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HomeMy WebLinkAbout04-RDA Item ....---~ ~ ~-- .........- -..... ~ AGE~_ A ITEM INFORMATION SUM~~..-\RY GENERAL INFORMATION: /7 ~) s~ (~.s{tj'L'.1 7Y~;{-IA~~--fld.-UL- Committee CommissionlCouncil Filing Dates d- 1"'2. -'70 Author -t y/ f ~??uO/ Ext. Ward~ Project Area .If' / ~~ Budget Authority ; j! tit MHling Dates d - /'7 - 7e Funding Requirements AJCM. RDA MANAGEMENT REVIEW: CLEARANCES: Dale Dale ~~-+ Z-f.5'. Yn Ye. NlA Dale o o EJ o }'ZI' City Adminislrator RDA Committee recommendation Jf:f Accolrtling JXV ~=~Aac_ o .A1.;;;;7 L ~~- Admini.1raIiw Deputy MMager/SupenlilOr .;1_1</' flD CITY DEPARTMENTAL REVIEW: Depl By Depl By INFORMATIONAL DATA FORWARDED TO CITY DEPARTMENTs/COUNCIL OFFICES: Senlto By Dale Mayor's Office Council Ward Council Ward Council Ward Council Ward Department Department COMMENTS/CONCERNS: Include pertinent comments and concerns of offices and persons clearing the summary, such as controversial Issues, time constraints and funding complications. Indicate dates when action must be taken. x~ RDA .174 REV. 6-29-89 -- ...- Redevelcrpment Agency · City or San Bernardino 300 Narth "0" Slreel, Fourth Floor . San Banlrdino, California 92.418 (714) 384-5081 FAX (714) 888-9413 Pride ~ ~e~ FEBRUARY 13, 1990 ARROWHEAD HEALTH CARE Synopsis of Previous Commission/Council/Committee Action: 09/21/89 Committee reviewed the item and recommended approval. 10/06/89 Council adopted a Resolution No. 89-404. 10/06/89 Council approved setting a joint public hearing. 10/06/89 Commission approved execution of a Second Ame~dment to the DDA. 10/06/89 Commission authorized execution of a Cooperat've Agreement. 10/06/89 Commission approved setting a joint public hearing for TEFRA Resolution. Recommended Motion: (COMMUNITY DEVELOPMENT COMMISSION) To approve the attached covenant and deed of trust with Arrowhead Health Care. Respectfully Submitted, Executive Director Supporting data attached: Yes Ward: 6 FUNDING REQUIREMENTS: None Project: NW Commission Notes: Agenda of: Item No. F'brU~Y 19, 1990 S T A F F R E P 0 R T This is to request that the Commission (1) approve adding the attached covenant with Arrowhead Health Care and (2) approve changes in the deed of trust to reflect the addition of the covenant. BACKGROUND Arrowhead Health Care has requested that a recorded covenant be used to secure in-lieu tax payments in place of using a deed of trust. The covenant (see exhibit A) would insure that during the (10) years specified in Section 312 of the Disposition and Joint Development Agreement, if any exemption to taxes is obtained, then Arrowhead or its successors at interest, will pay the in-lieu taxes as defined in the agreement.' The deed of trust would still secure the purchase price and the differential amount. To accomplish this, changes need to be made in the previously drafted trust deed. The changes are marked and can be found on pages 3, 9 and 16 of Exhibit B. The purpose behind the changes is to improve the ability of the developer to refinance the project within the ten year time frame. RECOMMENDATION Agency Counsel, Dennis Barlow, has reviewed the attached documents and the general concept was discussed at a previous Committee meeting. It is recommended that the Commission approve the attached substitute documents for submission to escrow. RJT:EJ:sm:2680H 2 --~----..... RECORDING REQUESTED BY: WHEN RECORDED MAIL TO: AGREEMENT COVENANT RUNNING WITH THE LAND THIS AGREEMENT made on February 2, 1990, by and between ARROWHEAD HEALTH CARE SYSTEM, INC., a California Corporation, (re f ereed to herei n as "ARROWHEAD") , and the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, (referred to herein as "AGENCY" ): WHEREAS, AGENCY is the owner of Real Property (referred to herei n as "Real Property"), whi ch is des cribed in Exhibi t "A", attached hereto and made a part hereof. WHEREAS, ARROWHEAD, has entered into a Second Amendment To and Restatement of Disposition and Joint Development Agreement (referred to herein "Agreement"), to purchase the above Real Property from AGENCY and thereafter cause the construction of a medical office facility thereon. WHEREAS, as a material inducement to the Agency in entering into the Agreement to sell said Real Property, was that they would receive certain tax increment revenues from the Real Property and improvements to be constructed thereon, and ARROWHEAD desires to covenant that it will not seek an exemption from taxes during a period of ten (10) years. NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, the agreements contained in the Agreement, and other valuable consideration, receipt of which is hereby acknowledged, ARROWHEAD expressly for the benefit of AGENCY and to bind their successors in interest, ARROWHEAD agrees that neither itself nor any successor to the land and improvements may seek an exemption from the payment of real property taxes on the Real Property or improvements thereon or if ARROWHEAD or any successor in interest is granted an exemption from taxes on the Real Property or improvements thereon, then ARROWHEAD or any successor shall be required to pay an amount in lieu of taxes which is defined in section 312 of the Agreement. This covenant shall be valid until October 5, 1999, which is a period of ten (10) years from the date of the execution of the Agreement and upon said date this covenant shall terminate upon its own terms and shall be of no force and effect. INITIAL ~ PAGE 1 INITIAL Fx!-lo31T A .. -..........- - ....-- ........- - ... - -- IN WITNESS WHEREOF, the parties have executed this agreement on the ~ay of February, 1990. ARROWHEAD HEALTH CARE SYSTEMS, INC., A California Corporation By: /~ SAN BERNARDINO REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO C. E. KRAUS C.E.O. and President By: Executive Director STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN BERNARDINO ) On February ~, 1990, before me, the undersigned, a Notary Public in and for said State, personally appeared C. E. KRAUS personally known to me the person who executed the within instrument as the President and Chief Executive Officer of Arrowhead Health Care System, Inc., personally known to me or proved to me on the basis of satisfactory evidence to be the person who executed the within instrument as the Secretary of the Corporation that executed the wi thin instrument and acknowledged to me that such corporation executed the within instrument pursuant to its by-laws or a resolution of its board of directors. WITNESS my hand and official .............................! . Q O.'FI(,lol~ 114~ ; : -'. AMY S. FREDIN : : '. NOTARY 1'U8L1C-CALlfORNIA : . SAN BERNARDINO COUNTY . : ..~ Comm. (ap. June 26. 1993 : .............................. seal. ~~~.~ NOTARY PUBLIC IN AND FOR SAID COUNTY AND STATE STATE OF CALIFORNIA ) )ss: COUNTY OF SAN BERNARDINO ) On February ,1990, before me, the undersigned, a Notary Public in and-for said State, personally appeared known to me to be or proved to me on the basis of satisfactory evidence to be the Executive Director of the Redevelopment AGency of the City of San Bernardino that executed the within instrument, and acknowledged to me that such partnership executed the same. NOTARY PUBLIC IN AND FOR SAID COUNTY AND STATE INITIAL Iff PAGE 2 INITIAL ... -- ... LEGAL DESCRIPTION That certain parcel Bernardino, County of San more particularly described of land in the City of San Bernardino, State of California, as follows: That portion of Lots 6 and 31, of the Mount Vernon Orange Grove and Fruit Company's Lands, as per plat recorded in Book 12 of Maps, Page 16, records of San Bernardino County , described as follows: Beginning at a point on the West line of Muscott Street, 82.5 feet wide, at a point 303.00 feet Southerly from the South line of 19th Street (Formerly Linyille) 60 feet wide; thence Southerly along the West' line of said Muscott Street, a distance of 322 feet; thence Westerly and parallel to the South line of said 19th Street, a distance of 718. 81 feet; thence Northerly and parallel to the West line of said Muscott Street a distance of 322 feet; thence Easterly and parallel to the South line of said 19th Street a distance of 718.81 feet to the point of beginning. SUBJECT TO: Covenants, conditions, reservations, easements and record, if any. restrictions, rights of way of INITIAL ~ EXHIBIT "A" INITIAL - - ~ ~ - - - ~ ~ ! Ii n . ~ ., .i, \:-.' . -... ... .-, ~ ,I, 1\:.. "I ~ u. 4 f'" I r q C I 'I .11 _ n o J '> \:::1- - U ~ 'i. ! -< . . L- - .J - '" .~ I Cz <- 0 Q,I" . , CJ 01 !) . , '" lir~ u.I 0>- 4 u.. - - 0- ... 8 .~ll Q - < - ..1: - CI - 0 f? Q. - ..- ...... ~..; - . . . .. cJ - ee:.J .:-! . - ~ C - -< c. .... CJ Q ~ - ... ..... > - - fII ':'l ~ !:: oC _, 'ii lIlj ::- -= "" ..= u c... "" "', %CI I t- lot- ;:)&.:.. Q - Oc U :i ... >- cJc t- - 0 Co.) - ) 0. ..' i I I 11 II ;- '11 J.103Iil~ .::.1 . I >- + - .t" u z i 11/ ~ Cl C .~ Z ~ 11/ :I ,. L 0 .J 11/ I > '" 11/ I C- C 11/ a: :.J >- ~ III . , c r 11/ " Z . '" ~ 0 ~ I - .. INITIAL ~ EXHIBIT "A" INITIAL DEED OF TRUST AND WHEN RECORDED MAIL TO: ) ) ) ) ) ) ) ) This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103. Redevelopment Agency of the City of San Bernardino 300 North "D" Street San Bernardino, California 92418 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Its: Executive Director Dated: , 1990 DEED OF TRUST AND ASSIGNMENT OF RENTS (San Bernardino County) THIS FIRST DEED OF TRUST AND ASSIGNMENT OF RENTS is made as of the day of , 1990. by and between ARROWHEAD HEALTH CARE SYSTEM, INC., a California nonprofit corporation (collectively, the "Trustor"), whose address is 1725 North Western Avenue, San Bernardino, California 92411, FIRST AMERICAN TITLE INSURANCE COMPANY (the "Trustee"), whose address is , and the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Beneficiary"), whose address is 300 North "D" Street, San Bernardino, California 92418. FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of BenefiCiary, under and subject to the terms and conditions hereinafter set forth, the property located in the County of San Bernardino, State of California, that is described in Exhibit A, attached hereto and by this reference incorporated herein (the "Site"). 12/12/89 7282n/2601/008 Page 1 of 1813 l!')(H 18 1 ~ TOGETHER WITH all rents, issues, profits, royalties, income and other benefits derived from the Site (collectively, the "rents"), provided that so long as Trustor is not in default hereunder, it shall be permitted to collect rents and operate the Project, as hereinafter defined, in accordance with the requirements of that certain Second Amendment to and Restatement of Disposition and Joint Development Agreement entered into between the Trustor and the Beneficiary as of June , 1989 (the "Agreement"), which Agreement is on file with the Beneficiary as a public record and is incorporated by reference herein; TOGETHER WITH all interests, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Site and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including, without limiting the generality of the foregoing, all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Site, including, without limitation, all fixtures, attachments, appliances, furnishings, equipment and machinery (whether fixed or movable) and other articles (including, in each instance, improvements, restorations, replacements, repairs, additions, accessions or substitutions thereto or therefor); TOGETHER WITH all leasehold estate, right, title and interest of Trustor in and to all leases or subleases covering the Site or any portion thereof now or hereafter existing or entered into, and all right, title and interest of Trustor thereunder, including, without limitation, all cash or security deposits, advance rentals, and deposits or payments of similar nature; TOGETHER WITH all right, title and interest of Trustor in and to all options to purchase or lease the Site or any portion thereof or interest therein, and any greater estate in the Site owned or hereafter acquired; TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Site, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Site; 12/12/89 7282n/2601/008 Page 2 of 18 TOGETHER WITH all the estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Site, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Site, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages; All of the foregoing, together with the Site! is herein referred to as the "Security". FOR THE PURPOSE OF SECURING: (a) Payment of an amount equal to the Purchase Price, as " such term is defined in Section 201 of the Agreement; (b) Payment of the Differential Amount, as such term is defined in Section 301 of the Agreement; (c) Payment of such additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, by Beneficiary, when evidenced by a promissory note or notes or other documents reciting that they are secured by this Deed of Trust; and (Q) Paym8R~s iR lieu of taxes pursuant to Section 312 of 't;fte .'\.lj"1'88R\8Rt; f~? Performance of every obligation, covenant or agreement of Trustor referenced in Section 404 of the Agreement. ARTICLE I DEFINITIONS 1. "Agreement" means that certain Second Amendment to and Restatement of Disposition and Joint Development Agreement entered into by the Trustor and the Beneficiary hereof, dated October 5, 1989; said Agreement (a copy of which is on file with the-aeneficiary at the address stated above, and including all of its attachments) is incorporated herein by reference. 2. "Participant", "Participant Improvements" and "Purchase Price" are defined in the Agreement. 12/12/89 7282n/260l/008 Page 3 of 18 3. The term "Expiration Date" means the date upon which the Purchase Price, the Differential Amount, and the in lieu of taxes if applicable, have been fully repaid by the Trustor to the Beneficiary, or forgiven by the Beneficiary and all other obligations the performance of which is secured by this Deed of Trust have been satisfied, but in no event later than (date of termination of the Redevelopment Plan) . 4. "Mortgage" means any permanent or long-term loan (other than a loan by an entity related to or controlled by the Trustor), or any other financing device (including without limitation deeds of trust) the proceeds of which are used in the construction of the Participant Improvements, which loan is secured by a security financing interest in the,Trustor's interest in the Participant Improvements; , . 5. "Project" means the "Site" and the "Participant Improvements", together with all additions, improvements, restorations and replacements thereof, and together with the items set forth in the sixth paragraph hereof. 6. "Site" is defined in the granting clauses hereof. 7. "Security" is defined in the granting clauses hereof. 8. "Standards" means those standards of construction and operation characteristic of medical office buildings of size, character, and quality similar to the Project. 9. "Trustor" means ARROWHEAD HEALTH SYSTEM, INC., a California nonprofit corporation and its transferees and successors in interest. Where an obligation is created herein binding upon Trustor, the obligation shall also apply to and bind any transferees or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of the Trustor and such transferee. Unless the context clearly otherwise requires, any capitalized term used herein and not defined herein shall have the meaning given to it under the Agreement (and any amendments thereto) . 12/12/89 7282n/2601/008 Page 4 of 18 ARTICLE II MAINTENANCE AND MODIFICATION OF THE PROJECT AND SECURITY; CERTIFICATE OF COMPLETION UPON PAYMENT Section 2.1 Maintenance and Modification of the Project by Trustor. The Trustor agrees that at all times prior to the Expiration Date, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Project or cause the Project to be maintained, preserved and kept in a condition substantially similar to other medical office buildings similar in size, character, and quality to the Project consisting only of those uses allowed by the Agreement. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. , The Beneficiary shall have no responsibility in any 'of these' matters or for the making of improvements or additions to the Project. Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid . notice of completion upon completion of construction of any part of the Security, diligently file or procure the filing of a notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security or any part thereof. Section 2.2 Granting of Easements. Trustor may grant easements, licenses, rights-of-way or other similar rights or privileges in the nature of easements with respect to any property or rights included in the Security without the prior written approval of the Beneficiary. In the event such rights are granted, the Trustor'shall promptly so advise the Beneficiary in writing. ARTICLE III TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges and Utility Charges. Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security or any part thereof; provided, however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long 12/12/89 7282n/2601/008 Page 5 of 18 ......- as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1 in accordance with generally accepted accounting principles. With respect to special assessments or other similar governmental charges, Trustor shall pay such amount in whole or in installments over a period of years. In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay any such item within seven (7) business days of the earlier of the receipt or mailing of such notice. Any amount so advanced: therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted under Section 1(2) of Article XV of the California Constitution, shall become an additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor hereby agrees to pay all such amounts. Section 3.2 Provisions Respecting Insurance. (a) Trustor agrees to provide insurance covering one hundred percent (100%) of the replacement cost of all insurable items within the Project during the course of construction and following completion in the event of fire, lightning, debris removal, windstorm, flood, vapdalism, malicious mischief, theft, mysterious disappearance and hazards, casualties and contingencies as are normally and usually covered by all-risk policies in effect in the locality where the Project is situated. (b) Trustor agrees to carry or cause to be carried: (i) comprehensive general liability insurance with respect to the Project with limits of not less than $1,000,000 each occurrence combined single-limit bodily injury and property damage. Coverages thereunder shall include contractual liability, personal injury, owners' and contractors' protection, elevator liability, garage liability, products and completed operations coverage; and (ii) worker~' compensation insurance as required by law. (c) All such insurance policies and coverages (i) shall be maintained at Trustor's sole cost and expense so long as any part of the amounts secured by its Deed of Trust have not been paid, (ii) shall be with insurers of recognized responsibility, and in form and substance satisfactory to the Beneficiary, (1ii) shall name Beneficiary as additional insured, and (iv) 12/12/89 7282n/2601/008 Page 6 of 18 - ~ -- - shall contain a prov~s~on to the effect that the insurer shall not cancel the policy or modify it materially and adversely to the interests of Beneficiary without first giving at least thirty (30) days' prior written notice thereof. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to the Expiration Date. Section 3.3 Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Project in good repair and operating condition, the Beneficiary may (but shall be under no obligation to) take out the required policies of insurance and pay the premium on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and, provided that the Beneficiary provides five (5) business days' notice to the Trustor all amounts so advanced therefor by the Beneficiary shall become an additional obligation of the Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the maximum rate permitted by Section 1(2) of Article XV of the California Constitution. ARTICLE IV DAMAGE, DESTRUCTION OR CONDEMNATION Section 4.1 Damage and Destruction. If, prior to the Expiration Date, the Project or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty, the Trustor shall (a) cause any insurance proceeds arising from insurance referred to in Section 3.2 hereof and any other coverage acquired by the Trustor to be used to promptly rebuild and replace the Project, and (b) repair and replace the Project as necessary to bring the Project into conformity with the Standards; provided that such covenants shall be subordinated to the provisions of all senior obligations to which this Deed of Trust is subordinate. shall be no abatement in, and Trustor shall be obligated continue to pay, the amounts payable under the Agreement this Deed of Trust. There to and Section 4.2 Condemnation. SUbject to the prov~s~ons of senior obligations to which this Deed of Trust is subordinate, if title to or any interest in or the temporary use of the Project or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by 12/12/89 7282n/2601/008 Page 7 of 18 - --- ~ -- ~ any person, firm or corporation acting under governmental authority, including any proceeding or purchase in lieu thereof, the proceeds as a result of such taking shall be paid as provided by the law of the State of California to all persons or entities as their interests appear of record. ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE TRUSTOR Section 5.1 Defense of the Title. The Trustor covenants that it is lawfully seised and possessed of title in fee simple to the Site, that it has good right to sell, co~vey or otherwise transfer or encumber the same, and that the Trustor, for itself and its successors and assigns, warrants and will forever defend the right and title to the foregoing described and conveyed property unto the Beneficiary, its successors and assigns, against the claims of all persons whomsoever, excepting only encumbrances approved by the BenefiCiary. Section 5.2 Inspection of the Project. The Trustor covenants and agrees that at any and all reasonable times and upon reasonable notice, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect the Site. ARTICLE VI AGREEMENTS AFFECTING THE PROJECT; FURTHER ASSURANCES; PAYMENT OF THE PURCHASE PRICE, THE DIFFERENTIAL AMOUNT AND IN LIEU TAXES Section 6.1 Other Agreements Affecting Project. The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Agreement or any other agreement of any nature whatsoever now or hereafter involving or affecting the Site or any part thereof. Section 6.2 Further Assurances; After Acquired Property. At any time, and from time to time, upon request by the Beneficiary, the Trustor shall make, execute and deliver, or cause to be made, executed and delivered, to the Beneficiary and, where appropriate, cause to be recorded and/or filed, and from time to time thereafter to be recorded and/or filed, and from time to time thereafter to be re-recorded and/or refiled, at such time and in such offices and places as shall be deemed 12/12/89 7282n/2601/008 Page 8 of 18 _.~ -.-. ------- - ~ ~ desirable by the Beneficiary, any and all such other and further deeds of trust, security agreements, financing statements respecting personal property, instruments of further assurance, certificates and other documents as may, in the opinion of the Beneficiary, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve, (a) the obligations of the Trustor under this Deed of Trust, and (b) the lien of this Deed of Trust as a lien prior to all liens except those obligations which shall be senior obligations pursuant to the provisions of this Deed of Trust. Upon any failure by the Trustor to do so, the Beneficiary may make, execute, record, file re-record and/or refile any and all such deeds of trust, security agreements, instruments, certificates and documents for and in the name of the Trustor, and the Trustor hereby irrevocably appoints the:Beneficiary the agent and attorney-in-fact of the Trustor to do so. The lien hereof shall automatically attach, without further act, to all after-acquired property deemed to be part of the Security as defined herein. Section 6.3 Agreement to Pay Attorney's Fees and Expenses. In the event of an Event of Default hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are incurred at the maximum rate permitted by Section 1(2) of Article XV of the California Constitution. Section 6.4 Payment of the Purchase Price, the Differential Amount and In Lieu Taxes. The Trustor shall pay to the Beneficiary an amount equal to the Purchase Price, the Differential Amount, aRa IR liey T.xes-if the obligation to pay such amount arises under the Agreement, in the amount(s) and by _ the time(s) set out in the Agreement. The failure to pay the rN~' Purchase Price, the Differential Amount, or the In Lieu Taxes \ if applicable, constitutes an Event of Default under the ~) Agreement authorizing and permitting the Beneficiary to ~ exercise the remedies set forth in Article VII hereof. ~ _/ Section 6.5 Subrogation; Payment of Claims. Provided that the Beneficiary gives notice of at least five (5) business days to the Trustor, the Beneficiary shall be subrogated to the claims and liens of all parties whose claims or liens are discharged or paid by the Beneficiary pursuant to the 12/12/89 7282n/2601/008 Page 9 of 18 .....--. -- - - provisions hereof. If permitted in the Mortgage, the Beneficiary shall have the right to pay and discharge the obligations secured by the Mortgage. Section 6.6 Operation of the Property. The Trustor agrees and covenants to operate the Site (and, in case of a transfer of a portion of the Site, the transferee shall operate such portion of the Site) in full compliance with the Agreement until the Expiration Date. Section 6.7 Transfer. No sale, transfer, lease, pledge, encumbrance, creation of a security interest in or other hypothecation of the Security shall relieve or release the Trustor from primary liability under this Deed of Trust or the Agreement. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default Defined. The occurrence of any failure of the Trustor to perform under this Deed of Trust or the Agreement, and the continuation of said failure for a period of thirty (30) business days as to monetary obligations and ninety (90) business days as to non-monetary obligations, after written notice specifying such failure and requesting that it be remedied (such notice being referred to herein as a "notice of default") shall have been given to Trustor from the Beneficiary,. shall be an Event of Default under this Deed of Trust. Section 7.2 Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then the entire indebtedness secured hereby shall, at the option of the Beneficiary, immediately become due and payable without notice or demand which are hereby expressly waived, and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right. Section Possession. continuing, 7.3 If the The Beneficiary's Right to Enter and an Event of Default shall have occurred Beneficiar:y may: Take and be <a} Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Site and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do'any acts which it deems necessary or desirable to preserve the value, marketability or rentability 12/12/89 7282n/2601/008 Page 10 of 18 of the Site, or part thereof or interest therein, increase the income therefrom or protect the Security hereof and, with or without taking possession of the Site, sue for or otherwise collect the rents, issues and profits thereof, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including attorneys' fees, upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Site, the collection of such rents, issues and profits and the application thereof, as aforesaid, shall not cure or waive any Event of Default or notice of Event of Default hereunder or invalidate any act done in response to such Event of Default or pursuant to such notice of Event of Default and, notwithstanding the continuance in possession of the Site or the collection, receipt and applica~ion of rents, issues or profits, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, the Agreement or by law upon occurrence of any Event of Default, including the right to exercise the power of sale. Trustor requests that a copy of any notice of default and a copy of any Notice of Sale hereunder be mailed to him at his address herein given; (b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the property to be sold, which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of the County in which the Site is located; or (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to the Site, including any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Section 7.4 Foreclosure By Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Benaficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the Purchase Price is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. 12/12/89 7282n/2601/008 Page 11 of 18 (a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such notice of default and election to sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such notice of default and after notice of sale having been given as required by law, sell the Site, at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine, at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such purchaser or purchasers. (b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the Purchase Price; (ii) all other sums then secured hereby; and (iii) the remainder, if any, to the person or persons legally entitled thereto. (c) Trustee may postpon~ sale of all or any portion of the Site by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. Section 7.5 Receiver. If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under Security, and without regard to the then value of the Site or the interest of Trustor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consen~s to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall have all the powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Site, unless such receivership is sooner terminated. 12/12/89 7282n/260l/008 Page 12 of 18 ...--.. Section 7.6 Remedies Cumulative. No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. Section 7.7 No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary. No consent or waiver, expressed or implied, by the Beneficiary to or of any breach by the Trustor in the performance of the obligations hereunder shall be deemed or construed to be a consent to or waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, powers or remedies consequent on any bre4ch or Event of Default by the Trustor. (b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted herein, or in the Agreement, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements of this Deed of Trust or the Agreement, (v) consents to the filing of any map, plat or replat affecting the Security, (vi) consents to the granting of any easement or other right affecting the Security, or (vii) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted upon the occurrence of the Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this 12/12/89 7282n/260l/008 Page 13 of 18 ---- - --- - Deed of Trust be altered thereby. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Site, the Beneficiary, without notice, is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Security (or a part thereof) or the indebtedness secured hereby, or with reference to any of the terms, covenants, conditions or agreements hereof, as fully and to the same extent as it might deal with the Trustor and without in any way releasing or discharging any liabilities, obligations or undertakings of the Trustor. Section 7.8 Suits to Protect the Security. The Beneficiary shall have power (upon ninety (90) days notice to the Trustor) to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security (and the rights of the Beneficiary as secured by this Deed of Trust) by any acts which may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security and in the rents, issues, profits and revenues arising therefrom, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the security thereunder or be prejudicial to the interests of the Beneficiary. Section 7.9 Trustee May File Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Tru~tor, its creditors or its property, the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings for the entire amount due and payable by the Trustor under this Deed of Trust at the date of the institution of such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. ARTICLE VI II SUBORDINATION Section 8.1 Subordination. Provided that all of the Conditions Precedent to Encumbrance (as set forth in Section 322 of the Agreement) have been satisfied and provided further that no Notice of Default under its terms appears of record, the Beneficiary agrees to execute documents reasonably acceptable in form and substance to the Executive Director of 12/12/89 7282n/2601/008 Page 14 of 18 -- ----......... "---.- - -- the Beneficiary and its legal counsel to subordinate the lien of this Deed of Trust, to the following: <a) Land loans, interim loans, construction loans and/or permanent loans obtained by Trustor from any institutional lender(s) for the acquisition of the Site and/or for the construction and/or permanent financing of the Participant Improvements, to the extent prescribed in the Agreement, to a maximum amount of Fifteen Million Dollars ($15,OOO,OOO)i and (b) Easements in favor of public agencies or public utilities typically conveyed in connection with similar developments. Section 8.2 Description of Loans. Any loan to which this Deed of Trust is to be subordinated shall De evidenced by a promissory note, which shall not be limited with respect to any terms (except as may be otherwise provided by Section 8.1 hereof), including the principal amount thereof, or the rate of interest thereon; provided, however, that any such loan or loans shall be subject to the approval of BenefiCiary. Section 8.3 Purpose and Use of Loans. Any loan or loans to which this Deed of Trust shall be subordinated may be used - for any purposes in connection with the acquisition, improvement, operation and/or management of the Site. Any lender in making any disbursement pursuant to any such loan or loans shall be under no obligation or duty to see to the application or use of such proceeds for the purposes provided herein, and any application or use of such proceeds for purposes other than those provided for in this Article shall not defeat the subordination herein made in whole or in part. Section 8.4 Execution of Subordination Agreement. Beneficiary agrees, upon request, provided that Trustor is not in default under this Deed of Trust or the Agreement, to execute a subordination agreement, or agreements, in form reasonably acceptable to the Beneficiary, in favor of any loan or loans to which this Deed of Trust is to be subordinated, and to deliver same to Trustor for recordation in order to confirm of record the subordination provided in this Deed of Trust. In the event of express conflict, the terms of any subordination agreement executed by Beneficiary shall prevail over the terms regarding such subordination provided herein. 12/12/89 7282n/2601/00e Page 15 of 18 ARTICLE IX MISCELLANEOUS Section 9. 1 Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought. Section 9.2. Reconvevance bv Trustee. Trustor and ~eneficiarv acknowledqe and aqree that certain obligations of Trustor shall, in fact, survive the completion of construction of Participant Improvements and the issuance of the cer~~t~ca~e ot Completion including, but not limited to, the covenant of nondiscrimination and the maintenance of the Participant Improvements and all other improvements on the Site pursuant to Sections 401 and 402 of the Agreement. Notwithstanding the surviving Obligations of Trustorl upon written request of Beneficiary stating that the purchase price, which amount is determinable in accordance wi th the provisions of Section 201 and 208 of the Agreement, has been paid, and upon surrender of the Deed of Trust to Trustee for cancellation and retention and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey to Trustor, or to the person or persons legally entitled hereto, without warranty, any portion of the Site then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in any reconveyance may be described as II the person or person legally entitled thereto." Section 9. 3 Notices. Whenever BenefiCiary, Trustor or Trustee shall desire to give or serve any notice, demand, request or other communication with respect to this Deed of Trust, each such notice, demand, request, or other communication shall be in writing and shall be effective only if the same is delivered by personal service or mailed by registered or certified mail, postage prepaid, return receipts requested, or by telecopier or facsimile transmission, addressed to the address set forth in the first paragraph of this Deed of Trust. Any party may at any time change its address for such notices by delivering or mailing to the other parties hereto, as aforesaid, a notice of such change. Section 9.4 Acceutance bv Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged is made a public record as provided by law. Section 9. 5 Cautions. The captions or heading at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust. 12/12/89 728n/2601/008 Page 16 of 18 Section 9.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. Section 9.7 No Merger. If title to the Site shall become vested in the Beneficiary, this Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger and, in such event, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary under this Deed of Trust. In addition, upon foreclosure under this Deed of Trust pursuant to the provisions hereof, any leases or subleases then existing and affecting all or any portion of the Security shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at any such foreclosure shall so elect. No act by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice of termination to such tenant or subtenant. Section 9.8 Governing Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Section 9.9 Gender and Number. In this Deed of Trust the Singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires. 12/12/89 7282n/2601/008 Page 17 of 18 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written. Dated: ~fr-jD , ARROWHEAD HEALTH CARE SYSTEM, INC., a California nonprofit corporation ?-~ By President Dated: By 12/12/89 7282n/2601/008 Page 18 of 18 " STATE OF CALIFORNIA ) ) ss. ) COUNTY OF SAN BERNARDINO On ~~~ :<, /910 before me, the undersiqned, a Notary Publi in and for said State, personally appeared Lna.A.L/!4 (.. 1tl.1lA.L4, the President of the corporation named in the within instrument, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledqed that he executed the same on behalf of the within-named corporation. WITNESS my hand and official seal. A~ J t-4u/~ (SEAL) '......-.....................1 @ ot't,nAL SiAL , AMY S. FREDIN : . NOT"~Y PUBliC-CALIFORNIA . SI\N 1l[~IWIDtNO COUNTY : My Comm. up June 25. 11193 . .............................: