedule Exhibit "0" Promissory Note SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 31 Exhibit "E" Deed of Trust Exhibit "E-l" - Collateral Assignment of Leases and Rents Exhibit "F" Regulatory Agreement Exhibit "G" Description of Home Grant Program - Procedures, Disbursements of Loan Advances and Reports By Borrower to the Agency under Affordable Home Grant Exhibit "H" Form of Subordination Agreement In Favor of the Phase II FHA Senior Lender (18) Effective Date of Aqreement. This Agreement shall have no force or effect until it shall have been approved at a duly noticed public meeting in the sole and absolute discretion of the governing board of the Agency. The effective date of this Agreement shall be either the date of such approval by the governing board of the Agency or such other date as may be expressly provided in such approval of the governing board of the Agency. SBEO/0124/DOC/931-1 1/3/00 1040 jmm 32 BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF JANUARY , 2001, BUT THIS AGREEMENT SHALL BE EFFECTIVE ON THE DATE SET FORTH IN SECTION 13 (18) , ABOVE, WHICH IS 2001. AGENCY BORROWER Redevelopment Agency of the City of San Bernardino San Bernardino Mobilehome Park Corporation, a California non- profit corporation By: Judith Valles By: Chairperson of the Community Development Commission of the City of San Bernardino, its By: governing board By: Agency Secretary Approved As To Form: Agency Counsel SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 33 EXHIBIT "A" Legal Description of the 1999 Project SBEO/0124/DOC/931-1 113/00 1040 jnun 34 EXHIBIT "B" Legal Description of Mobilehome Park Properties SBEO/0124/DOC/931-1 1/3/00 1040 jmm 35 SBEO/0124/DOC/931-1 1/3/00 1040 jmm EXHIBIT "e" Program Budget and Expense Schedule 36 EXHIBIT "D" Promissory Note SBEO/0124/DOC/931-1 1/3/00 1040 jmm 37 PROMISSORY NOTE PAYABLE TO A PUBLIC AGENCY Borrower: Lender: San Bernardino Mobilehome Park Corporation Redevelopment Agency of the City of San Bernardino 201 North -E" Street Suite 301 San Bernardino, California 92401 Principal Amount: NOT TO EXCEED $550,000.00 Date of Promissory Note: , 2001 [TO BE CONFUMED BY AGENCY AT TIME OF INITIAL ADVANCE] Interest Rate: 3% [Interest Commences to Accrue on January I, 2003] Maturity Date of Promissory Note: , 2001 [TO BE CONFIRMED BY AGENCY AT TIME OF INITIAL ADVANCE] PROMISE TO PAY. The San Bernardino Mooilehome Park Corporation, a California non-profit corporation (the "Borrower") promises to pay to the Redevelopment Agency of the City of San Bernardino (the "Agency"), or order, in lawful money of the United States of America, the principal amount of Five Hundred Fifty Thousand Dollars ($550,000.00), or so much as may be outstanding under this Promissory Note, together with interest on the unpaid outstanding principal balance of each advance. INDEBTEDNESS. This Promissory Note evidences the indebtedness of the Borrower to the Agency under the terms and conditions of the 2001 Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement dated as of January ,2001, (the "Loan Agreement") by and among the Borrower and the Agency. A copy of the Loan Agreement is on file with the Agency Secretary as a public record of the Agency. PAYMENT. Borrower will pay this Promissory Note prior to its maturity, in fifteen (15) annual installments, with the first such installment due on the fifth (5:h) anniversary following the date of this Promissory Note (which appears, above), and thereafter, on each following anniversary date (each such date referred to as a "scheduled debt service payment") until maturity or paid in full. Each such installment shall be a level debt amount of principal and interest based upon a twenty (20) year rate of amortization of the SBEO/0124/DOC/932 12/28/00 1100 jrnm 1 balance of outstanding principal and accrued and unpaid interest on the day immediately preceding the date when the first scheduled debt service payment is due. Prior to the maturity date of this Promissory Note, and for so long as either: (i) the Housing Authority of San Bernardino County (the "Housing Authority") or (ii) the United States Secretary of Housing and Urban Development (the "Secretary"), may have a security interest in the "Mobilehome Park Properties", as this term is defined in the Loan Agreement, the Borrower shall make payments of principal and interest to the Agency solely from "Surplus Cash" as this term is defined in the next paragraph, below. If Surplus Cash in an amount sufficient to make a scheduled debt service payment in full is not available on such a date, the portion of such scheduled debt service payment not then paid (the "deficiency debt service amount") shall be carried for~ard to the next following scheduled debt service payment date, the following scheduled debt service payment date, the balance of the deficiency debt service amount as carried forward shall be paid first and the scheduled debt service payment shall be paid second. On the maturity date, a balloon payment of the remaining principal balance and accrued and unpaid interest shall be due, but solely from Surplus Cash, and if the amount of such Surplus Cash is insu:ficient thereof, then the remaining. unpaid balance of this Promissory Note shall be deemed to be a deficiency debt service amount and shall be carried for~ard to the next anniversary date following the maturity date until paid in full. Borrower will make all payments of interest and principal to the Agency at the address of the Agency: 201 North "E" Street, Suite 301, San Bernardino, California 92401 or at such other place as the Agency may designate in writing. Unless otherwise agreed to by the Agency in writing or required by applicable law, payments will be applied first to any unpaid collection costs and any late charges, then to any unpaid interest, and any remaining amount to principal. The words "Surplus Cash" as used in the preceding paragraph mean and refer to any cash of the Borrower remaining on any payment date under the Promissory Note after: 1. (A) at all times during which the Housing Authority has a security interest in the Mobilehome Park Properties under the 1999 Housing Authority Loan Agreement, after the payment of: (i) all sums due or to be paid by the Borrower under the terms of the 1999 Housing Authority Loan Agreement and the 1999 Housing Authority Note; S8EO/0124/DOC/932 12/28/00 1100 jmrn 2 (ii) all amounts required to be deposited by the Borrower in the reserve funds established under the 1999 Housing Authority Loan Agreement; (iii) all amounts required to be paid as Operating Expenses" under the 1999 Authority Loan Agreement; and "Project Housing (B) the segregation of: (i) an amount equal to the aggregate of all special funds required to be maintained for the "1999 Project" as this term is defined in the Loan Agreement, under the 1999 Housing Authority Loan Agreement; and (ii) all tenant security deposits for the 1999 Project. 2. (A) at all times during which the "FHA Documents" as this term if defined in the Loan Agreement are in effect wi th respect to the Mobilehcme Park Properties, after the payment of: (i) all sums due or to be paid by the Borrower under the terms of any mortgage or note insured or held by the Secretary under the FHA Documents; (ii) all amounts required to be deposited by the Borrower in the reserve funds for the Mobilehome Park Properties as required under the FHA Agreement; (iii) all amounts required to be paid as Project Operating Expenses which have been approved by the Secretary under the FHA Documents; and (B) the segregation of: (i) an amount equal to the aggregate of all special funds required to be maintained for the Mobilehome Park Properties under the FHA Agreement and the FHA Documents; and (ii) all tenant security deposits for the Mobilehome Park Properties then held by the Borrower. SEEO/0124/DOC/932 12/28/00 1100 jmm 3 INTEREST RATE. Interest shall accrue on the outstanding principal balance of this Promissory Note commencing on January 1, 2003, at the rate of three percent (3%) per annum. Interest on this Promissory Note is computed on a 365/360 simple interest basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Interest which may accrue prior to the first scheduled debt service payment under this Promissory Note shall be capitalized as of the day immediately preceding the due date of such first scheduled debt service payment. PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed under this Promissory Note earlier than it is due. LATE CHARGE. If a payment is ten (10) days or more late, Borrower will also be charged (in addition to the annual installment amount as past due) five percent (5%) of the annual payment as a late charge. DEFAULT. Borrower will be in default if any of the following happens: (d) SBEO/0124/DOC/932 12/28/00 1100 jrnm (a) Borrower fails to make any payment when due under this Promissory Note. (b) Borrower fails to make any payment when due under the 1999 Housing Authority Loan Agreement or the FHA Documents, as applicable. (c) Borrower breaks any promise Borrower has made to the Agency in the Loan Agre~ment, or Borrower fails to comply with or to perform when due any other term, obligation, covenant, or condition contained in this Promissory Note or any agreement related to this Promissory Note. Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Promissory Note or the abili ty of Borrower to perform its other obligations under this Promissory Note or the Deed of Trust and the Collateral Assignment of Leases and Rents of even date herewith. 4 (e) Any representation or statement made or furnished to the Agency by Borrower or on Borrower's behalf under the Loan Agreement is false or misleading in any material respect either now or at the time made or furnished. (f) Any creditor tries to take any of Borrower's property on or in which the Agency has a lien or security interest. (g) A material adverse charge occurs in Borrower's financial condition, or the Agency believes the prospect of payment or performance of the indebtedness evidenced by this Promissory Note is impaired. If any default (other than a default described in (a), (b) or (e), above) is curable, and if Borrower has not been g~ven a notice of a default of the same provision of this Promissory Note within the preceding twelve (12) months, such a default may be cured (and in such event no default will be deemed to have occurred) if Borrower, after receiving written notice from the Agency demanding cure of such default: (i) cures the default within ten (10) days; or (ii) if the cure requires more than ten (10) days, immediately initiates steps which the Agency deems in its sole discretion to be sufficient to cure the default, and thereafter Borrower continues and RIGHTS OF THE HOLDER. Upon default the.Agency may exercise any of its rights provided under the Loan Agreement and the "Collateral Documents", as this term is defined in the Loan Agreement including without limitation, the declaration by the Holder that the entire unpaid principal balance on this Promissory Note and all accrued unpaid interest is immediately due, without notice, and then Borrower will pay that amount. Upon the failure to pay all amounts declared due pursuant to this paragraph entitled RIGHTS OF THE HOLDER," including failure to pay at the Maturity Date, the Holder, at its option, may also, if permitted under applicable law, increase the interest rate on this Promissory Note for interest which accrues after the date such amount is declared due, to the rate of eight percent (8%) per annum. The Agency may hire or pay someone else to help collect this Promissory Note if the Borrower does not pay. The Borrower also will pay the Holder that amount. This includes, subject to any limits under applicable ....- SBEO/0124/DOC/932 12/28/00 1100 jrnm 5 law, the Agency's reasonable attorneys' fees and the legal expenses of the Holder whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. The Borrower also will pay any court costs, in addition to all other sums provided by law. This Promissory Note has been delivered to the Holder and accepted by the Holder in the State of California. If there is a lawsuit arising under this Promissory Note, the Superior Court of San Bernardino County, the State of California, shall have jurisdiction of such lawsuit. This Promissory Note shall be governed by and construed in accordance with the laws of the State of California. COLLATERAL. The Borrower acknowledges this Promissory Note is secured by a Deed of Trust of even date here'..ith. The Deed of Trust affects certain real property described in the Loan Agreement as the "Mobilehome Park Properties". The Deed of Trust contains the following provisions: "THE LENDER MAY, AT ITS OPTION, DECLARE IMMEDIA~EL Y DUE AND PAYABLE ALL SUMS SECURED BY THIS DEED OF TRUST UPON THE OCCURRENCE OF A SPECIAL EVENT OF ACCELERATION, AS THIS TERM IS DEFINED IN SUBPARAGRAPH (A) OR (B) BELOW, AS THEN APPLICABLE (A) During the period of time when the security interests of the Housing Authority encumbers the Property, a "special event of acceleration" shall occur when there is a conveyance of the Property without the consent in writing of the Lender, of any right, title or interest in the Property to any person, whether such sale, refinancing or transfer is legal, beneficial,. or equitable, whether voluntary or involuntary, whether by sale, deed or installment sale contract, land contract, lease option contract, or by sale, assignment or transfer of any beneficial interest of the Trustor in the Property to any land trust, and when as pa:::t of such conveyance, the security interest of the Housing Authority or its assignee in the Property is released and reconveyed to the Trustor by the Housing Authority, or its assignee; provided however, that any such conveyance which is permitted under the 1999 Housing Authority Loan Agreement dated as of September 15, 1999, by and between the Trustor and the Housing Authority shall not be deemed to be a special event of acceleration; or SBEO/0124/DOC/932 12/28/00 1100 jmm 6 (B) During the period of time when the security interests of the FHA Senior Lender encumbers the Property under the FHA Documents, a "special event of acceleration" shall occur when there is a conveyance of the Property without the consent in writi~g of the Lender, of any right, title or interest in the Property to any person, whether such sale, refinancing or transfer is legal, beneficial, or equitable, whether voluntary or involuntary, whether by sale, deed or installment sale contract, land contract, lease option contract, or by sale, assignment or transfer of any beneficial interest of the Trustor in the Property to any land trust, and when as part of such conveyance, the security interest of the FHA Senior Lender or its assignee in the Property including the Secretary is released and reconveyed to the Trustor by the FHA Senior Lender, or its assignee including the Secretary. Any such conveyance which is permitted under the FHA Documents of the FHA Senior Lender or the FHA Agreement shall not be deemed to be a special event of acceleration. Initials of Trustor" LINE OF CREDIT. This Promissory Note evidences a line of credit in favor of the Borrower in an amount not to exceed the sum of $550,000.00. The accrued and unpaid interest and principal balance owing on this Promissory Note at any time may be evidenced by unpaid balance acknowledgment of the Agency on this Promissory Note (each referred to as an "Annex to Promissory Note") and/or by the internal records of the Agency. GENERAL PROVISIONS. The Agency may delay or forego enforcing any of its rights or remedies under this Promissory Note without losing them. Borrower and any other person who signs, guarantees or endorses the Promissory Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, protest and notice of dishonor. Upon any change in the terms of this Promissory Note, and unless otherwise expressly stated in writing, no party who signs this Promissory Note, shall be released from liability. All such parties agree that the Agency may renew or extend (repeatedly and for any length of time) this Promissory Note, or release any party, or collateral; or impair, fail to realize upon or perfect the Agency's security interest in the collateral; and take any other action deemed necessary by the Agency in its sole discretion without the consent of or notice to anyone. All such parties also agree that the Agency may modify SBEO/0124/DOC/932 12/28/00 1100 jrnm 7 this Promissory Note and/or the Loan Agreement without the consent of or notice to anyone other than the party with whom the modification is made. PRIOR TO SIGNING THIS PROMISSORY NOTE, BORROWER HAS READ AND UNDERSTANDS ALL OF ITS PROVISIONS. BORROWER AGREES TO THE TERMS OF THIS PROMISSORY NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF. BORROWER San Bernardino Mobilehome Park Corporation, a California non-profit corporation By: By: SBEO/0124/DOC/932 12/28/00 1100 jmm 8 EXHIBIT "E" Deed of Trust SBEO/0124/DOC/931-1 1/3/00 1040 jrrun 38 RECORDATION REQUESTED BY: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND WHEN RECORDED MAIL TO: 201 North UE" Street, Suite 301 San Bernardino, California 92401 Attention: Executive Director Space Above This Line is For Recorder's Use Only SUBORDINATE DEED OF TRUST AND ASSIGNMENT OF RENTS (San Bernardino Mobilehome Park Corporation 2001 Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement) THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust") is dated, 2001, among the San Bernardino Mobilehome Park Corporation, a California non-profit corporation (the "Trustor"), whose address is ; the Redevelopment Agency of the City of San Bernardino, a body corporate and politic, whose address is 201 North "En. Street, Suite 301, San Bernardino, California 92401 ( the "Lendern or "Beneficiary"); and First American Title Insurance Company, a California corporation, whose address is (the "Trustee") . 1.0 CONVEYANCE AND GRANT. For valuable consideration, Trustor irrevocably grants, transfers and assigns to Trustee in trust, with power of sale, for the benefit of Lender as Beneficiary, all of Trustor's right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of way, and appurtenances and all other rights, royalties, and profits relating to the real property, including and without limitation all minerals, oil, gas, geothermal and similar matters located in San Bernardino County, State of California (the "Property") : SBEO/0124/DOC/929-1 12/28/00 1100 jmm 1 SEE EXHIBIT "A" LEGAL DESCRIPTION ATTACHED HERETO Trustor presently assigns to the Lender all of Trustor's right, title and interest in and to all present and future leases of the Property and all Rents from the Property. In addition, Trustor grants Lender a Uniform Commercial Code security interest in the Rents and the Personal Property defined below. 2.0 DEFINITIONS. The following words shall have the following meanings when used in this Deed of Trust. Terms not otherwise defined in this Deed of Trust shall have the meanings attributed to such terms in the Uniform Commercial Code. All references to dollar amounts shall mean amounts in lawful money of the United States of America: Acquisition, Working Capital and Bomebuyer Grant Assistance Loan Agreement. The words "Acquisition, Working Capital and Homebuyer Grant Assistance Loan AgreementH mean that certain agreement dated as of January 2001, by and bet'...reen the Trustor and the Lender which provides for the loan to the Trustor which is secured by this Deed of Trust for the conduct of certain affordable housing redevelopment acquisition, working capital and homebuyer assistance financing activities to be undertaken by the Trustor in accordance with the terms and conditions of the Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement. Beneficiary. The word "Beneficiary" means the Redevelopment Agency of the City of San Bernardino, a body corporate and politic, its successors and assigns. The Agency is also referred to herein as "BeneficiaryH and "LenderH. Deed of Trust. The words "Deed of TrustH mean this Deed of Trust and Assignment of Rents among Trustor, Lender, and Trustee, and includes without limitation all assignment and security interest provisions relating to the Personal Property and Rents. FHA Agreement. The words "FHA AgreementH mean and refer to the commitment for mortgage loan insurance by and between the Trustor and the Secretary affecting the Property to be issued by the Secretary of the United States Department of Housing and Urban Development in favor of the FHA Senior Lender. FHA Documents. The words "FHA DocumentsH mean and refer to the mortgage loan documentation of the FHA Senior Lender. SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 2 I'BA Senior Lender. The words "FHA Senior Lender" mean and refer to , and its successors and assigns including the Secretary. This Deed of Trust shall be subordinate to the security interest of the FHA Senior Lender in the Property at such time as the FHA Senior Lender may cause the FHA Documents to be recorded against the Property as provided in Paragraph 9.0, below. Housing Authority. The words "Housing Authority" mean and refer to the Housing Authority of the county of San Bernardino. The Trustor has previously entered into a 1999 loan agreement with the Housing Authority, and this Deed of Trust is subordinate to the security interest of the Housing Authority in the Property as arises under that certain $27,195,000.00 Housing Authority Loan Agreement, dated as of September 15, 1999, by and between the Trustor and the Housing Authority, as set forth in Paragraph 9.0, below. Improvements. The word "Improvements" means and includes without limitation all existing improvements on the Property; provided however, the word "Improvements" does not include any manufactured home or other personal property owned by a third party which may be situated in the Property. Indebtedness. The word "Indebtedness" means all principal and, if applicable, interest payable under the Promissory Note and any amounts expended or advanced by Lender to discharge obligations of Trustor or expenses incurred by Trustee or Lender to enforce obligations of Trustor under the Promissory Note and this Deed of Trust, together with interest on such amounts. This Deed of Trust secures, in addition to the amounts specified in the Promissory Note any future advances, together with all interest thereon, which future advances the Lender may in its sole and absolute discretion make so long as Trustor complies with all the terms and conditions of the Promissory Note or other loan agreement. Lender. The word "Lender" means the Agency, its successors and assigns. Personal Property. The words "Personal Property" means all equipment, fixtures, and other articles of personal property now or hereafter owned by Trustor, and now or hereafter attached or affixed to the Property, together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property, and together with all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property. The words "Personal Property" SBEO/0124/DCC/929-1 12/28/00 1100 jrnm 3 also include all tangible and intangible items obtained or owned by, or in the possession of Trustor that are directly or indirectly related to the acquisition, development, design, construction, permitting, marketing, or habitation of the Property of the improvements to be constructed on the Property, whether heretofore or hereafter issued, prepared, or executed, including without limitation all permits, licenses, authorizations and approvals, trademarks and trade names, and any and all land use entitlements, development rights, sewer capacity, approvals, density allocations and other rights or approvals, relating to or authorizing the development or occupancy of the Property, plus all utility or other deposits, reimbursement rights, studies, tests contracts, plans and specifications, relating to the Property and improvements. Promissory Note. The words "Promissory Note" mean the Promissory Note of even date herewith, in the principal amount not to exceed Five Hundred Fifty Thousand Dollars ($550,000.00) from Trustor to the Agency as Lender, together with all rene'tlals, extensions, modifications, refinancing, and substitutions for the Promissory Note. Property. The word "Property" means collectively the Property and the Personal Property, and the rights described above in the "Conveyance and Grant" section of the Deed of Trust. Related Documents. The words "Related Documents" mean and include without limitation Rents. The word "Rents" means all present and future revenues, income, issues, royalties, profits, and benefits derived from the Property. rents, other Secretary. Secretary of Development. The word "Secretary" means and refers to the the United States Department of Housing and Urban Trustee. The word "Trustee" means Title Insurance Company, and any substitute or successor trustees. Trustor. The word "Trustor" means any and all persons and entities executing this Deed of Trust, including without limitation all Trustors named above. 3.0 THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PE~SONAL PROPERTY, IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF TRUSTOR UNDER THE PROMISSORY NOTE AND, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED SBEO/0124/DOC/929-1 12/28/00 1100 jmrn 4 OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS ALSO GIVEN TO SECURE ANY AND ALL OBLIGATIONS OF ~RUSTOR UNDER THAT CERTAIN ACQUISITION, WORKING CAPITAL AND HOMEBUYER GRANT ASSISTANCE LOAN AGREEMENT DATED AS OF JANUARY __, 2001, BETWEEN TRUSTOR AND LENDER. ANY EVENT OF DEFAULT UNDER THE ACQUISITION, WORKING CAPITAL AND HOMEBUYER GRANT ASSISTANCE LOAN AGREEMENT, OR ANY OF THE RELATED DOCUMENTS REFERRED TO THEREIN, SHALL ALSO BE AN EVENT OF DEFAULT UNDER THIS DEED OF TRUST. THE PROMISSORY NOTE AND THIS DEED OF TRUST ARE GIVEN AND ACCEPTED ON THE FOLLOWING TERMS: 3.1 PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust, Trustor shall pay to Lender all amounts secured by this Deed of Trust as they become due, and shall strictly and in a timely manner perform all of Trustor's obligations under the Promissory Note, this Deed of Trust, and the Related Documents. 3.2 POSSESSION AND MAINTENANCE OF THE PROPERTY. Trustor agrees that Trustor's possession and use of the Property shall be governed by the following provisions: Possession and Use. Until the occurrence of an Event of Default, Trustor may (a) remain in possession and control of the Property, (b) use, operate or manage the Property for the purposes authorized in the Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement. Duty to Maintain. Trustor shall maintain the Property in tenantable conditions and promptly perform all repairs, replacements, and maintenance necessary to preserve its value. Hazardous Substances. The terms "hazardous wastes", "hazardous substance", "disposal," "release", and "threatened release", as used in this Deed of Trust, shall have the same meanings as set forth in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U. S. C. Section 9601, et ~. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act. 49 U.S.C. Section 1801, et ~., the Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et ~., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et ~., or other applicable state or Federal laws, rules, or regulations adopted pursuant to any of the foregoing. Trustor represents and warrants to Lender that: (a) Trustor has no knowledge of, or reason to believe that there has been: (il any use, generation, manufacture, storage, SBEO/0124/DOC/929-1 12/28/00 1100 jmm 5 treatment, disposal, release, or threatened release of any hazardous waste or substance by any prior owners or occupants of the Property or (ii) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (b) neither Trustor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of, or release any hazardous waste or substance on, under, or about the Property. Trustor authorizes Lender and its agents to enter upon the Property to make such inspections and tests and Lender may deed appropriate to determine compliance of the Property with this section of the Deed of Trust. Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Trustor or to any other person. The representations and warranties contained herein are based on the Trustor's due diligence in investigating the Property for hazardous substances. Trustor hereby (a) releases and waives any future claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Deed of Trust or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of hazardous substances occurring prior to Trustor's ownership or interest in the Property, whether or not the same was or should have been known to Trustor. The provisions of this section of the Deed of Trust, including the obligation to indemnify, shall survive the payment of the Indebtedness and the satisfaction any reconveyance of the lien of this Deed of Trust and shall not be affected by Lender's acquisition of any interest in the Property, whether by foreclosure of otherwise. Lender's Right to Enter. Len d era n d its age n t san d representatives may enter upon the Property at all reasonable times to attend to Lender's interests and to inspect the Property for purposes of Trustor's compliance with the terms and conditions of this Deed of Trust. Compliance with Governmental Requirements. T r u s tor s hall promptly comply wi th all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property. Trustor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Trustor has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender I s interes~s in the Property are not jeopardized. Lender may require Trustor to post adequate SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 6 security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest. Duty 1:0 Protect. Trustor agrees neither to abandon nor leave unattended the Property. Trustor shall do all other acts, in addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property. . 3 . 3 CUE ON SALE. THE LENDER MAY, AT ITS OPTION, DECLARE IMMEDIATELY DUE AND PAYABLE ALL SUMS SECURED BY THIS DEED OF TRUST UPON THE OCCURRENCE OF A SPECIAL EVENT OF ACCELERATION, AS THIS TERM IS DEFINED IN SUBPARAGRAPH (A) OR (B) BELOW, AS THEN APPLICABLE (Al During the period of time when the security interests of the Housing Authority encurnbe~s the Property, a "special event of acceleration" shall occu~ when there is a conveyance of the Property without the consent in writing of the Lender, of any right, title or interest in the Property to any person, whethe~ such sale, refinancing o~ transfer is legal, beneficial, or equitable, whether voluntary or involuntary, whether by sale, deed or installment sale contract, land contract, lease option contract, or by sale, assignment or transfer of any beneficial interest of the T~ustor in the Property to any land trust, and when as pa.:::t of such conveyance, the security interest of the Housing Authority or its assignee in the Property is released and reconveyed to the Trustor by the Housing Authority, or its assignee; provided however, that any such conveyance which is permitted under the 1999 Housing Authority Loan Agreement dated as of September 15, 1999, by and between the Trustor and the Housing Authority shall not be deemed to be a special event of acceleration; or (B) During the period of time when the security interests of the FHA Senior Lender encumbers the Property under the FHA Documents, a "special event of acceleration" shall occur when there is a conveyance of the Property without the consent in writing of the Lender, of any right, title or interest in the Property to any person, whether such sale, refinancing or transfer is legal, beneficial, or equitable, whether voluntary or involuntary, whether by sale, deed or installment sale contract, land contract, lease option contract, or by sale, assignment or transfer of any beneficial inte~est of the Trustor in the Property to any land trust, and when as part of such conveyance, SBEO/0124/00C/929-1 12/28/00 1100 jmm 7 the security interest of the FHA Senior Lender or its assignee in the Property including the Secretary is released and reconveyed to the Trustor by the FHA Senior Lender, or its assignee including the Secretary. Any such conveyance which is permitted under the FHA Documents of the FHA Senior Lender or the FHA Agreement shall not be deemed to be a special event of acceleration. Initials of Trustor 3.4 ~S AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Deed of Trust: Payment. Trustor shall pay when due (and in all events at least ten (10) days prior to delinquency) all taxes, special taxes, assessments, charges (including water and sewer), fines and impositions levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Trustor shall maintain the Property free or all liens having priority over or equal to the interest of Lender under this Deed of Trust, except for the lien of property taxes and assessments not due. Right to Contest. Trustor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized. If a lien arises or is filed as a result of nonpayment, Trustor shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen (15) days after Trustor has notices of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and attorneys' fees or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest, Trustor shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property. Trustor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Evidence of Payment. Trustor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property. SBEO/0124/DOC/929-1 12/28/00 1100 jmm 8 3.5 PROPDT! DAMAGE INSURANCE. The following provisions relating to insuring the Property as a part of this Deed of Trust: Haint."UI"Ce of In.su:ance. Trustor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender, together with such other insurance, including but not limited to hazard, liability, business interruption and boiler insurance, as Lender may reasonably require. Notwithstanding the foregoing, in no event shall Trustor be required to provide hazard insurance in excess of the replacement value of the improvements on the Property. Policies shall be written in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies whose policies of insurance qualify for inclusive in the State insurance guarantee fund, are rated not less than "A(vii)" in Best Insurance Guide, current edition and are in other respects reasonably acceptable to Lender. Trustor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be canceled or diminished without at least thirty (30) days's prior written notice to Lender. Application of Proceeds. Trustor shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if Trustor fails to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at its election, receive ~nd retain the proceeds and apply the proceeds to the reduction of the indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds to restoration and repaid, Trustor shall repair or replace the damaged or destroyed improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, payor reimburse Trustor from the proceeds for the reasonable cost of repair or restoration if Trustor is not in default under this Deed of Trust. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Deed of Trust, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Trustor as Trustor's interests may appear. SBEO/0124/DCC/929-1 12/28/00 1100 jmm 9 Unexp~ed Insurance at Sale. Any unexpired insurance shall inure to the benefit of, and pass to, the purchaser for the Property covered by this Deed of Trust at any trustee's sale or other sale held under the provisions of this Deed of Trust, or at any foreclosure sale of such Property. Trustor's Report of Insurance. Upon request of Lender, however not more than twice per year, Trustor shall furnish to Lender a report on each existing policy of insurance showing (a) the name of the insurer; (b) the risks insured; (cl the amount of the policy; (d) the property insured, the then current replacement value of such property, and the manner of determining that value; and (e) the expiration date of the policy. Trustor shall, upon request of Lender, have an independent appraiser satisfactory to Lende:r determine the cash value replacement cost of the Property. 3.6 EXPENDITURES BY LENDER. If Trustor fails to comply with any provision of this Deed of Trust, or if any action or proceeding is commenced that would materially affect Lende:r's interests in the Property, Lender on Trustor's behalf may, but shall not be required to, take any action that Lende:r deems appropriate. Any amount that Lender expends in do doing will bear interest at the rate charged under the Promissory Note from the date incu:rred or paid by Lender to the date of repayment by Trustor. All such expenses, at Lender's option, will (a) be payable on demand, (b) be added to the balance of the Promissory Note and be apportioned among and be payable with any installment payments to become due during the remaining term of the Promissory Note, or (c) be treated as a balloon payment which will be due and payable at the Promisso:ry Note's maturity. This Deed of Trust also will secure payment of these amounts. The rights provided for in this paragraph shall be in addition to any other rights or any remedies to which Lender may be entitled on account of the default. Any such action by Lender shall not be construed as curing the default so as to bar Lender from any remedy that it otherwise would have had. 3.7 WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Deed of Trust: Title. Trustor warrants that (a) Trustor hold good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the title insurance policy issued in favor of, and accepted by, Lender in connection with this Deed of Trust, and (b) Trustor has the full right, power, and authority to execute and deliver this Deed of Trust to Lender. SBEO/0124/DOC/929-1 12/28/00 1100 jmm 10 Defense of Title. Subject to the exception in the paragraph above, Trustor warrants and will forever defend its title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Trustor's title or the interest of Trustee or Lender under this Deed of Trust, Trustor shall defend the action at Trustor's expense. Trustor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Trustor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation. Compliance with Laws. Trustor warrants that the Property and Trustor I s use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities. 3.8 CONDEMNATION. The following provisions rela ting to condemnation proceedings are a part of this Deed of Trust: Application of Net Proceeds. I f all or any pa rt 0 f the Property is condemned by eminent domain proceedings or by an proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any portion of the net proceeds of the award be applied to the Indebtedness or the repair or restoration of the Property. The net proceeds of the a'Nard shall mean the award after payment of all reasonable costs, expenses, and attorneys' fees, Trustee or Lender in connection with the condemnation. Proceedings. If any proceeding in 'condemnation is filed, Trustor shall promptly notify Lender in writing, and Trustor shall promptly take such steps as may be necessary to defend the action and obtain the award. Trustor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Trustor will deliver or cause to be delivered to Lender such instruments as may be requested by it from time to time to permit such participation. 3.9 IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and charges are a part of this Deed of Trust: SBEO/0124/SCC/929-1 12/28/00 1100 jrnm 11 Cur:ent 'razes, Fees and Charges. Upon request by Lender, Trustor shall execute such documents in addition to this Deed of Trust and take whatever other action is requested by Lender to perfect and continue Lender's lien and security interest on the Property. Trustor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Deed of Trust, including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Deed of Trust. 'razes. The following shall constitute taxes to which this section applies: (al a specific tax upon this type of Deed of Trust or upon all or any part of the Indebtedness secured by this Deed of Trust; (b) a specific tax on Trustor which Trustor is authorized or required to deduct from payments on the Indebtedness secured by this type of Deed of Trust; (cl a tax on this type of Deed of Trust chargeable against the Lender or the holder of the Promissory Note; and (d) a specific tax on all or any portion of the Indebtedness or on payments of princi?al and interest made by Trustor. Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Deed of Trust, this event shall have the same effect as an Event of Default (as defined below), and Lender may exercise any or all of its available remedies for an Event of Default as provided below unless Trustor either (a) pays the tax before it becomes delinquent, or (b) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender. 3 . 10 SECURITY AGREEMENT; FINANCING STATEMENTS. The provisions relating to this Deed of Trust as agreement are a part of this Deed of Trust: following a security Security Agreement. This instrument shall constitute a security agreement to the extent of any of the Property constitutes fixtures or other personal property, and Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time. Security Interest. Upon request by Lender, Trustor shall execute financing statements and take whatever other action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property in a manner and at a place reasonably convenient to Trustor and Lender and make it SBEO/0124/DOC/929-1 12/28/00 1100 jmm 12 available to Lender within ten (10) days after receipt of written demand from Lender. Addresses. The mailing addresses of Trustor (debtor) and Lender (secured party), from which information concerning the security interest granted by this Deed of Trust may be obtained (each as required by the Uniform Commercial Code), are as stated on the first page of this Deed of Trust. 3.11 !'OR~BER ASSURANCES; M~ORNEY-IN-FAC~. The following provisions relating to further assurances and attorney-in-fact are a part of this Deed of Trust: Further Assurances. At any time, and from time to time, upon request of Lender, Trustor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve the obligations of Trustor under the Promissory Note, this Deed of Trust, and the Related Documents. Trustor shall reimburse Lender for all costs and expenses incurred in connec~ion with the matters referred to in this paragraph. Attorney-In-Fact. If Trustor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Trustor and at Trustor's expense. For such purposes, Trustor hereby irrevocably appoints Lender as Trustor's attorney-in-fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in the preceding paragraph. 4.0 FULL PERFORMANCE AND RECONVEYANCE. If Trustor pays the Indebtedness, including without limitation, all future advances, when due, terminates the line credit, and otherwise performs all the obligations imposed upon Trustor under the Agency Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement, the Promissory Note and this Deed of Trust, Lender shall execute and deliver to Trustee a request for full reconveyance and shall execute and deliver to Trustor suitable statements of termination of any financing statement SEEO/0124/00C/929-1 12/28/00 1100 jrnm 13 on file evidencing Lender's security interest in the Rents and Personal Property. Lender may charge Trustor a reasonable reconveyance fee at the time of reconveyance. 5.0 DEFADL~. Each of the following, at the option of Lender, shall constitute an event of default ("Event of Default") under this Deed of Trust: Default on Indebtedness. Failure of Trustor to make any payment when due under the Promissory Note. Default on Other Payments. Failure of Trustor within the time required by this Deed of Trust to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien. Compliance Default. Failure to comply with any other term, obligation, covenant or condition contained in this Deed of Trust, the Promissory Note, the Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement, or in any of the Related Documents. Breaches. Any warranty, representation or statement made or furnished to Lender by or on behalf of Trustor under this Deed of Trust, the Promissory Note, the Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement, or any of the Related Documents is, 'or at the time made or furnished was, false in any material respect. Insolvency. The insolvency of Trustor, appointment of a receiver for any part of Trustor's property, any assignment for the benefit of creditors, the commencement of any proceeding under any bankruptcy or insolvency laws by or against Trustor, or the dissolution or termination of Trustor's existence as a going business (if Trustor is a business). Except to the extent prohibited by federal law or California law, the death of Trustor also shall constitute an Event of Default under this Deed of Trust. Foreclosure, etc. Commencement of foreclosure, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Trustor against any of the Property. However, this subsection shall not apply in the event of a good faith dispute by Trustor as to the validity or reasonableness of the claim which is the basis of the foreclosure, provided that Trustor gives Lender written notice of such claim and furnishes reserves or a surety bond for the claim satisfactory to Lender. SBEO/0124/DOC/929-1 12/28/00 1100 jrnrn 14 Breach of Othe: Related Documenb or any AqJ:eements. Any breach by Trustor under the terms of any Related Document or other agreement between Trustor and Lender that is not remedied within any grace period provided therein (if any), including without limitation any agreement concerning any other indebtedness or other obligation of Trustor to Lender whether existing now or later. 5.1 RIGHTS AND REMEDIES OF LENDER ON DEFAOLT. Upon the occurrence of any Event of Default and at any time thereafter, Trustee or Lender, at its option, may exercise anyone or more the following rights and remedies, in addition to any other rights or remedies provided by law, subject to the provisions of Section 10(b) of the Loan Agreement as relate to the conditions upon the Lender's exercise of rights and remedies under the terms of the 1999 Housing Authority Loan Agreement or the FHA Documents of the FHA Senior Lender, as applicable: Foreclosure by Sale. Upon an Event of Default under this Deed of Trust, Beneficiary may declare the entire indebtedness secured by this Deed of Trust immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold the Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Promissory Note, other documents requested by Trustee, and all documents evidencing expenditures secured hereby. After the lapse of such time may then be required by law following the recordation of the notice of default, and notice of sale having been given as then required by law. Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time filed by the preceding postponement in accordance with applicable law. Trustee shall deliver to such purchaser its deed conveying the Property so sold, but wi thout any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale. Trustee shall apply the proceeds of sale to payment of; all sums expended under the terms hereof, SBEO/0124/DOC/929-1 12/28/00 1100 jmrn 15 "". not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. Judicial Foreclosure. With respect to all or any part of the Property, Lender shall have the right in lieu of foreclosure by power of sale to foreclose by judicial foreclosure in accordance with and to the full extent provided by California law. t1CC Remedies. With respect to all or any part of the Property, Lender shall have the right and remedies of a secured party under the Uniform Commercial Code, includ:.ng without limitation the right to recover any deficiency in the manner and to the full extent provided by California law. Collect Rents. Lender shall have the right, without notice to Trustor, to take possession of and manage the Property and collect the Rents, including amounts past due and unpaid, and ap~ly the net proceeds, over and above Lender's costs, against the indebtedness. In furtherance of this right, Lender may require any tenant or other user of t~e Property to make payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then Trustor irrevocably designates Lender as Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response to Lender's demand shall satisfy the obligations for which the payments are made, whether or not any property grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver. Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership against the indebtedness. The receiver may serve w:.thout bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver. Tenancy at Sufferance. If Trustor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 16 upon default of Trustor, Trustor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (a) pay a reasonable rental for the use. of the Property, or (b) vacate the Property immediately upon the demand of Lender. Other Remedies. Trustee or right or remedy provided in Promissory Note or by law. Lender shall have any other this Deed of Trust or the Notice of Sale. Lender shall give Trustor reasonable notice of the time and place of any public sale of the Personal Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made. Reasonable notice shall mean notice given at lease five (5) days before the time of the sale or disposition. Any sale of Personal Property may be made in conjunction with any sale of the Property. Sale of the Property. To the extent permitted by applicable law, Trustor hereby waives any and all rights to have the Property marshaled. In exercising its rights and remedies, the Trustee or Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale on all or any portion of the Property. Waiver: Election of Remedies. A waiver by any party of a breach of a provision of this Deed of Trust shall not constitute a waiver of or prejudice the party's rights otherwise to demand strict compliance with that provision or any other provision. Election by Lender to pursue any remedy provided in this Deed of Trust, the Promissory Note, in any Related Document, or provided by law shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Trustor under this Deed of Trust after failure of Trustor to perform shall not affect Lender's right to declare a default and to exercise any of its remedies. Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and on any appeal. Whether or not any court action is involved, all reasonable expenses incurred by Lender which in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the indebtedness payable on demand and shall bear interest at the Promissory Note rate from the date of expenditure until SBEO/0124/SCC/929-1 12/28/00 1:00 jrnm 17 repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's attorneys' fees whether or not there is a lawsuit, including attorneys' fees for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors' reports, appraisal fees, title insurance, and fees for the Trustee, to the extent permitted by applicable law. Trustor also will pay any court costs, in addition to all other sums provided by law. Rights of Trustee. Trustee shall have all of the rights and duties of Lender as set forth in this section. 6.0 POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the powers and obligations of Trustee are part of this Deed of Trust: Powers of Trustee. In addition to all powers of Trustee arising as a matter of law, Trustee shall have the power to take the following actions with respect to the Property upon the written request of Lender and Trustor: (a) join in preparing and filing a map or plat of the Property, including the dedication of streets or other rights to the public; (b) join in granting any easement or creating any restriction on the Property; and (c) join in any agreement affecting this Deed of Trust or the interest of Lender under this Deed of Trust. Obligations to Notify. Trustee shall not be obligated to notify any other party of a pending sale with respect to the Property under any other trust deed or lien, or of any action or proceeding in which Trustor, Lender, or Trustee shall be a party, unless the action or proceeding is brought by Trustee. Trustee. Trustee shall meet all qualifications required for Trustee under applicable law. In addition to the rights and remedies set forth above, with respect to all or any part of the Property, the Trustee shall have the right to foreclose by notice and sale, and Lender shall have the right to foreclose by judicial foreclosure, in either case in accordance with and to the full extent provided by applicable law. Successor Trustee. Lender, at Lender's option, may from time to time appoint a successor Trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the recorder of San Bernardino County, California. The instrument shall contain, in addition to all other matters required by state law, the names of the SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 18 original Lender, Trustee, and Trustor the book and page where this Deed of Trust is recorded, and the name and address of the successor trustee, and the instrument shall be executed and acknowledged by Lender or its successors. in interest. The successor trustee, without conveyance of the Property, shall succeed to all the title, power, and duties conferred upon the Trustee in this Deed of Trust and by applicable law. This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution. 7.0 NOTICES TO TRUSTOR AND OTHER PARTIES. Any notice under this Deed of Trust shall be in writing and shall be effective when actually delivered or, if mailed, shall be deemed effective when deposited in. the United States mail first class, registered mail, postage prepaid, directed to the addresses shown near the beginning of this Deed of Trust. Any party may change its address for notices under this Deed of Trust by giving formal written notice to the other parties, specifying that the purpose of this notice is to change the party's address. All copies of notices of foreclosure from the holder of any lien which has priority over this Deed of Trust shall be sent to Lender's address, as shown near the beginning of this Deed of Trust. For Notice purposes, Trustor agrees to keep Lender and Trustee informed at all times of Trustor's current address. Each Trustor requests that copies of any notices of default and sale be directed to Trustor's address shown near the beginning of this Deed of Trust. 8.0 STATEMENT OF OBLIGATION. Lender may collect a fee, in an mount not to exceed the statutory maximum, for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California. 9.0 SUBORDINATION OF LENDER DEED OF TRUST TO THE 1999 SECURITY INTEREST OF THE HOUSING AUTHORITY, AND IF APPLICABLE, TO THE SECURITY INTEREST OF THE FHA SENIOR LENDER UNDER THE FHA DOCUMENTS. Subordination of Deed of Trust to the Security Interest of the Housing Authority. During the period of time when the security interest of the Housing Authority, including its Recorded Instrument No. , Official Records of San Bernardino County, are in effect with respect to the Property, this Deed of Trust shall be subordinate to such security interest of the Housing Authority, and all renewals and extensions thereof. No provision of this Deed of Trust shall be construed to restrict or adversely affect the duties and obligations of the Trustor under the terms of the security interest of the Housing SBEO/0124/DOC/929-1 12/28/00 1100 jmm 19 Authority in the Property, or adversely affect the rights of the Housing Authority under such Recorded Instrument No. Subordination and Deed of Trust to the Security Interest of the FHA Senior Lender. Section 12 of the Loan Agreement provides for the subordination of this Deed of Trust at such time as the FHA Senior Lender may cause the FHA Documents, and its security in the Property as evidenced thereby, to be recorded against the Property. During the period of time when the security interest of the FHA Senior Lender in the Property is in effect, this Deed of Trust shall be subordinate to such security interest of the FHA Senior Lender and all rene'"als and extensions thereof. Following the time of the recordation of the security interest of the FHA Senior Lender under the FHA Documents in the Property, no provision of this Deed of Trust shall be construed to restrict or adversely affect the duties and obligations of the Trustor under the terms of the FHA Documents, or the Secretary under the FHA Agreement or the FHA Documents. 10.0 ASSIGNMENT OF CONTRACTS. In addition to any other grant, transfer or assignment effectuated hereby, without in any manner limiting the generality of the grants in the conveyance and grant section hereof, Trustor shall assign to Beneficiary, as security for the indebtedness secured hereby, Trustor's interest in all agreements, contracts, leases, licenses and permits affecting the Property in any manner whatsoever, such assigr.ments to be made, if so requested by Beneficiary, by instruments in form satisfactory to Beneficiary; but no such assig~ment shall be construed as a consent by Beneficiary to any agreement, contract license or permit so assigned, or to impose upon Beneficiary any obligations with respect thereto. 11.0 BOOKS AND RECORDS. Trustor shall maintain, or cause to be maintained, proper and accurate books, records and accounts reflecting all items of income and expense in connection with the operation of the Property or in connection with any services, equipment or furnishings provided in connection with the operation of the Property, whether such income or expense be realized by Trustor or by any other person or entity whatsoever excepting persons unrelated to and unaffiliated with Trustor and who leased from Trustor portions of the Property for the purposes of occupying the dame. Upon the request of Beneficiary, Trustor shall prepare and deliver to Beneficiary such financial statements regarding operation of the Property as Beneficiary may reasonably request. Beneficiary, or its designee, shall have the right from time to time during normal SBEO/0124/DOC/929-1 12/28/00 1100 jrnrn 20 business hours to examine such books, records and accounts and to make copies or extracts therefrom. 12.0 IIISMZT.T.1UU!:OOS ~SIONS. The following miscellaneous provisions are a part of this Deed of Trust: Amendments. This Deed of Trust, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Deed of Trust. No alteration of or amendment to this Deed of Trust shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Annual Reports. Trustor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Trustor's at such time and in such form and detail as Lender may request pursuant to the Acquisition, Working Capital and Homebuyer Grant Assistance Loan Agreement. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Applicable Law. This Deed of Trust has been delivered to Lender and accepted by Lender in the State of California. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Caption Headings. Caption headings in this Deed of Trust are for convenience purposes only and are not to be used to interpret or define the provisions of this Deed of Trust. Merger. There shall be no merger of the interest or estate created by this Deed of Trust with any other interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender. Multiple Parties. All obligations of Trustor under this Deed of Trust shall be joint and several, and all references to Trustor shall mean each and every Trustor. This means that each of the persons signing below is responsible for all obligations in this Deed of Trust. Where anyone or more of the parties are corporations or partnerships, its is not necessary for Lender to inquire into the powers of any of the pa.:::ties or of the officers, directors, partners, or agent acting or purporting to act on their behalf. SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 21 Severability. If a court of competent jurisdiction finds any provision of this Deed of Trust to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceabili ty or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Deed of Trust in all other respects shall remain valid and enforceable. Successors and Assigns. Subject to the limitations stated in this Deed of Trust on transfer of Trustor's interest, this Deed of Trust shall be binding upon and inure to the benefit of the pa:=ties, their successor and assigns. If ownership of the Prope:=ty becomes vested in a person other than Trustor, the Lende:=, without notice to Trustor, may deal with Trustor's successors with reference to this Deed of Trust and the indebtedness by way of forbearance or extension without releasing Trustor from the obligations of this Deed of Trust or liability under the Indebtedness. Time is of the Essence. Time is of the essence in the performance of this Deed of Trust. Waivers and Consents. Lender shall not be deemed to have waived any rights under this Deed of Trust (or under the Related Documents) unless such waiver is in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by and any party of a provision of this Deed of Trust shall not constitute a waiver of or prejudice the party's right otherwise to demand strict compliance with that provision or any other provision. No prior waiver by Lender, nor any course of dealing between Lender and Trustor, shall constitute a waiver of any of Lender's rights or any of Trustor's obligations as to any future transactions. Whenever consent by Lender is required in this Deed of Trust, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required. SEEO/0124/DOC/929-1 12/28/00 1100 jrnm 22 ~STOa ACDC1ILBJ)GBS BAVDTG DAD AIJ. '!JIB novISlOSS 01' 'rillS DDD 01' ~S': , AlII) 'fRUS'rOB. AGBDS 'rO ITS !DMS, AlII) 'rD ~ 01' 'rD DCIIIIISSOll% BOB SBcmum BY 'mIS DBBD 01' DDST. DDS1'01l: San "Bernardino Mobilehome Park Corporation a California non-profit corporation By: Its: By: Its: [SIGNATURES MUST BE ACCOMPANIED BY NOTARY JURAT] SBEO/0124/DOC/929-1 12/28/00 1100 jrnm 23 EXHIBIT "E-l" Collateral Assignment of Leases and Rents SBEO/0124/DOC/931-1 1/3/00 1040 jrnrn 39 EXHIBIT "F" Regulatory Agreement SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 40 Description of Disbursements Borrower to the SBEO/0124/DOC/931-1 1/3/00 1040 jmm EXHIBIT "G" Home Grant Program - Procedures, of Loan Advances and Reports By Agency under Affordable Home Grant 41 EXHIBIT "H" Form of Subordination Agreement In Favor of the FHA Senior Lender SBEO/0124/DOC/931-1 1/3/00 1040 jrnm 42