HomeMy WebLinkAboutR07-Redevelopment Agency
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DEVELOPMENT DEPARTMENT
OF THE CIn OF SAB BBRlWIDINO
REOUEST FOR COMMISSION/COUNCIL ACTION
From:
KENNETH J. HENDERSON
Executive Director
Subject: DUKES - DUKES AND
ASSOCIATES LOAB
AGUISI'IISI!IT
Date:
January 15, 1993
SvnoDsis of Previous Commission/Council/Committee Action(s):
On January 11, 1993, the Community Development Commission continued
this item.
Recommended Motion(s):
(Communitv Develooment Commission)
(Councilwoman PODe-Ludlam's Recommendation)
That the Community Development Commission consider a loan agreement
between Dukes - Dukes and Associates and the Redevelopment Agency in
the amount of $700,000.
Item will be passed out at the January 20, 1993 Commission Meeting.
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Administrator
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KEBlIIBTII J. IIBBDE ON
Executive Direct r
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Contact Person(s):
Kenneth J. Henderson/Dave Ed~ar
Phone:
5081
Project Area(s):
Ward(s) :
Third
Supporting Data Attached:
FUNDING REQUIREMENTS:
Amount: $700.000
Source:
Budget Authority:
Reauested
Commission/Council Notes:
KJH:lmp:2482B
COMMISSION MEETING AGBBDA
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DEVELOPMEIIT DEPARTMEIIT
OF THE CITY OF SAIl BERlWmIIIO
REOUEST FOR COIMISSIOII/COUIICIL ACTIOII
From:
KENNETH J. HENDERSON
Executive Director
Subject: DUKES-DUKES AIID ASSOCIATES
LOAII AGltJWousJir.r
Date:
January 20, 1993
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SvnoDsis of Previous Commission/Council/Committee Action(s):
On April 20, 1990, the Community Development Commission approved a DDA
with Dukes-Dukes and Associates calling for the development of a 114
unit subdivision.
In April 1992, the Commission approved a $250,000 business
reorganization loan.
The Commission has also approved three (3) amendments to the original
DDA.
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Recommended Motion(s):
(Communitv Deve100ment Commission)
(Councilwoman PODe-Lud1am's Recommendation)
MCTIOII:
That the Community Development Commission consider a loan
agreement between Dukes-Dukes and Associates and the
Redevelopment Agency in the amount of $900,000.
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Administrator
ll&'mJUIl J. BEBDE 011
Executive Direct r
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Contact Person(s): Ken Henderson
Phone:
5081
Project Area(s): Northwest (NW)
Ward(s):
Six (6)
Supporting Data Attached:
Staff ReDort
FUNDING REQUIREMENTS:
Amount: $900.000
Source: 20% Set-Aside
Budget Authority:
Reauested
Commission/Council lIotes:
KJH:lag:1103E
COIMISSIOII MEETIIIG AGEllDA
Meeting Date: 1/20/1993
Agenda Item Jllumber: 7
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DEVELOP"ERT DEPART"ERT
OF TIlE CITY OF SAN BERRARDIRO
STAFF REPORT
Dukes-Dukes and Associates Loan ARreement
Dukes-Dukes and Associates has applied to the Agency for a loan in the
amount of $900,000 to allow for the restructuring of its financial
affairs and that of its operating entities so Dukes can continue its
redevelopment activities in the City of San Bernardino. In addition to
John Dukes, the parties to the agreement are Vivian Nash, Dukes-Dukes
and Associates, Inc., Dorjil I, a California general partnership and
Dorjil II, a California general partnership.
The proceeds of the loan are to be used as follows:
One-hundred, twenty-five thousand dollars ($125,000) for the
payment of federal tax liens.
Two-hundred thousand dollars ($200,000) for paying off the first
trust deed currently in favor of the Bank of San Bernardino on the
Dukes-owned thirty-eight (38) lot parcel, allowing the Agency to
assume the first trust deed position.
Two-hundred, fifty thousand dollars ($250,000) to payoff various
unsecured Bank of San Bernardino loans.
Two-hundred thousand dollars ($200,000) to pay off various
accounts payable.
Approximately $20,000 for title insurance and escrow fees.
Approximately $105,000 for working capital.
The attached signed loan agreement requires the loan proceeds to be
deposited into escrow with the agreement containing appropriate
instructions on how the funds are to be disbursed and applicable
conditions which must be met before such funds can be released to
appropriate entities.
KJH:lag:ll03E
COMlfiSSIOR ~IRG AGENDA
"eeting Date: 1/20/1993
Agenda Item BuIIIber:
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DEVELOPMElIT DEPARTMUT STAFF REPORT
Dukes-Dukes and Associates Loan Agreement
January 20. 1993
Page Number -2-
Because funds from the Agency's Twenty Percent Set-Aside Low/Moderate
Housing Fund are encumbered through June 30, 1993, if the Commission
desires to approve Duke's request for financial assistance, the
Commission must utilize unliquidated obligations in the form of a
"float" loan for a period of not more than twelve (12) months. That
is, the Commission can re-appropriate funds previously allocated to
another project, but not expected to require the expenditure of such
funds over the next year, and allocate said funds to the subject
proposal for a period of not more than twelve (12) months.
Based upon the foregoing, staff recommends adoption of the form motion.
Ul'lftJ5TII J. RSON. Executive Director
Development De artment
KJH:lag:ll03E
COMMISSION MEETING AGElIIDA
Meeting Date: 1/20/1993
Agenda Item Number:
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JAN 19 '93 05:08PM
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BLAClCLINED AGAINST DRAFT OF
171/15/93
LOAN AGREEMENT
(DUKES.DUKES AND ASSOCIATES, INC.)
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THIS LOAN AGREEMENT ("Loan Agreement") is dated this D day of
January, 1993, by and between the Redevelopment Agency of the City of San Bernardino
(the "Agency") and John Dukes and Vivian Nash, as individuals, Dukes-Dukes and
Associates, Inc., a California corporation, Dorjil I, a California general partnership, and
Dorjil n, a California general partnership (hereinafter, collectively refemd to as the
"Borrower").
WHEREAS, the Borrower has sought a loan from the Agency in an amount
equal to J2.oo,ooo (the "Loan") for the purpose of enabling it to restructure its financial
affairs and that of its various operating entities to thus permit the Borrower to continue
its redevelopment activities within the City of San Bernardino; and
WHEREAS, the Agency deems it desirable to provide funds to the
Borrower to so allow the Borrower to continue its redevelopment activities within the
City of San Bernardino; and
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WHEREAS, the Borrower anticipates accomplishing (i) the sale or
refinancing of Little Zion Manor as located at~City of San Bernardino
within six (6) months from the date hereof and (ii) the sale or refinancing of Villa Mirage
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located at~ City of Rancho Mirage within six (6) months from the
date hereof and intends that the Loan as hereinafter provided shall be repaid from the sale
or refinancing proceeds of either or both of said projects; and
WHEREAS, the Borrower shall provide to the Agency (i) a Deed of Trust
(in the form as attached hereto as Exhibit "A ") securing this Loan Agreement, (ii) the
Note (in the fonn attached hereto as Exhibit dB") to be executed pursuant hereto which
Deed of Trust shall be recorded as a lien against the Dorjil I Project, the DoIjil IT Project
and the thirty-e1ght (38) residentialJots located at the northeast corner of 16th Street and
~omia Street within the City of San Bernardino (the "38 Lots"), and (iii) the Penonal
Guaranty (in the form attached hereto as Exhibit "C") to be executed by John Dukes and
Vivian Nash as shall be delivered prior to the disbursement of funds under this Loan
Agreement.
NOW, THEREFORE, in consideration of the mutual promises as hereinafter
given by the parties, the parties agree as follows:
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Section t.
~. The Agency. hereby agrees to loan to
the Borrower an amount equal to WO,OOO at an interest rate of eight percent (8%) per
annum with a maturity date of January 20. 1994. No principal or interest shall be due
and payable prior to the maturity date at which time the entire principal amount plus all
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JFlN 19 '93 05:09PM
ac:cNed and unpaid interest shall be due and owing to the Agency in whole. Interest shall.
be calculated on the actual number of days that all or an~ nortion of this Loan is
outstanding baed upon a 365/366-day year. Any principal and accrued and unpaid
interest that has not been paid on the due date hereof shall. as of the maturity date bear
interest at the rate equal to twelve percent (12%) per annum, or such other maximum
interest rate as may be allowed pursuant to the laws of the State of California (the
"Default Interest Rate"), calculated upon the principal amount then due and owing plus
the accrued and unpaid interest as of such date. The unpaid principal and the unpaid
accrued interest shall continue to bear interest at such Default Interest Rate compounded
daily for the actual number of days from the maturity date until the date that all unpaid
principal and unpaid interest has been paid in full, including interest at the Default
Interest Rate on the previously unpaid principal balance and the unpaid accrued interest.
Section 2.
M;lfI~atOl:Y and Optional Prepayment. This Loan shall
be subject to mandatory prepayment by the Borrower upon the sale or refinancing of any
one of the following multi-family residential dwelling projects (the "Projects") as owned
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either in whole or in part by the Borrower:
1. Little Zion Manari
2. Villa Mirage;
3. Dorjill; or
4. Doljil n.
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P.9
The Borrower shall provide from the proceeds of sale or refinancing of all
or any of said Projects, whether such sale or refinancing of any such Project is to occur
prior to or subsequent to the maturity date of this Loan, the amount required to pay the
unpaid principal balance plus aU accrued and unpaid interest hereunder plus secured and
unpaid interest at the Default Interest Rate, as applicable. This Loan may also be prepaid
by the Borrower, and at the option of the Borrower. at any time prior to the maturity date
hereof without penalty and without any prepayment premium from any other source of
funds available to the Borrower. From and after the maturity date of this Loan, the
A,ency may seek repayment of this Loan from any source offunds of the Borrower,
including the Personal Guaranty as required to be delivered to the Agency under this
Loan Agreement and the sale or refinancing proceeds derived from the Projects, and the
BOI1'Ower hereby agrees that on and after the maturity date hereof this Loan shall be paid
not only from the source of funds derived from the sale or refinancing of the Projects as
described above, but from all other funds and assets and properties of the Borrower and
pursuant to the Personal Guaranty. After the maturity date of this Loan, the Agency may
(i) foreclose upon either or all of the Deeds of Trust as herein granted by the Borrower
to the Agency to repay the Loan plus all accrued and unpaid interest plus any interest
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calculated at the Default Interest Rate then due and owing from the Borrower to the
Agency, (ii) demand payment pursuant to the Personal Guaranty and exercise all rights
and remedies as provided therein and (ill) exercise all other rights and remedies available
under the laws of the State by legal action or to obtain equitable relief pursuant to this
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JAN 19 '93 05: 10PM
P.10
Loan Agreemcnt and the other documents and Exhibits attached hereto as executed and
delivered by the BOJTowcr.
The BOJTOwer acknowledses and agrees that neither the Agency nor the City
of San Bernardino shall have any duty or obligation to provide any financial inducement
or other benefits or accommodations to the Borrower in any manner that may be deemed
necessary by the Borrower, a purchaser ofthe Project or any party or financial institution
seeking to provide refinancing of the Projects or financing for the sale of the Projects to
a purchaser thereof. Neither the City nor the Agency shall have any obligation hereunder
to be the issuer of any tax-exempt obligations or to participate in any other financial
transaction to accomplish the sale and financing or refinancing of the Projects.
Section 3.
t2jsbursement of Loan Proceeds. All net amounts of
the Loan proceeds shall be disbursed throuSh an escrow to be held by First American
Title Company, San Bernardino, California (the "Title Company"), and this Loan
. Agreement shall serve as instructions to the Title Company for the disbursement of funds
pursuant hereto and for the proper recording of the Deeds of Trust required pursuant to
this Loan Agreement. The Agency and the BOJTower shall execute all additional
documents as reasonably required by the Title Company for the purpose of establishing
the escrow for the disbursement of funds pursuant hereto and for the recordation of the
Deeds of Trust as required by this Loan Agreement. The Borrower shall be solely
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JAN 19 '93 05:11PM
P.l1
responsible for all costs related to such escrow and Loan proceeds, and such costs may
be paid from the net available proceeds of the Loan.
The Loan proceeds shall be disbursed by the Tille Company in the following
amounts and for the following identified purposes:
1. Approximatm:Jl25.000 for the satisfaction of federal tax liens
recorded against properties of the Borrower located within the County of San Bernardino;
2. .$200.000 for the repayment of a loan from the Bank of
San Bernardino presently secured by a deed of trust on the 38 Lots;
3. $250.000 for the repayment of various unsecured loans from the Bank
of San Bernardino;
4. $200,000 for the payment of various accounts payable subject to the
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joint approval by written requisition exeeuted by both the Executive Director of the
Agency and the Borrower instructing the Title Company to pay such amounts;
~ ~roximately $20,000 as estimated amount for escrow fees, title
insurance policies in favor of the Agency and other costs of the Loan;
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JAN 19 '93 05:11PM
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..J. sroximately $105.000 as a net amount to be disbursed to the '
BOlTOwer after all amounts required pursuant to 1 to.J.above have been satisfied.
Total: SlO,ooo
The Borrower shall provide at the sole cost of the Borrower. which cost
may be funded from the proceeds of the Loan, a Mortgagee's Title Insurance Policy
issued by the Title Company in favor of the Agency in the full amount of this Loan which
shall insure the proper recordation of this Loan as a second lien to be filed for record as
to the DorjU I Project and the DorjU II Project and as a first lien to be filed for record
as to the 38 Lots. No Loan funds shall be disbursed pursuant hereto until such time as
the Tide Company is able to record the appropriate Deed of Trust securing this Loan
against the Dorjil I Project and the DorjillI Project and simultaneously obtains a
reconveyance of the 38 Lots and the recordation of a Deed of Trost in a first lien position
as to the 38 Lots for the benefit of the Agency.
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The Title Company shall deliver Preliminary Title Reports and Title
Insurance Commitments on the Dorjil I Project, the DorjillI Project and the 38 Lots to
the Executive Director of the Agency for review and approval by the Executive Director
and counsel to the Agency. The Executive Director and counsel to the Apncy shall have
five (5) business days to review such Preliminary Title Reports and Title Insurance
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Commitments after receipt thereof to either approve or disapprove such documents. Any
disapproval shall be in writing to the Title Company and shall describe the items or
exceptions to title that the Executive Director and counsel to the Agency will not accept.
Failure by the Bxecutive Director and counsel to the Agency to respond to the Title
Company within said five (5) business day period will be deemed to be final approval of
the Preliminary Title Reports and the Title Insurance Commitments.
After such time as the Executive Director and counsel to the Agency have
approved or have been deemed to have approved the Preliminary Title Reports and the
Title Insurance Commitments. the Agency shall deposit an amount equal to $900,000 into
the escrow as shall be held by the Title Company not more than three (3) business days
prior to the date that the Title Company has scheduled for the close of escrow. Such
close of escrow shall be evidenced by the disbursement of funds and the recording of the
documents required pursuant hereto. No funds shall be disbursed by the Title Company
and the escrow shall not be deemed to have closed until such time as evidence has been
obtained by the Title Company that all three (3) Deeds of Trust have been recorded
against the appropriate properties and that the Title Insurance Policies have been issued
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by the Title Company in favor of the Agency in a principal amount equal to the Loan.
Section 4.
Security Interest: Dee~. The Borrower shall
grant to the Agency three (3) blanket Deeds of Trust all three (3) of which shall be in the
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JAN 19 '93 05: 13PM
P.14
amount ofJ2.QO,OOO to jointly and collectively secure the repayment of the Loan made
pursuant to this Loan Agreement. The Deeds of Trust shall be recorded as a second
Deed of Trust against the Dorjil I Project and the Doljil n. Project and simultaneously
with the reconveyance by the Bank of San Bernardino of the 38 Lots. A Deed of Trust
shall be recorded as a first Deed of Trust against such 38 Lots. None of said Deeds of
Trust shall be released or reconveyed by the Agency until the principal amount of the
Loan plus accrued and unpaid interest and interest at the Default Interest Rate, if any,
have been paid in full together with all other amounts as the Borrower may be required
to pay to the Agency for other costs, expenses and fees of the Agency incurred pursuant
to the terms and provisions of the Deeds of Trust.
Section 5.
Payment of Costs by Borrower. The Borrower and the
parties executing the Personal Guaranty shall be responsible for and shall pay any and all
costs of collection, attorneys fees, foreclosure costs and expenses that may be incurred
by the Agency to both preserve the security interest of the Agency as granted by the
Borrower pursuant to this Loan Agreement and the several Deeds of Trust. Additionally,
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the Borrower and the parties executing the Personal Guaranty shall be responsible for and
shall pay all costs of collection and enforcement of this Agreement as may be incurred
by the Agency against the Borrower or under the Personal Guaranty or as to the rights
of any other lien holder asserting claims against the Dorjil I Project, the Doljilll Project
or the 38 Lots or with regard to any other costs incurred by the Agency to satisfy any
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JAN 19 '93 05'l3PM
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prior or subsequent lien to that of the Agency under the Deeds of Trust so as to protect
the security interests granted by the Borrower to the Agency.
Section 6.
Effective Dste' Dishur~eq1ent of Fllnlb. This Loan
Agreement shall be effective as of the date of approval and execution by the Agency and
the Borrower. Funds shall not be disbursed pursuant to this Agreement until all
conditions as are set forth in this Loan Agreement and in other final escrow instruction
with the Title Company have been met, including but not limited to, the execution and
delivery of the Personal Guaranty and the Agency Obtaining the required Title Insurance
Policy.
JOHN DUKES AND VIVIAN NASH,
as individuals
By: C1_~^,)
~n Dukes
By:1~u,t-
Vivian Nash
Pt.~p
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DUKES-DUKES AND ASSOCIATES, INC.
a California corporation
Byj.J. ...2 ,QJ^.,I d
TI :-f A . A ~~1-
By:
Title: 4' t ..5<. e-.
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DORJIL I, a California general partnenhip
By: ClJ~ ^ ) "19,," 4/ 4 ~
Ti{
DORJIL n, a California general partnership
By: ;;~,_ ~ jD'.l ~
Title:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
By:
Title:
(SEAL)
Attest:
. Ily:
SecretaI)'
APPROVED AS TO FORM:
By:
SJIOIQOOllllOC\644
1119193 S:50
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EXHIBIT" A"
DEED OF TRUST
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(Standard Agency Form to Be Attached)
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JAN 19 '93 05: 15PM
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EXHIBIT "8"
NOTE
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(Standard Agency Form to Be Attached)
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JAN 19 '93 05:15PM
P.19
EXHIBIT "C"
PERSONAL GUARANTY
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1. For valuable consideration, the undersigned lohn Dukes and Vivian
Nash (hereinafter called "Guarantors") unconditionally guarantee and promise to pay to
the Redevelopment Agency of the City of San Bernardino (hereinafter called "Lender"),
or order, on demand, in lawful money of the United States, any and all indebtedness of
John Dukes and Vivian Nash, as individuals, Dukes-Dukes and Associates, Inc., a
California corporation, Dorjil I, a California general partnership, and Dorjil n, a
California general partnership as borrowers (hereinafter collectively called "Borrower")
to Lender. The word "indebtedness" is used herein in its most comprehensive sense and
includes any and all advances, debts, obligations, and liabilities of Borrower or anyone
or more of them, heretofore, now, or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Borrowers may be liable individually or jointly with others. or whether recovery upon
such indebtedness may be or hereafter become barred by any statute of limitations, or
whether such indebtedness may be or hereafter become otherwise unenforceable.
2. The Lender has approved at a duly called and held meeting of the
Lender on lanuary _, 1993 (the "Meeting") am<J,OOO financial restructuring loan to
Exhibit C - Page I
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JAN 19 '93 05:16PM
P.20
BOITOwer pursuant to a Loan Agreement dated January~ 1993. The liability of
Guarantors shall not exceed at anyone time the sum of~undred Thousand Dollars
(~,OOO) for principal, together with all interest upon the indebtedness or upon such
part thereof together with interest at the Default Interest Rate as set forth in the Loan
Agreement. Notwithstanding the foregoing, Lender may permit the indebtedness of
BOlTOwer to exceed Guarantors liability. This is a continuing guaranty relating to any
indebtedness, including that arising under successive transactions which shall either
continue the indebtedness or from time to time renew it after it has been satisfied. This
Guaranty shall not apply to any indebtedness created after actual receipt by Lender of
written notice of its revocation as to future transactions. Any payment by Guarantor shall
not reduce their maximum obligation hereunder unless written notice to that effect be
actually received by Lender at or prior to the time of such payment and agreed to in
writing by Lender.
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3. The obligations hereunder are joint and several, and independent of
the obligations of Borrower, and a separate action or actions may be brought and
prosecuted against Guarantors whether action is brought against Borrower or whether
BOlTOwer be joined in any such action or actions; and Guarantors waive the benefit of any
statute of limitations affecting his liability hereunder or the enforcement thereof.
Exhibit C . Page 2
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4. Guarantors authorize Lender, without notice or demand and without
affecting their liability hereunder, from time to time to (a) renew, compromise, extend,
accelerate, or otherwise change the time for payment of, or otherwise change the terms
of the indebtedness or any part thereof, including increase or decrease of the rate or rates
of interest thereon; (b) take and hold security for the payment of this Personal Guaranty
or the indebtedness guaranteed, and exchange, enforce, waive, and release any such
security; (c) apply such security and direct the order or manner of sale thereof as Lender
in its discretion may determine; and (d) release or substitute anyone or more of the
endorsers or guarantors. Lender may without notice assign this Personal Guaranty in
whole or in part.
5. Guarantors waive any right to require Lender to (a) proceed against
Borrower; (b) proceed against or exhaust any security held from Borrower; or (c) pursue
any other remedy in Lender's power whatsoever. Guarantors waive any defense arising
by reason of any disability or other defense of Borrower or by reason of the cessation
from any cause whatsoever of the liability of Borrower. Until all indebtedness of
Borrower to Lender shall have been paid in full. even though such indebtedness is in
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excess of Guarantors'liability hereunder, Guarantors shall have no right of subrogation,
and waive any right to enforce any remedy which Lender now has or may hereafter have
against Borrower, and waives any benefit of, and any right to participate in any security
now or hereafter held by Lender. Guarantors waive all presentments, demands for
Exhibit C . Page 3
-
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JAN 19 '93 05:17PM
P.22
performance, notices of nonperformance, protests, notices of protest, notices of dishonor,
and notices of acceptance of this Guaranty and of the existence, creation, or incurring of
new or additional indebtedness.
6. No lien or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Lender, or by any neglect to exercise such right of setoff
or to enforce such lien, or by any delay in so doing; and every right of setoff and lien
shall continue in full force and effect until such right of setoff or lien is specifically
waived or released by an instrument in writing executed by Lender.
7. Guarantors agree to pay reasonable attorney's fees and all other costs
and expenses which may be incurred by Lender in the enforcement of this Personal
.
Guaranty .
8. This Personal Guaranty shall remain in effect until such time as all
.
principal, accrued interest and interest ~ at the Default Interest Rate, as
applicable, and all other costs, fees and expenses incurred by Lender pursuant to the Loan
Agreement and Note secured by the three (3) blanket Deeds of Trust 118 executed and
delivered by the Borrower to Lenders have been paid in full. At such time as all
financial responsibilities of Borrower to Lender have been extinguished, this Personnel
Guaranty shall be of no force and effect and shall be delivered to the Guarantors.
Exhibit C . Page 4
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JAN 19 '93 05:18PM
P.23
9. Any married woman who executed this Personal Guaranty hereby
expressly agrees that recourse may be had against her separate property for all her
obligations under this Personal Guaranty.
10. In all cases where there is but a single Borrower or a single
Guarantor, then all words used herein in the plural shall be deemed to have been used in
the singular where the context and construction so require; and when there is more than
one Borrower named herein, or when this Personal Guaranty is executed by more than
one Guarantor, the word "Borrowers" and the word "Guarantors" respectively shall mean
all and anyone or more of them.
.
Exhibit C - Page S
1"-
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.
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JAN 19 '93 05:18PM
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P.24
IN WITNESS WHEREOF I the undersigned Guarantors have executed this
Personal Guaranty on . 1993.
GUARANTORS
~~ .QA<~~
C1~ ~~
L~~ /ld../~
Vivian Nash
ACCEPTED BY LENDER:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
By:
Kenneth J. Henderson,
Executive Director
U101OOO1\D0C\641
011191" ',OS
.
Exhibit C . Page 6