HomeMy WebLinkAbout1981-496
San Bernardino
60;009-8-1
Langston
RESOLUTION NO. _Y/-~~
RESOLUTION OF ~IE 11AYOR AND CC~10N COL~,-
CIL OF THE CIYl OF SAN BERNARDINO APPROV-
ING A CERTAIN PROJECT AGREEMENT WITH
ROBERT L. LANGSTON AND WILTON K. NEvlBY,
A GENERAL PARTNERSHIP, AND AUTHORIZING
THE EXECUTION OF VARIOUS DOCUMENTS
(LANGSTON-NE~IBY PROJECT)
'~REAS, there has been filed with the City an
Application pursuant to thE: provisions of Ordinance No. 3815,
as amended, of said City, Robert L. Langst.on ~r.d Wilton K.
Np.wby, a General Partnership, request.ing the :l.ssuance of
Industrial Development Bonds which sh2ll be issued in the
principal amount of $1,130,000 in the form of a tax-exempt
construction loan for the purpose of financing the cost and
expens~ of the construction of a commercial office building
as more particularly c.escrib,~d in said ;,.pplication; d!ld
WHEREAS, the IVJayor and Common Council mu~''::. now
approve and author3.ze the execution of variouk1 document~s and
a certain Projec't Agreement ",i th Robert L. Langston and
wil ton K. Newby, a General Pal:t,nership.
NOW, THEREFORE, THE N1WOR AND COMHON COUNCIL OF
THE CITY OF SAi'i BERNARDINO DO HEREBY .FINe, RESOLVE, DETER-
MINE AND ORDER l,S FOLLOWS:
208.4(tp)
10/7/81
1~
San Berl7\ardino
60,009-8-1
Langston
section 1. The recitals set forth hereinabove are
true and correct in all respects.
section 2. The Mayor and Common Council, acting
for and on behalf of the City of San Bernardino, hereby
approve the Project Agreement with Robert L. Langs.ton and
\lilton K. Newby, a General Partnership, substantially in the
form attached hereto as "Exhibit A" and incorporated herein
by reference, with such corrections, changes, modifications,
additions or deletions as may be approved and recommended by
Bond Counsel to the Mayor and approved by him, his execution
thereof to be conclusive evidence of his approval; and the
Mayor and City Clerk are hereby authorized and directed to
execute such final Project, Agreement when the same sha.ll
have been prepared for execution, with the seal of the City
to be affixed thereto.
Section 3. The Resolution of Issuance is hereby
authorized to be executed and delivered with such correc-
tions, changes, modifications, additions or deletions as may
be approved and recommended by Bond Counsel to t11e Mayor and
approved by him, his execution thereof to be conclusive
evidence of his approval.
208.4(tp)
10/7/81
2
-~~
San Bernardino
60,009-8-1
Langston
Section 4. The Mayor, City Clerk, Project Coordi-
nator and any other City official, officer or employee to
the extent necessary under the circumstances, are hereby
authorized to execute any and all documents as may be required
to conswmuate the transaction contemplated by the Project
Agreement as attached hereto as "Exhibi t. A" and the Resolu-
tion of Issuance.
I HEREBY CERTIFY that the foregoing resolution was
duly adopted by the Mayor and Common Council of the City of
adjourned
San Bernardino at an regular . meeting t.hereof, held on
the l2t~ day of
October
, 1981, by the fo110w-
i~y vote, to wit:
AYES:
Councilmen Castaneda, Reilly, Hernandez,
Botts, Hudson, Hobbs and Strickler
NOES:
None
ABSENT:
None
None
ABSTAIN:
r1k~ t~ J;J
(~/~.
ifj ci C er .
208.4(tp)
10/7/81
3
San Benlardino
60,009-8-1
Langston
The foregoing resolution is hereby approved this
~L day of
0~.J
, 1981.
Approved as to form:
~W~
City At~y
208.4(tp)
10/7/81
4
'.n Bernardino
.J,009-8-1
Langston
STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO
CITY OF SAN BERNRADINO
)
) ss
)
I, LUCY MARTINEZ, Deputy City C~erk, in and for the City of
San Bernardino, DO HEREBY CERTIFY that the foregoing and attached
copy of San Bernardino City Resolution No. 81-496 is a full, true
and correct copy of that now on file in this office.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the City of San Bernardino this 14th day of
October, 1981.
u 7:b~
De;-~ ~it~ lerk
San BernarcUno
(Langston-Newby)
60,009-8-2
PROJECT AGREEMENT
BETWEEN
THE CITY OF SAN BERNARDINO
CALIFORNIA
AND
ROBERT L. LANGSTON AND WILTON K. NEWBY,
A GENERAL PARTNERSHIP
\'lITH
IMPERIAL BANK
AS PURCHASER
IN CONNECTION WITH
$1,130,000
INDUSTRIAL DEVELOPMENT REVENUE NOTE
(COMMERCIAL OFFICE BUILDING)
(SMALL ISSUE EXE~~TION - $10,000,000 r1AXI~J.M)
Dated as of October 1, 1981
The interest of the City of San Bernardino,
California in this Agreement has been assigned by the City
of San Bernardino, California to Imperial Bank, a California
Corporation, as Trustee, for the holder of the Bonds pur-
suant to the Resolution of Issuance of the City of San
Bernardino, California dated as of the date hereof, and is
subject to the security interest of Imperial Bank, a California
Corporation.
#208(ph)
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San Be;rnarcUno
(Langston-Newby)
60,009-8-2
PROJECT AGREEMENT
TABLE OF CONTENTS
Page
Proj ect Agreement ...................................... 1
Parties ........................................... 1
Reci tals .......................................... 1
Definitions
ARTICLE 1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . .
4
Section 1.01 Definitions ......................... 4
Section 1.02 Inclusiveness of Certain Terms ...... 16
Section 1.03 References to Project Agreement ..... 16
ARTICLE 2
Acquisition and Construction of the Project ............ 17
Section 2.01
Section 2.02
Section 2.03
section 2.04
Section 2.05
Section 2.06
section 2.07
Section 2.08
Section 2.09
Construction of the Project
Completed .......................... 17
Issuance of city Note .............. 17
Loan Disbursements ................. 18
provisions Governing Disbursements
of Loan Moneys ..................... 18
Bank Requisition Retention ......... 19
Expenditures of Requisitioned Funds 19
Revision of Plans and Specifications 20
Completion of the Project .......... 20
Company to Pay in Event Loan is
Insufficient ....................... 20
(i)
#208(ph)
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Section 2.10
Section 2.11
The Loan
San Ber:-nar<Uno
(Langston-Newby)
60,009-8-2
TABLE OF CONTENTS
(Continued)
Events upon which Disbursements
may be Terminated ..................
Accounting by the Bank, Supervision
of Expenditures ....................
ARTICLE 3
.......................................................................................... ..
Section 3.01
Section 3.02
Section 3.03
Section 3.04
Section 3.05
section 3.06
Section 3.07
Section 3.08
Section 3.09
Funding of the Loan
Section 4.01
Section 4.02
Paqe
20
21
The Loan ....................,...... 23
23
Company Note
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
23
Acceleration of Loan ............... 24
securi ty ........................... 24
Incorporation of Terms
.................... ..
Prepayment of the Note
........................ ..
25
25
Time of Payments ................... 25
Additional Payments by Company
25
Payments by Company for Bond
Counsel Services ................... 27
ARTICLE 4
................................................................... ..
Application of City Note Proceeds ..
Funding of Loan
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
(ii)
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28
28
San Bernardino
(Langston-Newby)
60,009-8-2
TABLE OF CONTENTS
(Continued)
Page
ARTICLE 5
Section 5.01
Damage, Destruction and Condemna"tion
.................................... ..
31
section 5.02
Section 5.03
Representations and
Section 6.01
Section 6.02
Section 6.03
Section 6.04
Section 6.05
Section 6.06
section 6.07
section 6.08
Section 6.09
Section 6.10
Section 6.11
Section 6.12
No Abatement of Payments ...........
31
Repair, Restoration and Relocation
31
Proceeds of Insurance or
Condemnation .......................
32
ARTICLE 6
Warranties ......................... 34
Organization, Powers, Etc. ......... 34
Execution of Project Agreement and
Other Documents ...........,........ 34
Title to Properties ................ 35
Litigation......................... 35
Design of Project .................. 35
Payment of Taxes ................... 35
Description of the Project ......... 36
No Defaults
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
36
Important Inducement ............... 36
Obligations of Company............. 36
No Untrue Statements ............... 36
No Outstanding Industrial Revenue
Bonds ............................... 37
(iii )
#208(ph)
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Section 6.13
Section 6.14
Section 6.15
Section 6.16
section 6.17
Section 6.18
Conditions of Lending
Section 7.01
Section 7.02
Section 7.03
Covenants
San Bernardino
(Langston-Newby)
60,009-8-2
Limitation on Expenditures .......... 37
No Working Capital.................. 39
Tax Treatment of Project ............ 39
Not to Make the City Note Taxable ... 39
Operation of Project
.............................. ..
39
No Conflict of Interest ............. 40
ARTICLE 7
.................................................................... ..
41
Opinion of Counsel for Company......
41
Opinion of Bond Counsel.............
42
Other Documents, Etc. ...............
42
ARTICLE 8
........................................................................................ ..
43
Section 8.01
Section 8.02
Section 8.03
Section 8.04
Section 8.05
Section 8.06
Section 8.07
Section 8.08
Section 8.09
Payment of Secured Obligations ..... 43
Preservation and Defense of Property 43
General provisions Concerning
Insurance .......................... 44
Insurance Required ................. 45
Payment of Taxes, Etc. ............. 46
Payment of Utilities ............... 48
Concerning .the Project ............. 48
Compliance with Code ............... 48
Compliance with Applicable Laws .... 50
(iv)
#208(ph)
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Section 8.10
Section 8.11
Section 8.12
Section 8.13
Section 8.14
Section 8.15
Section 8.16
Section 8.17
Defaults and Remedies
section 9.01
Section 9.02
Section 9.03
Section 9.04
Section 9.05
section 9.06
San Be,rnarqino
(Langston-Newby)
60,009-8-2
TABLE OF CONTENTS
(Continued)
Paqe
Financial Statements ............... 50
Mergers, Etc. ...................... 50
Indemnification .................... 50
Certificate of No Default
.. .. .. .. .. .. .. .. .. ..
51
Inspection of the Project
.................. ..
52
Indebtedness of Company............ 52
Duties in Case of Breach of
Convenant .......................... 52
Pursuit of Remedies ................ 52
ARTICLE 9
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
53
Event of Default ...................
53
Remedies
.................................................... ..
55
No Remedy Exclusive ................
56
Agreement to Pay Attorneys'
Fees and Expenses ..................
57
No Additional Waiver Implied by
One Waiver .........................
57
Repayment After Acceleration .......
57
(v)
#208(ph)
10/8/81
Miscellaneous
San Be~nard,ino
(Langston-Newby)
60,009-8-2
TABLE OF CONTENTS
(Continued)
Page
ARTICLE 10
.................................................................................. ..
59
Section 10.01
Section 10.02
Section 10.03
Section 10.04
section 10.05
Section 10.06
section 10.07
Notices ............................ 59
Effect of Agreement ................ 59
Amendment
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
60
Counterparts
............................................ ..
60
Severability of provisions ......... 60
Liability of City.................. 60
Construction
.......... ...................................
60
(vi)
#208(ph)
10/8/81
TABLE OF CONTENTS
(Continued)
EXHIBITS
Exhibit A Form of Company Note
Exhibit B Form of Deed of Trust
Exhibit C Legal Description of Land
Exhibit D Form of Title Insurance Policy
Exhibit E Form of Accountant's Certificate
(vii)
San Bernardino
(Langston-Newby)
60,009-8-3
- . . - ~.=.''--'"'' . - _._.~.- '_"',,'~'._h...
~l208 (ph)
1'1/9/81
San Bernardino
(Langston-Newby)
60,009-8-2
PROJECT AGREEMENT
PARTIES:
THE CITY OF SAN BERNARDINO, CALIFORNIA, a
municipal corporation organized and existing
under the Constitution of the State of Cali-
fornia and the City Charter of said City (the
"City") ;
Robert L. Langston and Wilton K. Newby, a
General Partnership duly formed and existing
under the laws of the State of California
(the "Company"); and
IMPERIAL BANK, a California Corporation (the
"Bank") .
Dated as of October 1, 1981.
RECITALS:
WHEREAS, the City of San Bernardino is a municipal
corporation duly organized and existing under the Constitu-
tion of the State of California and the City Charter of said
City; and
WHEREAS, the City has adopted its Ordinance No. 3815
entitled "Ordinance of the City of San Bernardino Relating
to the Financing of Projects for the Encouraging of Increased
Employment Within the city" and certain amendments thereto
(collectively the "Ordinance No. 3815"); and
WHEREAS,said Ordinance No. 3815 is intended to
provide a means for financing the development of industry
and commerce and to thereby broaden the employment opportu-
nities for residents of the City and its tax and revenue
base; and
WHEREAS, the Company has submitted its Application
for the financing of certain capital improvements and
improvements to land as authorized by Ordinance No. 3815 and
on April 14, 1980, the Mayor and Co~non Council of the City
have adopted a Resolution approving the same and making the
necessary determinations, in a certain Resolution No. 80-126
#208(ph)
10/8/81
San Bernardino
(Langs'ton-Newby)
60,009-8-2
entitled: "Resolution of the Mayor and Common Council of
the city of San Bernardino Approving an Application for the
Issuance of Industrial Development Revenue Bonds of the City
and the Project Referred to Therein; Finding that There Was
No Evidence Presented at a Public Hearing Held on Said
Application in Opposition to Said Application or Said Pro-
ject; Directing the Preparation of a Project Agreement,
Resolution of Issuance and other Legal Documents as May Be
Necessary to Carry Out Said Project and Provide for the
Issuance of Industrial Development Revenue Bonds Therefor;
and Making certain Other Findings and Determinations in
Connection Therewith"; and
WHEREAS, pursuant to and in accordance with the
provisions of Ordinance No. 3815, the Company proposes to
undertake the construction of a 22,612 square feet commer-
cial office building located at 1255 East Highland Avenue in
the City of San Bernardino, together with off-street parking
therefor, the same to be acquired and financed by the Company
with the proceeds of a loan to be evidenced by this Project
Agreement (the "Project Agreement"); and the City intends to
finance the cost of the Project by the issuance of special
revenue bonds of the City under a Resolution dated of even
date herewith (the "Resolution of Issuance"); and
\~REAS, one City Note will be issued under the
Resolution of Issuance and will be secured by a pledge of
the Revenues derived by the City under this Project Agree-
ment; and
WHEREAS, this Project Agreement and the Resolution
of Issuance to which it pertains have in all respects been
duly and validly authorized by the Mayor and Common Council
of the city; and all things required by Ordinance No. 3815
to be done have been done; and
WHEREAS, it has been determined that the estimated
amount necessary to finance the cost of the Project, in-
cluding necessary expenses incidental thereto, will require
the issuance, sale and delivery of the City Note pursuant to
Ordinance No. 3815 in the principal amount set forth in the
Resolution of Issuance; and
WHEREAS, all things necessary to make the City
Note, when issued as in the Resolution of Issuance provided,
the valid, binding and legal special revenue obligation of
the city according to the import thereof, and to constitute
#208(ph)
10/8/81
2
San Bernardino
(Langston-Newby)
60,009-8-1
the Resolution of Issuance a valid assignment and pledge of
the Revenues derived by the City from this Project Agreement
to the payment of the principal of and interest on the City
Note and a valid assignment and pledge of the rights of the
City under this Project Agreement have been done and per-
formed, and the creation, adoption, execution and delivery
of the Resolution of Issuance, and the creation, execution,
delivery and issuance of the City Note, subjec"t to the terms
hereof, have in all respects been duly authorized.
~ 1. 1: !! ~ S ~ ~ 1: H:
For and in consideration of the mutual promises
and agreements herein contained the parties hereto agree as
follows:
#208(tp)
10/6/81
3
San Bernardino
(Langston-Newby)
60,009-8-2
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions.
The terms defined in this Article 1 shall for all
purposes of this Project Agreement have the meanings herein
specified, unless the context clearly otherwise requires:
Accountant's Certificate
"Accountant's Certificate" means an op1n10n signed
by a firm of certified public accountants approved by the
City.
Administration Expenses
"Administration Expenses" shall mean the reason-
able and necessary expenses incurred by the City in the
administration of the Project Agreement, the Resolution of
Issuance and the financing of the Project, and shall be paid
to the city as Additional Payments by the Company pursuant
to Section 3.08.
Agency
"Agency" means the Redevelopment Agency of the
City of San Bernardino, a public body, corporate and politic.
Annual Debt Service on the Note
"Annual Debt Service on the Note" means the total
amount of principal and interest payable on the Company Note
for any Bond Year after the computation is made.
Assignment of Leases, Rents and Profits
"Assignment of Leases, Rents and Profits" means
the document by such name and in substantially the form
approved by the city and the Bank.
Authorized Company Representative
"Authorized Company Representative" shall mean a
person authorized to act on behalf of and bind the Company.
Such authorization shall be evidenced by written certifi-
cate, power of attorney, or other instrument acceptable to
#208(ph)
10/9/81
4
San Bernardino
(Langston-Newby)
60,009-8-2
the City and the Trustee, furnished to the city, the Agent
and the Trustee, as the case may be, containing the specimen
signature of the Authorized Company Representative and
executed and signed on behalf of the Company by one of the
general partners thereof, [and shall be accompanied by an
unqualified Opinion of Counsel to the Company as to the
foregoing]. Such certificate, power of attorney or instru-
ment may designate one or more alternate representatives and
may designate a different Authorized Company Representative
to act for the Company with respect to different sections of
the Agreement and this Resolution, and any other documents
which are a part of the financing transaction which is the
subject of the Agreement and the Resolution of Issuance.
Authorized Newspapers
"Authorized Newspapers" means a financial paper,
or a newspaper of general circulation in the City of Los
Angeles, California, and the Daily Bond Buyer or other
financial paper or newspaper circulated in the City and
State of New York, each of which is published at least once
a day for at least five (5) days (other than legal holidays)
in each calendar week, and is printed in the English lan-
guage.
Authorized Officer
"Authorized Officer" means the Mayor of the city
of San Bernardino, the city Attorney, the city Clerk or any
other authorized elected official of the City or any other
person authorized by resolution of the City to perform the
act or sign the document in question on behalf of the City.
Bank
"Bank" means Imperial Bank, a California Corpora-
tion, sometimes also referred to as "Purchaser."
Bond Counsel
"Bond Counsel" shall mean James Warren Beebe, A
Law Corporation, its successors or assigns or any other firm
of nationally recognized bond counsel of favorable reputa-
tion selected by the City.
Bondholder or Holder or Holders of Bonds
"Bondholder", "Holder" or "Holders of Bonds" or
any similar term, when used with respect to the City Note,
#208(ph)
10/9/81
5
San Bernardino
(Langston-Newby)
60,009-8-2
mean any person who shall be the registered owner or his
duly authorized attorney, trustee, representative or assigns
on the City Note.
City Note Proceeds
"city Note Proceeds" shall mean all amounts received
by the City upon the sale or other disposition of the City
Note issued under the Resolution of Issuance.
Bond Year
"Bond Year" means the twelve (12) month period
commencing on October 15, 1981 and on each October 15 there-
after.
Business Day
"Business Day" shall mean a day on which banking
business is transacted in the City in which the Bank has its
principal corporate trust office.
Certificate of Net Revenues
"Certificate of Net Revenues" means an Accoun-
tant's Certificate in a form satisfactory to the City and
the Bank attached hereto as Exhibit "E" and incorporated
herein showing as of any particular date:
(1) in each and every year the City Note is Out-
standing the actual amount of Net Revenues received in
such Bond Year and the Maximum Annual Debt Service on
the Company Note;
(2) in such Bond Year, the difference between (i)
Maximum Annual Debt Service on the Company Note referred
to in (1) above, and (ii) the actual Net Revenues
received;
(3) the ratio of Net Revenues to Maximum Annual
Debt Service on the Company Note referred to in (1)
above.
city
"City" shall mean the City of San Bernardino,
California.
#208(ph)
10/9/81
6
San Bernardino
(Langston-Newby)
60,009-8-2
city Note
"city Note" means any City Note authorized and
issued under the Resolution of Issuance.
Company
"Company" shall mean Robert L. Langston and Wilton K.
Newby, a general partnership, duly formed and existing under
the laws of the State of California, or any entity which is
the surviving, resulting or transferee entity in any merger,
consolidation or transfer of assets.
Company Note
"Company Note" or "Note" means that certain pro-
missory note executed by the Company and payable to the
City, secured by the Deed of Trust, and substantially in the
form attached hereto as Exhibit A.
Company Representative
"Company Representative" shall mean the person or
persons at the time designated to act on behalf of the Com-
pany by written certificate furnished to the City or to the
Bank and containing the specimen signature of such person or
persons.
Conflict of Interest
"Conflict of Interest" shall mean an interest
which constitutes a conflict of interest as applied to
pUblic officials, public officers and employees in the City
and the State.
Costs of Issuance
"Costs of Issuance" means items of expense payable
or reimbursable directly or indirectly by the city or the
Company and related to the adoption of the Project Agree-
ment, the authorization, sale and issuance of the City Note,
which items of expense shall include but not be limited to,
costs of document production, costs of reproducing and
binding documents, filing and recording fees, insurance
premiums, city Note discounts, legal fees and charges, pro-
fessional consultants' fees, fees and charges for execution,
transportation and safekeeping of the city Note, and other
costs, charges and fees in connection with the foregoing.
1208(ph)
10/9/81
7
San B~rnarQino
(Langston-Newby)
60,009-8-2
counsel
"Counsel" shall mean an attorney or firm of attor-
neys (who may be of counsel to the City or the Company, or
retained by the city or the Company in other connections as
the context may require), licensed to practice in the State
in which said attorney or firm maintains an office, selected
by the city and satisfactory to the Bank.
Counsel's Opinion
"Counsel's Opinion" means an opinion signed by
Counsel. Any Opinion of such Counsel may be based upon,
insofar as it relates to factual matters, information which
is in the possession of the City or Company, as the case may
be, upon a certificate or opinion of, or representation by,
an officer or officers of the City or Company, unless such
Counsel knows, or in the exercise of reasonable care should
have known, that the certificate or opinion or representa-
tion with respect to the matters upon which his opinion may
be based, as aforesaid, is erroneous, incomplete, or mis-
leading.
County Recorder
"County Recorder" means the County Recorder of the
County of San Bernardino.
Deed of Trust
"Deed of Trust" shall mean the document by such
name and in substantially the form approved by the City and
the Bank, attached hereto as Exhibit B.
Determination of Taxability
"Determination of Taxability" means any deter-
mination, decision or decree made with regard to section 103
of the Internal Revenue Code of 1954, as amended and then in
effect, by the Commissioner or any District Director of the
Internal Revenue Service or by any court of competent juris-
diction that, due to an Event of Taxability interest on the
City Note, is includable in the gross income of the holders
of the City Note (other than a holder who is a substantial
user or related person as defined in the Internal Revenue
Code of 1954, as amended); provided, however, should the
Agency, Company or any holder of the city Note, either
jointly or severally, succeed in reversing or setting aside
a Determination of Taxability, then an Event of Default of
Taxability will not be deemed to have occurred hereunder.
#208(ph)
10/9/81
8
San Bernardino
(Langston-Newby)
60,009-8-2
Event of Taxability
"Event of Taxability" means the occurrence of the
circumstances described in Section 103(b)(6)(D) of the
Internal Revenue Code of 1954, as amended and then in effect,
resulting from any action or inaction on the part of the
Company or a principal user of the Project or any other
related person, which results in a Determination of Tax-
ability, with the result that the interest payable on the
City Note becomes includable in the gross income of the
holders of the City Note (other than a holder who is a
substantial user or related person as defined in the Inter-
nal Revenue Code of 1954).
Facilities
"Facilities" shall mean the 22,612 square feet
commercial office building located on the Land at 1265 East
Highland Avenue in the City of San Bernardino, including
incidental facilities and appurtenances and appurtenant
work, and also including all substitutions, modifications,
and additions thereto as from time to time may be made by
the Company.
Fiscal Year
"Fiscal Year" means the year period beginning on
January 1st and ending on the next following December 31st.
Hazard and Liability Insurance
"Hazard and Liability Insurance" means insurance,
issued by a person qualified to issue such insurance in the
State which provides coverage at least equal to that pro-
vided in connection with commercial developments similar to
the Project constructed by the Company. Such insurance
shall include, but not be limited to (i) comprehensive
public liability insurance with respect to Project in mini-
mum amounts of $1,000,000 for death or bodily injury in
connection with each occurrence and $100,000 for property
damage in connection with each occurrence or such greater
amounts as may from time to time be required by Federal
National Mortgage Association in connection with loans for
projects similar to the Project; (ii) insurance against loss
or damage by fire and any of the risks covered by insurance
of the type known as "fire and extended coverage" for an
amount not less than the replacement cost of the Project;
and (iii) insurance against loss or damage due to flDOds for
an amount not less than the replacement cost of the Project
#208(ph)
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San Bernardino
(Langston-Newby)
60,009-8-2
if the Project shall at any time hereafter be located in an
area designed by the Department of Housing and Urban Devel-
opment as a flood hazard zone. The premiums on Hazard and
Liability Insurance shall be paid by the Company.
Independent
"Independent," when used with such terms as "Cer-
tified Public Accountant," means any person or firm, respec-
tively, appointed by the City or the Company, as the context
may require, in such capacity, and who, or each of whom, has
a favorable reputation in the field in which his opinion or
certificate will be given, and:
(1) is in fact independent and not under
domination of the City or the Company;
(2) does not have any substantial interest,
direct or indirect, with the City or the Company; and
(3) is not connected with the City or the
Company as an officer or employee of the City or the
Company, but who may be regularly retained to make
reports to the city or the Company.
Interest Payment Date
"Interest Payment Date" means each date on which
interest on any City Note is required to be paid by the
Resolution of Issuance.
Interest Requirement
"Interest Requirement" means, as of any particular
date of calculation, the amount equal to any unpaid interest
then due plus an amount equal to the interest to become due
on the City Note on the next succeeding Interest Payment
Date.
Issue Date
"Issue Date" means the date of the City Note
specified and determined in accordance with the Resolution
of Issuance.
Land
"Land" shall mean the Land (sometimes referred to
as "Site"). on which the Project is to be acquired and
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constructed, described on Exhibit C and on the Title Insur-
ance Policy attached hereto as Exhibit D and which will be
subject to the lien of the Deed of Trust and the Resolution
of Issuance.
Loan
"Loan" means an interest-bearing obligation made
for the purpose of financing of the Project and secured by a
Mortgage on the Project and an Assignment of Leases, Rents
and Profits and such other security arrangements described
herein and in the Company Note.
Local Codes
"Local Codes" means the applicable city, state,
Federal and Redevelopment Agency standards for the Facil-
ities.
Maintenance and Operating Expenses
"Maintenance and Operating Expenses" means all
costs and expenses of operating the Project, including (1)
the cost of all utilities, taxes and assessments, if any, of
any type or character levied at any time during the term of
this Agreement upon the Project or upon the operation of the
Project; (2) the premiums on all insurance required or
permitted under this Agreement; (3) the cost of keeping the
Project free and clear of all mechanics' liens, and similar
charges and encumbrances; (4) all costs of maintaining the
Project in proper order and repair; and (5) the amount of
any reasonable replacement or repair reserves required
hereunder or under the Resolution of Issuance.
Maximum Annual Debt Service on the Note
"Maximum Annual Debt Service on the Note" means
the largest amount of Debt Service on the city Note and on
the Company Note payable in any Bond Year, it being the
intent hereof that they be equal.
Net Proceeds
"Net Proceeds," when used with respect to any
insurance proceeds from policies required to be maintained
by the Company pursuant to this Project Agreement, means the
amount remaining after deducting from gross proceeds all
expenses (including attorneys' fees) incurred in the collec-
tion thereof.
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San Bernardino
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Net Revenues
"Net Revenues" means all revenues excluding all
insurance revenues or sale proceeds received by the Company
including all payments by tenants with respect to the Proj-
ect less Maintenance and Operating Expenses.
Officer's Certificate
"Officer's Certificate" means a certificate of the
city or the Company, as the case may be, signed by an Autho-
rized Officer and filed with the Bank; sometimes, as to the
Company, such Certificate is referred to as a "Certificate
of the Company".
Ordinance No. 3815
"Ordinance No. 3815" means that certain Ordinance
of the city entitled "Ordinance of the City of San Bernardino
Relating to the Financing of Projects for the Encouraging of
Increased Employment Within the city" and all amendments
hereto, under the authority of which the Resolution of
Issuance is adopted and the City Note is to be issued.
Outstanding
The term "Outstanding", when used with reference
to the City Note, shall mean, as at any particular date, the
aggregate amount of the City Note authenticated and deliv-
ered under the Resolution of Issuance except:
(1) The amount of such City Note for the payment
of which cash shall have been theretofore deposited in
trust; and
(2) The amount of such city Note othen1ise deemed
to be paid in accordance with the Resolution of Issuance.
Permitted Encumbrances
"Permitted Encumbrances", when used with respect
to Mortgage Loans, means those liens, covenants, conditions,
restrictions, easements, encroachments or rights which are
customarily waived or accepted by prudent lending institu-
tions and the existence of which will not prevent the con-
veyance of good title to a mortgaged premises if a claim for
Nortgage Insurance benefits with respect thereto shall
thereafter be made.
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San Be.rnardino
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Permitted Investments
"Permitted Investments" means any of the following
which at the time are legal investments for the City under
the laws of the State, and to the extent provided by law,
for the moneys held hereunder then proposed to be invested
therein: (i) time or demand deposits in, or other banking
arrangements with any bank or trust company having aggregate
capital and surplus of at least $50,000,000 and authorized
to accept deposits of public funds (including the investment
department of the Bank), which are secured at all times by
bonds or other obligations which are authorized by law as
security for public deposits, of a market value at least
equal to the amount required by law; (ii) evidences of
indebtedness, or obligations for which the full faith and
credit of the United States are pledged for the payment of
principal and interest; (iii) obligations, participations,
or other instruments of, or issued by, or fully guaranteed
as to principal and interest by, FNMA, or issued by a fed-
eral agency or a United states Government sponsored enter-
prise; (iv) evidence of indebtedness of corporations autho-
rized by the provisions of Section 1364 of the California
Financial Code provided such indebtedness is rated, or is on
a parity with obligations that are rated "AA" or better by a
nationally recognized rating agency; (v) mortgage Obliga-
tions on single-family dwellings purchased from a state or
federally chartered bank or savings and loan association
pursuant to a repurchase agreement under which the bank or
savings and loan association will repurchase for a specified
amount.
Plans and Specifications
"Plans and Specifications" shall mean the plans
and specifications prepared for the Project, as the same may
be amended from time to time prior to the Completion Date by
the Company, all as certified by the Architect and shown on
the building permit or permits on file in the City's records.
Prepayment
"Prepayment" means any amount received or recov-
ered which reduces or eliminates the principal amount of the
Loan other than scheduled amortization payments of the
principal amount of the Loan, including any prepayment
penalty, fee, premium or other such additional charge.
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(Langston-Newby)
60,009-8-1
Prime Rate
"Prime Rate" is weighted average for the immedi-
ately preceding three (3) months prior to the date that the
Prime Rate is to be computed, as the contract may require,
of the interest rate established by the Bank as its prime
rate. In the event that the Bank shall fail to establish or
publish a "Prime Rate," then, for purposes hereof, the
"Prime Rate" shall be deemed to be the average Prime Rate
for the three (3) largest (total assets) banking institu-
tions in the State then publishing a Prime Rate.
Principal User
"Principal User" means any principal user of the
Project within the meaning of Section 103 of the Internal
Revenue Code of 1954, as amended.
Proceedinqs
"Proceedings" means the actions taken by the city
in undertaking, carrying out and completing the Project,
including, without limitation, this Project Agreement, the
Resolution of Issuance, the Company Note, the City Note, the
Deed of Trust and any and all other agreements and documents
involved in the issuance, sale, delivery of the City Note,
the security therefor and the expenditure of the City Note
Proceeds.
Project
"Project" shall mean collectively the Facilities
and the Land.
Project Agreement
"Project Agreement" or "Agreement" shall mean this
Project Agreement dated as of October 1, 1981, by and
between the City, the Company and the Bank, and any and all
modifications, alterations, amendments and supplements
hereto.
Resolution of Issuance
"Resolution of Issuance" means the Resolution of
Issuance adopted under and pursuant to Ordinance No. 3815,
providing for financing of the Project.
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San Be~nard.ino
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Resolution of Preliminary Approval
"Resolution of Preliminary Approval" means that
certain Resolution entitled "Resolution of the Mayor and
Common Council of the City of San Bernardino Finding That an
Application for Industrial Development Bond Financing Has
Been Submitted Pursuant to the Provisions of Ordinance
No. 3815 of the City by Robert L. Langston and wilton K.
Newby, a General Partnership; Finding That Said Application
Complies With the Provisions and Requirements of Said Ordi-
nance No. 3815; Preliminarily Approving Said Application and
the Project to Which it Refers; Fixing a Time and Place for
the Holding of a Hearing Thereon; Ordering the Publication
of a Notice of Hearing in the Form and Manner Provided by
Said Ordinance No. 3815; and Making Certain Other Findings
and Determinations in Connection Therewith."
Revenues
"Revenues" shall mean all amounts received as
repayment of principal and interest on the Loan, Prepayment
charges, if any, and all other charges received for, and all
other income and receipts derived by the City from the
Financing of the Project, including, without limitation,
payments and other income derived by the City from the
Con~any or its legal successor in interest, if any, under
this Project Agreement, to wit, payments made directly to
the Bank under the Company Note, but not including receipts
designated to cover Administrative Expenses.
site
"site" shall mean the Site (sometimes referred to
as "Land"), on .Ihich the Project is to be acquired and
constructed, described on Exhibit C hereto and on the Title
Insurance Policy attached hereto as Exhibit D and which will
be subject to the lien of the Deed of Trust and the Resolu-
tion of Issuance.
State
"State" means the State of California.
Supplemental Resolution
"Supplemental Resolution" means any resolution at
any time in full force and effect which has been duly adopted
by the City under Ordinance No. 3815, or under any act
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(Langston-Newby)
60,009-8-2
supplementary thereto or any amendment thereof, at a meeting
of the Mayor and Common Council duly convened and held, at
which a quorum was present and acted thereon, amendatory of
or supplemental to the Resolution of Issuance, but only if
and to the extent that such Supplemental Resolution is
specifically authorized thereunder,
Treasurer.
"Treasurer" means the officer who is then perform-
ing the functions of Treasurer of the City.
Written Requisition
"Written Requisition" means a requisition prepared
in such form or forms and signed by an Authorized Company
Representative and containing the information required by
this Project Agreement.
Section 1.02.
Inclusiveness of Certain Terms.
Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and
neuter genders. Unless the context shall otherwise indi-
cate, the words "Note," "Owner," "Holder" and "Person" shall
include the plural as well as the singular number.
section 1.03. References to P~oject Agreement.
The terms "hereby," "hereof," "hereto," "herein,"
"hereunder," and any similar terms, as used in this Project
Agreement, refer to this Project Agreement, and, unless the
context shall otherwise indicate, the term "this Agreement"
shall mean this Project Agreement, together with any adden-
dum supplemental hereto.
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San Bef:nard,ino
(Langston-Newby)
60,009-8-1
ARTICLE 2
ACQUISITION AND CONSTRUCTION OF THE PROJECT
Section 2.01. Aqreement .to Construct the Project.
In connection with the acquisition and construc-
tion of the Project, the parties agree as follows:
(a) the Company shall cause the Project to be
acquired and constructed as herein provided on the Land and
in accordance with the Plans and Specifications, all in
compliance with Ordinance No. 3815;
(b) the Company hereby agrees that, in order to
effectuate the purposes of this Agreement, it shall make,
execute, acknowledge and deliver any contracts, orders,
receipts, writings and instructions, with any other persons,
firms or corporations and in general do all things which may
be requisite or proper, all for constructing and completing
the Project, all in accordance with the Plans and Specifi-
cations and building permit. So long as the Company is not
in default under any of the provisions of this Agreement,
this power of the Company to act as provided in this para-
graph is granted and conferred irrevocably without consent
or intervention of tlle City and shall not be terminated by
act of the city or of the Company; and
(c) the Company shall acquire and construct the
Project as promptly as practicable; and shall use its best
efforts to cause acquisition and construction to be com-
pleted, delays incident to striking, riots, acts of God or
causes beyond the reasonable control of the Company only
excepted, but if for any reason, such acquisition and con-
struction is not completed promptly, there shall be no
resulting liability on the part of the City and no diminu-
tion in or postponement of the payments required under the
Note to be paid by the Company.
Section 2.02. Issuance of the City Note.
In order to provide funds for payment of the Cost
of Acquisition and Construction, the City, as soon as prac-
ticable after the execution of this Project Agreement, will
issue, sell and deliver the City Note to the Purchaser
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San Be;r:-nard.ino
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(Bank), which in turn will provide funds for the Costs of
Acquisition and Construction.
Section 2,03. Loan Disbursements.
The Bank shall disburse Loan moneys from time to
time in accordance with the provisions of this Project
Agreement.
Section 2.04. Provisions Governing Disburse-
ments of Loan Moneys.
In making Loan disbursements, the Bank shall be
governed by the following provisions:
(a) the Bank shall make disbursements upon the
order of the Company to pay the Cost of Acquisition and
Construction, but only upon receipt from time to time
of requisitions signed by an Authorized Company Repre-
sentative, stating with respect to each disbursement to
be made:
(1) the requisition number;
(2) the name and address of the person, finn
or corporation to whom payment is due;
(3) the amount to be paid;
(4) the purpose for which each obligation to
be paid was incurred; and
(5) that each obligation, item of cost, or
expense mentioned therein has been properly incurred,
is a proper charge against the Loan as a Cost of
Acquisition and Construction, is within the amount
estimated as the cost of the item or items for
which the obligation was incurred, and has not
been the basis of any previous withdrawal.
(b) if requested to do so, the Bank will provide
copies of such requisitions to the City;
(c) in the case of each payment made pursuant to
a construction contract, or, as reasonably requested by
the Bank, the requisition in (a) above shall be accom-
panied by an Officer's Certificate of the Company
certifying approval thereof and further certifying that
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each such obligation has been properly incurred and is
then due and payable and that insofar as such obliga-
tion was incurred for work, materials, equipment and
supplies, such work was actually performed, or such
materials, equipment or supplies were actually installed
in furtherance of the acquisition and construction of
the Project, or delivered at the site of the work for
that purpose or delivered for storage or fabrication at
a place or places approved by the Company;
(d) upon receipt of each such requisition, and
accompanying certificate, if applicable, the Bank shall
pay such item directly to the person thereto as named
in such requisition, or shall deliver to the Company a
check or draft for the payment thereof drawn to the
person entitled thereto, as directed by the Company;
and
(e) the Bank may rely as to the completeness and
accuracy of all statements in any such requisition upon
the approval of such requisition by an Authorized
Company Representative, and, if applicable, the inde-
pendent architects or engineers, as the case may be,
and the Bank shall be protected and shall incur no
liability in acting or proceeding in good faith upon
such requisition and shall be under no duty to make any
investigation or inquiry as to any statements contained
or matters referred to in any such requisition, but may
accept and rely upon the same as conclusive evidence of
the truth and accuracy of such statements. The Company
hereby covenants and agrees to indemnify and save
harmless the city and the Bank from any liability
incurred in connection with any requisition so approved.
Section 2.05. Bank Requisition Retention.
For two (2) years from the date thereof the Bank
shall retain in its possession all requisitions received by
it, Subject to the inspection of the City, its agents and
representatives, the Company and its agents and representa-
tives, at all reasonable times.
Section 2.06. Expenditure of Requisitioned
Funds.
The Company shall not submit any requisition
which, if paid, would result in a violation of Section 103(b)
of the Internal Revenue Code of 1954, as amended, an4 the
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San Be;t"nard;ino
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United States Treasury Regulations then in effect thereunder
and applicable to obligations issued on the date of issuance
of the City Note, or would result in an expenditure for
Facilities that may not, under the Ordinance, be financed by
the city.
Section 2.07. Revision of Plans and Specifi-
cations.
The Company, with the consent of the City, may
revise the Phms and Specifications at any time and from
time to time prior to the completion of the Project.
Section 2.08. Completion of the Project.
The same Certificates of Completion required under
paragraph 18 of the Disposition and Development Agreement
shall also be filed with the Bank.
Section 2.09. Company to Pay in Event Loan
is Insufficient.
If the net proceeds of the sale of the Loan shall
not be sufficient to pay the Cost of Acquisition and Con-
struction in full, the Company shall pay from its own funds
(which may be obtained through a loan secured by a deed of
trust on the Project subordinate to the deed of trust secur-
ing the Loan) tha~ portion of the Cost of Acquisition and
Construction in excess of the Loan moneys available there-
for. The City does not make any warranty, either express or
implied, that the Loan will be sufficient to pay the Cost of
Acquisition and Construction. If the Company shall pay from
its own funds any portion of the Cost of Acquisition and
Construction as above required by the provisions of this
Section, it shall not be entitled to any reimbursement
therefor from the city, or the Bank or the Holder of the
City Note, nor shall it be entitled to any diminution in or
postponement of payments of the Company Note required to be
paid by the Company under this Project Agreement.
section 2.10. Events Upon Which Disbursements
May be Terminated.
The Company and the City hereby instruct the Bank,
and the Bank hereby accepts such instructions, that it shall
continue to disburse Loan moneys in accordance with the
provisions of this Project Agreement until anyone or more
of the following shall have occurred:
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San Be~nar~ino
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60,009-8-1
(a) all Loan moneys shall have been disbursed in
accordance with the provisions of this Article so that
the same is exhausted; or
(b) the Facilities shall have been damaged or
destroyed to such extent that, in the opinion of the
Company, expressed in a Certificate of the Company
filed with the Bank and the City, taking into account
the receipt of any insurance proceeds, that either:
(I) the Facilities cannot be reasonably
restored within a period of six months to the
condition thereof immediately preceding such
damage or destruction; or
(2) restoration of the Facilities is not
economically feasible; or
(c) title to, or the temporary use of, all or
substantially all of the Facilities or such part thereof
as shall materially interfere, in the jUdgment of the
Company expressed in a Certificate of the Company filed
with the Bank and the City, with the operation of the
Facilities for the purpose for which the Facilities are
designed, shall have been taken under the exercise of
the power of eminent domain by any governmental body or
by any person, firm or corporation acting under gov-
ernmental authority (including such a taking or takings
as results in the Company being thereby prevented from
operating the Facilities for a period of six months);
or
(d) the occurrence of an Event of Default described
in this Project Agreement.
Section 2.11. Accounting by the B~~k, Sup~rvisiog
of Expenditures.
A. The Bank shall, at least semiannually, deliver
to the Company and the City an accounting schedule of the
Loan which will show the following:
(a) the date, amount, and intended use of each
disbursement which has been made;
(b) the current status of the Company's payments
and whether said payments are current with the payment
schedule; and
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San Bernardino
(Langston-Newby)
60,009-8-1
(c) the then outstanding balance including the
total payment of principal and the total payment of
interest necessary to payoff the outstanding balance
of the Loan in full.
B. Using such schedule and any other info~~ation
it may reasonably request from the Company and the Bank, the
city shall supervise the expenditure of the city Note Pro-
ceeds to assure proper application to the Project.
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ARTICLE 3
THE LOAN
Section 3.01. The Loan,
The City agrees, upon the terms and subject to the
conditions hereinafter set forth, to make a loan to the
Company through the Bank in the principal amount of One
Million One Hundred Thirty Thousand Dollars ($1,130,000)
(the "Loan") for the purpose of providing construction and
permanent financing for the Project. The sum of Nine Hun-
dred Seventy-Five Thousand Dollars ($975,000) shall be
initially disbursed to the Company for the construction of
the Project for a period of twelve (12) months beginning
October __, 1981, including, without limitation, the payment
of the costs of issuance. Said costs of issuance to include
to James Warren Beebe, a Law Corporation, for bond counsel
services, the approximate sum of Ten Thousand Three Hundred
Twenty-five Dollars ($10,325.00) less Five Thousand Dollars
($5,000.00) (representing a portion of the Ten Thousand
Dollars ($10,000.00) paid to the City) for a total approxi-
mate sum of Five Thousand Three Hundred Twenty-five Dollars
($5,325.00), plus the approximate sum of Two Thousand Five
Hundred Dollars ($2,500.00) for expenses. The balance of
the Loan shall be disbursed to the Company for the permanent
financing of the Project upon the completion of construc-
tion. The Loan shall be funded in accordance with Article 4
hereof.
Section 3.02. Company Note.
The Loan shall be evidenced by the Company Note.
The Loan shall be repaid as provided for in the Company Note
and shall bear interest on the unpaid outstanding principal
amount thereof from the date of the Company Note until
payment in full of the entire principal amount outstanding,
such interest to be paid from time to time at the rate or
rates and upon the terms, all as provided for in the Com-
pany Note.
The Company shall be absolutely and uncondition-
ally obligated to pay all installments of principal and
interest on the Company Note both before and after the
Project exists or becomes functional, without any defense or
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San Ben::n'l.ino
( Langston.-N'e"7by)
60,009-8-2
set-off by I:eason of any default by any suppliers or ten-,
ants, or under any previous agreemerrt between the Company
and the City or for any other reason, including w:thout
limitation the Project ceasing to exist or be functional to
any ext,ent and from any cause, the Company not being enti-
tled to or in possession of the Project, or any acts or
circumstances "that mey constitute failure of' consideration,
destruction of or damage t,o the Project or commercial frus-'
tration of purpose.
Section 3.03, Acceleration of Loan,
The Loan shall become irrunediately due and payable
lvi thout notice in the amount and under the circums'tances as
hereinafter provided:
(a) upon t,he occurren.ce of an Event of
Taxability, on any date, in an amount equal to (i) 107.5~1,
of the outstanding principal amount thel-.eof a't "the time
of a Dete:nuination of Taxability plus accrued ini:erest
to the date of redemption o:fthe City No'te; plus
(ii) 7. 5~1, of the principal amount of the city Note no"t
Outstanding at the time of the Determination of Taxa-
bility but which Ivas out.st,anding at the time of the
Event of Taxability, lvi th such amount to be held and
disbursed by the Bank; plus (iii) an additional amount
equal to 3% of the principal amount of sucb City Note
outstanding at tehe time of tbe Event of' Taxabil i i:y for
each six-month period, or any part the:ceoL i'rom ;:l1e
time of the occurrence of the Event of Taxabili'l:.y to
and through the date of redemption; provided, however,
if the Company shall bave made proper provision fo:r:
redemp'tion of t,be Outs"t.anding City Note \d thin six
months follOlving the date of the Determination of'
Taxability or within any subsequent six-month period,
the amount specified in subsection (iii) shall noi: be
payable CiS to such six-month period;
(b) except as otherwise required by Subsec-
tion (a) of thi[4 Section, upon the occurrence of an
Event of Default as provided in Article 4 hereof or in
the even;: of any damage, dest:cuction ox: condemnation oE
the Project. and Company elects not to repair, replace
or reconstruct, the P:r:ojec't purs,:ant to Section 5.03
hereof in an amo,m'l: eqlwl to 100% of t:he Out,st.anding
principa.l amount of the Loan t.ofJether with a.cc:cu.ed
interest, thereon to the dai:e of redemption of i.he cii:y
NOT.es .
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San Ber-nard.ino
(Langston-Newby)
60,009-8-2
section 3.04. Security.
Upon disbursement of Loan proceeds pursuant to
Section 4.02 hereof, the Company Note shall be secured by
(i) Deeds of Trust on the Project, which Deeds of Trust,
when recorded in the office of the County Recorder, shall
constitute first liens on the Project; (ii) an Assignment of
Leases, Rents and Profits to be executed by the Company and
delivered to the City; and (iii) such other security instru-
ments as herein provided.
Section 3.05. Incorporation of Terms.
The Company Note, Deeds of Trust, Resolution of
Issuance and Assignment of Leases, Rents and Profits, to be
executed, aCknowledged and delivered pursuant to this Proj-
ect Agreement shall be made subject to all the terms and
conditions contained in this Project Agreement, to the same
extent and effect as if this Project Agreement were fully
set forth in and made a part of the Company Note, the Deeds
of Trust, the Resolution of Issuance, and the Assignment of
Leases, Rents and Profits. This Project Agreement is made
subject to all the conditions, stipulations, agreements and
covenants contained in the Company Note, the Deeds of Trust,
the Resolution of Issuance and the Assignment of Leases,
Rents and Profits to the same extent and effect as if the
Company Note, othe Deeds of Trust, the Resolution of Issuance
and the Assignment of Leases, Rents and Profits were fully
set forth herein and made a part hereof. Notwithstanding
any of the foregoing, if any provisions in the Company Note,
the Deeds of Trust, the Project Agreement and the Assignment
of Leases, Rents and Profits are inconsistent with the
Resolution of Issuance, this Project Agreement shall control.
Section 3.06. Prepayment of the Note.
Company may, at its option at any time after
October ,1982, prepay the Company Note in whole or upon
the written approval of Bank, in part upon giving the Bank
written notice of Company's intention to prepay the Company
Note at least sixty (60) days and not more than one hundred
eighty (180) days prior to the date of prepayment unless
otherwise agreed to by the Bank.
section 3.07. Time of Payments.
Any payment to be made under the Project Agreement
and the Company Note shall be made when due at the main
#208(ph)
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25
San Bernardino
(Langs'ton-Newby)
60,009-8-3
office of Imperial Bank, 9920 South La Cienega Boulevard,
Ing1ewood, California 90301, Attention: Municipal Govern-
ment Finance Department.
Section 3.08. Additional Payments by Company.
In addition to the payments hereinabove set forth,
the Company shall pay to the City an amount or amounts
(hereinafter called "Additional Payments") equivalent to the
sum of the following:
(a) all taxes and assessments of any nature
whatsoever, including, but not limited to, excise
taxes, ad valorem taxes, ad valorem and specific lien
special assessments and gross receipts taxes, if any,
levied upon the City's interest in the Project or the
City's income derived therefrom;
(b) all expenses (not otherwise paid or
provided for out of the proceeds of the sale of the
City Note) incidental to the issuance of the City Note
and Company Note and all Administrative Expenses,
including, without limiting the generality of the
foregoing, fees and charges of auditors, accountants,
architects, attorneys and engineers, and all other
necessary administrative charges of the City or charges
required to be paid by it in order to comply with the
terms of the City Note or of the Resolution of Issuance
and to defend the City and its officers and officials
in any litigation to which the City may become a party
arising out of or in any way connected with the trans-
action of which this Project Agreement is a part;
(c) insurance premiums, if any, on all
insurance required or permitted under the provisions of
this Project Agreement;
(d) all costs and expenses which the City
may incur 1n consequence of or because of any default
by the Company under this Project Agreement, including
reasonable attorneys' fees and costs of suit in equity
or action at law to enforce the terms and conditions of
this Project Agreement; and
(e) all sums necessary to maintain the
amount of $2,500 in the Administrative Expense Fund
established pursuant to the Resolution of Issuance.
#208(tp)
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26
San Bernardino
(Langston-Newby)
60,009-8-3
The obligation to make Additional Payments shall
not be reduced by any reduction in the amounts paid to
service the Company Note.
The Additional Pa~nents payable hereunder shall be
paid by the Company within thirty (30) days after notice in
writing from the City to the Company stating the amount of
Additional Payment then due and payable and the purpose
thereof; it being the intent hereof that the Company shall
cooperate with the City t(; the end that Ordinance No. 3815
shall be observed and the City shall incur no indebtedness
or liability and to that end the provisions of Section 19 of
said Ordinance No. 3815 are specifically incorporated herein,
Nothing herein contained shall prevent the Company from
making from time to time contributions or advances to the
city for any purpose now or hereafter authorized by law.
Each annual Base Payment and each Additional Payment shall
be paid in lawful money of the United states of ~merica, by
warrant or check drawn against funds of the Company, and
each annual Base Payment and each Additional Payment which
is not paid when due shall bear interest at two percent (2%)
per annum in excess of the Prime Rate until the same is
paid, but in no event shall such rate exceed the maximum now
permitted by law.
1208(tp)
10/9/81
27
San Be;rnarqino
(Langston-Newby)
60,009-8-1
ARTICLE 4
FINANCING, FUNDING OF THE LOAN
Section 4.01. Application of the City Note
Proceeds.
In order to provide Financing for the Loan, the
City, concurrently with the execution and delivery of the
Company Note, will sell and shall thereafter deliver the
City Note to the Bank to enable the funding of the Loan from
time to time in accordance with Article 2 hereof.
Section 4.02. Disbursement of Loan Proceeds.
(a) The Bank shall make the initial disbursement
of proceeds of the Loan upon receipt of the following:
(1) The original Company Note setting forth
the amount of the initial disbursement of the Loan and
secured by the Deeds of Trust, duly executed by the Company;
(2) The original or certified copy of the
fully executed Deeds of Trust, such Deed of Trust to be duly
recorded in the office of the County Recorder, as evidenced
by a document stamped of record or by certification of
the Bank;
(3) A current American Land Title Associa-
tion mortgage title insurance policy, containing appropriate
endorsements assigned to the Bank by the terms of such
policy or any endorsement of the title insurance company, or
the irrevocable agreement of the title company to so endorse
such assignnlent for the benefit of the Bank, on behalf of
the City, insuring title to the Project as being vested in
the Company, subject only to the lien of the Deed of Trust
and Permitted Encumbrances, and issued in the face amount of
the Loan by a reputable title insurance company, the form of
which is attached hereto as Exhibit D;
(4) A copy of the Hazard and Liability
Insurance policy or policies or an appropriate endorsement
or binder or such policies on the Project, insuring the
Bank, the City, the Company and any other parties in inter-
est as their interests may appear;
#208(tp)
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28
San Be;r:nard,ino
(Langston-Newby)
60,009-8-1
(5) An Assignment of Leases, Rents and
Profits duly executed by the Company and recorded in the
office of the County Recorder which shall provide, inter
alia, that upon the occurrence of an Event of Default, the
Bank shall have the right to enforce all leases and to
collect all rents and px,fits in connection with the Project;
(6) Evidence reasonably satisfactory to the
Bank that all security interests in the rents, profits or
other income derived from the Project and assigned to the
Trustee have been properly perfected, including any filings
required by the California Uniform Commercial Code;
(7) Evidence reasonably satiSfactory to the
Bank, including such opinions as the Bank shall deem neces-
sary, that the Deed of Trust has been duly recorded and
constitutes a valid first lien upon the Project, subject to
the exceptions shown on Exhibit D;
(8) A requisition s.tating with respect to
such disbursement:
(i) the requisition number;
(ii) the name and address of the person,
firm or corporation including, without limitation, the
Company or the Bank, to whom payment is due;
(iii) the amount to be paid;
(iv) the purpose for which each obliga-
tion to be paid was incurred;
(v) that each obligation, item of cost,
or expense mentioned therein has been properly incurred,
is a proper charge as a Cost of Acquisition and Con-
struction, is within the amount estimated as the cost
of the item or items for which the obligation was
incurred, and has not been the basis of any previous
withdrawal; and
(vi) that there has not been filed with
or served upon the Agency, the City or the Company,
notice of any lien, right to lien, or attachment upon,
or claim affecting the right to receive payment of any
of the moneys payable to any of the persons named in
such requisition, which has not been released or will
not be released simultaneously with such payment, other
#208 (tp)
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29
San Be~narqino
(Langston-Newby)
60,009-8-1
than materialmen's or mechanics' liens accruing by mere
operation of law which will not be released until final
payment is made.
(b) Subsequent disbursements other than the final
disbursement shall be made upon receipt of a requisition,
provided no Event of Default has occurred. The amount of
each disbursement shall be annotated on the Company Note
upon disbursement.
(c) The final disbursement of Loan proceeds shall
be made upon receipt of the following:
(1) A requisition;
(2) A Notice of Completion of Improvement,
validly recorded as required by law and evidence satisfac-
tory to the Bank that construction of the Project is com-
plete.
(d) The Bank will make the final disbursement of
proceeds of the loan at such time as the Project is one
hundred percent (100%) complete and a notice of completion
has been issued with respect thereto.
#208(tp)
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30
San Bernarqino
(Langston-Newby)
60,009-8-1
ARTICLE 5
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 5.01. No Abatement of Payments.
If the Project shall be damaged or either par-
tially or totally destroyed, or if title to or the temporary
use of the whole or any part of the Project shall be taken
or condemned by a competent authority other than the City
for any public use or purpose, there shall be no abatement
or reduction in the amounts payable by the Company here-
under, or under the Company Note, and the Company shall
continue to be obligated to make such payments. The Company
shall supply prompt notice of any such damage, destruction
or condemnation or any proposal to condemn to the City.
Section 5.02. Repair, Restoration and Relocation.
In the event of any damage, destruction or partial
condemnation of the Project in an amount less than $50,000,
Company shall at its own cost (subject to the application of
any available insnrance proceeds or proceeds from such
condemnation held by the Company or the Bank) repair, replace
or reconstruct the Project. If the damage, destruction or
condemnation is in an amount over $50,000, the Company shall
have the option to prepay the Company Note without premium
in accordance with Section 3.03 or at its own cost (subject
to the application of any available insurance proceeds or
proceeds from such condemnation held by the Company or the
Bank) repair, replace or reconstruct the Project to substan-
tially its condition immediately prior to such event or to a
condition of at least equivalent value, regardless of whether
or not the proceeds shall be sufficient to pay the cost
thereof, subject to the following:
(a) The Company shall have a period of two months
in which to make a decision as to whether to repair,
replace or reconstruct the Project or prepay the Com-
pany Note. In any case involving an insured loss, if
at the end of said two-month period there are issues
still unresolved between the insurance company and the
Company regarding their respective rights and obliga-
tions under any applicable insurance policy, then the
Company shall be entitled to an extension of up to an
additional three (3) months in which to make a decision
or such longer period with the approval of the Bank
#208(tp)
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31
San Bernarqino
(Langston-Newby)
60,009-8-1
(provided payments on the Loan shall continue to be made at
the time and in the amounts provided in the Company Note),
but in no event beyond (i) the date of the resolution of
such unresolved issues or (ii) the date of payment of any
insurance proceeds whichever first occurs; and
(b) for the purpose of this Section, the Project
shall be deemed to be in a condition substantially
equivalent to its condition or value immediately prior
to the damage, destruction or condemnation, if Company
determines, in its discretion, that the Project can be
utilized effectively for substantially the same pur-
poses for which it was utilized immediately prior to
such damage, destruction or condemnation and if the Net
Revenues, as demonstrated by a Certificate of Net
Revenues, exceeds Maximum Annual Debt Service.
If the Company elects not to repair, replace or
reconstruct the Project pursuant to this Section, the Com-
pany shall prepay the entire principal amount of the Company
Note in accordance with Section 3.03 hereof and all insur-
ance and condemnation proceeds held by the Bank shall be
applied to such prepayment. Any excess insurance or condem-
nation proceeds shall be paid by the Bank to the Company.
Section 5.03. Proceeds of Insurance or Condemna-
tion.
In the event of any damage, destruction or condem-
nation all proceeds shall be payable to the Bank. The
Company shall have the right to settle, adjust or compromise
any claims for loss, damage or destruction under any policy
or policies of insurance or condemnation action without the
consent of the city; provided, that payments on the Loan
continue to be made in the amounts and at the time as pro-
vided in the Company Note. All such awards, compensation,
rights of action and proceeds awarded to the Company shall
be paid to the Bank to be held by the Bank for the repair,
restoration or relocation applied as provided in this Arti-
cle, and the Company agrees to execute such further assign-
ments or documents necessary to authorize direct payment of
such proceeds to the Bank.
Except as provided in Section 5.02 hereof, and
except to the extent that proceeds received by the City or
the Bank hereunder are applied to the indebtedness secured
hereby if the Company elects not to repair, replace or
reconstruct the Project, nothing herein contained shall be
#208(tp)
10/6/81
32
San Be;r:nard,ino
(Langston-Newby)
60,009-8-1
deemed to excuse the.Company from continuing to make pay-
ments on the Loan in the amounts and at the times provided
in the Company Note or from repairing or maintaining the
Project as provided in Section 8.02 or restoring the damage
or destruction to the Project, regardless of whether or not
there are proceeds available or whether any such proceeds
are sufficient i.n amount.
#208(tp)
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33
San Bernardino
(Langston-Newby)
60,009-8-1
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
Section 6.01. Organization, Powers, etc.
Company
(a) is a general partnership duly organized,
validly existing and in good standing and is authorized
to transact business in the State of California;
(b) has the power and authority to own its
properties and assets and to carryon its business as
now being conducted (and as now contemplated); and
(c) has the power to execute and perform all
the undertakings of the Project Agreement, to borrow
hereunder and to execute and deliver the Company Note,
the Deeds of Trust, the Assignment of Leases, Rents and
Profits, and this Project Agreement.
Section 6.02. Execution of Project Agreement and
Other Documents.
The execution and performance of this Project
Agreement, the Company Note, the Deeds of Trust, the Assign-
ment of Leases, Rents and Profits, and other instruments
required pursuant to this Project Agreement
(a) have been duly authorized by all requi-
site action;
(b) will not violate with respect to Company
any provislon of law, rule or regulations, any order of
any court or other agency of government, or any pro-
vision of any charter document or by-law of Company; and
(c) will not violate any provision of any
indenture, agreement or other instrument by which
Company may be bound, or result in the creation or
imposition of any lien, charge or encumbrance of any
nature on the Project, other than the liens created
pursuant hereto.
#208(tp)
10/6/81
34
San Bernarc'(ino
(Langston-Newby)
60,009-8-1
section 6.03. Title to Properties.
Company shall on or prior to the funding of the
Project have good and marketable title to the Site as shown
on Exhibit C free and clear of any lien or encumbrance
except for (i) liens for taxes not yet due or which are
being contested in good faith by appropriate proceedings;
(ii) Permitted Encumbrances; and (iii) any lien or encum-
brance in connection with any loan or other indebtedness
incurred in connection with the construction of the Project
provided such lien or encumbrance is removed prior to or
simultaneously with the funding of the Project.
section 6.04. Litigation.
There is no action, suit, or proceeding at law or
in equity by or before any court, governmental instrumen-
tality or other agency now pending, or to the knowledge of
Company, threatened against or affecting it, or any of its
properties or rights, which, if adversely determined, would
materially adversely affect Company's ability to perform
under this Project Agreement.
Section 6.05. Design of Project.
To the best of Company's knowledge the operation
of the Project in the manner presently contemplated and as
described herein will not and does not conflict with any
zoning, water or air pollution or other ordinance, order,
law or regulation applicable thereto; and Company has caused
the Project to be designed in accordance with all federal,
state and local laws or ordinances (including rules and
regulations) relating to zoning, building, safety, and
environmental quality and has not failed to obtain and
maintain in effect any licenses, permits, franchises or
other governmental authorizations necessary for the opera-
tion and conduct of the Project.
section 6.06. Payment of Taxes.
Company has filed or caused to be filed all fed-
eral, state and local tax returns which are required to be
filed and of which Company has knowledge, and has paid or
caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that 'such taxes
have become due and payable other than those payable without
penalty or interest.
#208(tp)
10/6/81
35
San Be;r:narqino
(Langston-Newby)
60,009-8-1
Section 6.07. Description of the Project.
The Project described in the Resolution of Issu-
ance, Company Note and Deeds of Trust is the same Project as
that described in this Project Agreement and is the Project
being constructed by Company in accordance with this Project
Agreement.
Section 6.08. No Defaults.
Company is not in default in the performance,
observance or fulfillment of any of the obligations, cove-
nants or conditions contained in any material agreement or
instrument to which it is a party. No event has occurred
and no condition exists which, upon entering into obliga-
tions contemplated by this Agreement, would constitute an
Event of Default.
Section 6.09. Important Inducement.
Long-term goals of the Company as set forth in its
Application, and the possible availability of the financial
assistance by the City pursuant to Ordinance No. 3815 as
provided herein have been important inducements to Company
to locate the Project in the City.
Section 6.10. Obligations of Company.
The Project Agreement is, and the Company Note,
the Deeds of Trust and the Assignment of Leases, Rents and
Profits when executed and delivered, will be valid and
binding obligations of Company enforceable against it in
accordance with their respective terms.
Section 6.11. No Untrue Statements.
Neither the Project Agreement, nor any other
document, certificate or statement furnished to the Bank or
the City by or on behalf of Company contains to the best of
its knowledge any untrue statement of a material fact or
omits to state a material fact necessary in order to make
the statement contained herein and therein not misleading or
incomplete. It is specifically understood by Company that
all such statements, representations and warranties shall be
deemed to have been relied upon by the city as an inducement
to make the Loan and that if any such statements, repre-
sentations and warranties were materially incorrect at the
time they were made, the City may consider any such misrep-
resentation or breach, an Event of Default.
#208(tp)
10/6/81
36
San Bernardino
(Langston-Newby)
60,009-8-1
Section 6.12. No Outstanding Industrial Revenue
Bonds.
There is outstanding no issue of industrial reve-
nue bonds other than the City Note, as defined in Section 103
of the Internal Revenue Code of 1954, as amended, and the
regulations thereunder (the "Code") the proceeds of which
have been or will be used with respect to facilities, the
Principal User or users of which are or will be Company or
any Principal User of the Project as of the date hereof or
any related person or persons (as defined in Section 103 of
the Code) and which are or will be wholly or partially
located in the City of San Bernardino.
Section 6.13. Limitation on Expenditures.
The sum of the following does not now and is not
reasonably expected, during the period ending three years
from the date of issue of the City Note, to exceed
$10,000,000:
(1) the aggregate face amount of any
outstanding issues of obligations (othe~ than the
City Note) exempt from taxation under Section 103
(b)(6) of the Code, the proceeds from which were
or will be used primarily with respect to facil-
ities (a) located within the City and (b) the
principal user of which is or will be the Prin-
cipal User of the Project or related person or
persons within the meaning of Section 103 of the
Code;
(2) the aggregate amount of any capital
expenditures paid or incurred (other than those
financed out of the proceeds of the City Note or a
bond referred to in subparagraph (1) above) within
the meaning of Treas. Reg. Sec. 1.103-10(b)(2)(ii)
and (iii) under the Code, during the six-year
period beginning three years prior to the date of
issuance of the City Note and ending three years
after such date of issuance with respect to facil-
ities utilized by any Principal User of the Proj-
ect located within the City;
(3) the aggregate principal amount of
the City Note.
#208(tp)
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37
San Bernardino
(Langston-Newby)
60,009-8-1
If at any time before the end of the third year
after the date of issuance of the City Note, the Company or
any Principal User or any related person proposes to payor
incur any capital expenditure other than expenditures pay-
able out of the proceeds of the City Note in an amount
exceeding $100,000 with respect to the Project or any 0~1er
property located in the City of San Bernardino, California,
or if the total of all such capital expenditures plus the
amount of the City Note exceeds $9,000,000 in an amount
exceeding $10,000, the Company will, prior to the payment or
incurrence of such capital expenditure, file with the Bank
an opinion of counsel satisfactory to the Bank to the effect
that such capital expenditure will not have the effect of
causing the interest on the City Note (other than that held
by a substantial user of the Project or any related person)
to be included in the gross income of the recipient thereof
for Federal income tax purposes. If at any time during
which any portion of the City Note is Outstanding, the
Company or Principal User or any related person proposes to
gain control of any person, firm or corporation with facil-
ities located in the City of San Bernardino, or assume
liabilities incurred in connection with facilities located
in said city of another person, firm or corporation or
acquire greater than 50% of the outstanding stock of such
corporation, the Company shall first file with the Bank an
opinion of counsel satisfactory to the Bank to the effect
that such action would not cause the interest on the City
Note (other than that held by a substantial user of the
Project or any related person) to be included in the gross
income of the recipient thereof for Federal income tax
purposes.
The Company will, until the end of the third full
fiscal year after the date of issuance of the city Note,
keep separate books and records and require each Principal
User to keep separate books and records with respect to the
Project and any other property or facilities located in the
City of San Bernardino of which the Company or Principal
User or any related person is the principal user, which
books and records shall be sufficient to indicate the nature
of all expenditures with respect to the Project or such
property or facilities. The Company will at its sole expense
cause an audit for each of the fiscal years ending December
31, 1981-1984 to be made of such books and records by an
independent public accountant satisfactory to the Bank.
Such independent public accountant shall within 120 days
after the end of such fiscal year file with the Bank and the
City a certificate, which shall state that during the pre-
#208(tp)
10/6/81
38
San Bernardino
(Langston-Newby)
60,009-8-1
ceding fiscal year neither the Company, any Principal User
nor any related person has paid or incurred any capital
expenditures in the city of San Bernardino of the nature
specified in Section 103(b)(6)(D) of the Internal Revenue
Code, or in the event the Company, any Principal User or any
related person has paid or incurred any such expenditure,
such certificate shall specify the details, including the
date and amount thereof.
Section 6.14. No Working Capital.
Substantially all of the proceeds from the sale of
the City Note, exclusive of Costs of Issuance and other
expenses, and other amounts which the Company does not
receive, will be expended to pay the cost of acquisition and
construction of the Project; and the proceeds of the Loan
will be used only for payment of such costs, and will not be
used to provide working capital for the Company.
Section 6.15. Tax Treatment of Project.
The Project constitutes and will constitute either
(i) land or (ii) property of a character subject to the
allowance for depreciation under Section 167 of the Code.
All amounts to be paid by or for the account of the Company
from proceeds of the Loan will be, for Federal income tax
purposes, chargeable to the Project's capital account or
would be so chargeable either with a proper election by the
Company (for example under Section 266 of the Code) or but
for a proper election by the Company to deduct such amounts.
The proceeds of the Loan will be used only for paymen't of
such Costs, and will not be used to provide working capital
for the Company.
Section 6.16. Not To Make the city Note
Taxable.
The Company will not take, or permit to be taken,
any action, or make or permit to be made any change in the
Project, which would have the effect, directly or indi-
rectly, of SUbjecting interest on the City Note to Federal
income taxation.
Section 6.17. Operation of Project.
The Company intends to operate the Project, or
cause the Project to be operated, as a "project," within the
meaning of Ordinance No. 3815, until the date on which the
4t208(tp)
10/6/81
39
San Bernardino
(Langston-Newby)
60,009-8-3
City Note and the Company Note have been retired and are no
longer outstanding.
Section 6.18. No Conflict of Interest.
Neither the Company, any entity or person consti-
tuting the Company, nor any officer or employee of the
foregoing has a Conflict of Interest in connection with the
Project.
4t208(tp)
10/9/81
40
San Bernardino
(Langston-N.ewby)
60,009-8-1
ARTICLE 7
CONDITIONS OF LENDING
The City's obligation to lend hereunder is subject
to the follo"ring conditions precedent:
Section 7.01. Opinion of Counsel for Company.
As of the date of delivery of the City Note, the
City and the Bank shall have received the opinion of counsel
for Company, dated the date of such execution, addressed to
the City and the Bank satisfactory in form and substance to
Bond Counsel,
(a) confirming the representations and
warranties set forth in Sections 6.01, 6.02, 6.04, 6.07
and 6.08 hereof (which in the case of Sections 6.02(b),
6.02(c), 6.04 and 6.08 may be to the best knowledge of
such counsel); and
(b) to the effect that
(i) the Project Agreement has been
duly executed and delivered by Company and consti-
tutes the valid and binding obligation of Company
enforceable in accordance with its terms;
(ii) the Company Note, the Deed of
Trust and the Assignment of Leases, Rents and
Profits have been duly executed and when delivered
in accordance with the provisions hereof will
constitute valid and binding obligations in accor-
dance with their respective terms; and
(iii) to the best knowledge of such
counsel substantially all of the proceeds of the
Loan will be used for the permanent financing of
the costs incurred in connection with the acquisi-
tion, construction or improvement of land or
property subject to the allowance for depreciation
under Section 167 of the Internal Revenue Code.
#208(tp)
1 0/6/S 1
41
San Be+nardjno
(Langston-Newby)
60,009-8-1
Section 7.02. Opinion of Bond Counsel.
The City shall have received an opinion from Bond
Counsel, that interest on the City Note is exempt from
Federal income taxes and from personal income taxes imposed
by the State of California and that the City Note has been
duly authorized and issued under the provisions of Ordi-
nance No. 3815.
Section 7.03. Other Documents, etc.
Prior to the funding of the Loan pursuant to
Section 4.02, the Bank shall have received the executed
Company Note and such supporting certificates and documents
as may be requested by the Bank, the Deed of Trust and the
Assignment of Leases, Rents and Profits together with evidence
that such documents have been recorded in the office of the
County Recorder and legal matters in connection with making
the Loan shall be satisfactory to the Bank, the City and
Bond Counsel.
#208(tp)
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42
San Bernard~no
(Langston-Newby)
60,009-8-1
ARTICLE 8
COVENANTS
Company covenants and agrees, so long as the
Company Note is outstanding, as follows:
Section 8.01. Payment of Secured Obligations.
To pay when due the principal of, and the interest
on, the indebtedness evidenced by the Company Note, charges,
fees and all other sums as provided in the Projec't Agreement
and the Deed of Trust; and the principal of, and interest
on, any future advances secured by the Deed of Trust.
Section 8.02. Preservation and Defense of Property.
To keep the Project in good order and good operating
condition: to make or cause to be made, as and when necessary,
all repairs, renewals and replacements, structural and non-
structural, exterior and interior, ordinary and extraordinary,
foreseen and unforeseen; not to remove, demolish or substan-
tially alter or permit the removal, demolition or substantial
alteration (except such alterations as may be required by
laws, ordinances or regulations) any of the improvements on
the Project and the Site; to complete promptly and in good
and workmanlike manner any improvement which may be damaged,
removed, substantially altered or destroyed thereon, and to
pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws, ordinances,
regulations, covenants, conditions and restrictions now or
hereafter affecting the Project or the site or any part
thereof or requiring any alterations or improvements; not to
commit or permit any waste or deterioration of the Project
or the Site; to keep and maintain abutting grounds, sidewalks,
roads, parking and landscaped areas over which Company has
control in good and neat order and repair; to comply with
the provisions of any lease of all or any part of the Project
or the Site; not to knowingly commit, suffer or permit any
act to be done in or upon the Project or the site in violation
of any law, ordinance or regulation; not to permit the
Project or the Site to become vacant or deserted. This
section 8.02 is subject to Section 5.03.
Company will appear in and contest any action or
proceeding purporting to affect the city's interest in the
#208(tp)
10/6/81
43
San Bernarqino
(Langston-Newby)
60,009-8-1
Project or the Site as set forth in this Project Agreement
or the rights or powers of the City or its assigns and to
pay all costs and expenses, including reasonable attorney's
fees, in any such action or proceeding in which the City may
appear.
Section 8.03. General Provisions Concernin~
Insurance.
All policies of insurance issued pursuant to
Section 8.04 hereof shall be so written or endorsed as to
make losses, if any, payable to the City, Company and the
Bank as their respective interests may appear and duplicate copies
of any such policy and evidence of renewal or replacement
thereof shall be promptly furnished to the city and the
Bank, upon their request, for their records. All such
policies of insurance shall contain an endorsement or agree-
ment by the insurer that any loss shall be payable in accord-
ance with the terms of such policy notwithstanding any act
or negligence of Company which might otherwise result in
forfeiture of such insurance and the further agreement of
the insurer waiving all rights of set off, counterclaim or
deductions against Company. All such policies shall not be
subject to contribution by the City or the Bank.
All such policies, including policies for any
amounts carried in excess of the required minimum and policies
not specifically required by the Bank shall be in form
satisfactory to the City, shall be maintained in full force
and effect and shall be assigned and delivered to the Bank,
with premiums prepaid, as collateral security for payment of
the Loan. If the insurance, or any part thereof, shall
expire, or be withdrawn, or become void or unsafe by reason
of Company's breach of any condition thereof, or become void
or unsafe by reason of the failure or impairment of the
capital of any company in which the insurance may then be
carried, or if for any reason whatever the insurance shall
be unsatisfactory to the Bank, Company shall place new
insurance on the Project, satisfactory to the Bank.
In the event Company fails to provide, maintain,
keep in force or deliver and furnish to the City and the
Bank the policies of insurance required by this Project
Agreement, the Bank may procure such insurance or single-
interest insurance for such risks covering its interest, and
Company will pay all premiums thereon promptly upon demand
by the Bank and until such payment is made by Company the
amount of all such premiums, together with interest thereon
#208(tp)
10/6/81
44
San Bernardino
(Langston-Newby)
60,009-8-1
at a rate which shall be equal to the rate specified in the
Company Note, shall be secured by the Mortgage.
In the event of foreclosure of the Deed of Trust
or delivery of a deed in lieu of foreclosure or assignment
of the Project in extinguishment, in whole or in part of the
Loan, all right, title and interest of Company in and to all
policies of insurance required by the Project Agreement
shall inure to the benefit of and pass to the successor in
interest to Company or the purchaser or grantee of the
Project.
Section 8.04. Insurance Required.
(a) Company agrees to provide the following
insurance coverages:
(i) Hazard and Liability Insurance;
(ii) Company shall supply boiler and
machinery insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping, heating,
air conditioning and elevator equipment and escala-
tor equipment, provided the Project contains
equipment of such nature, and insurance against
loss of occupancy or use arising from any such
breakdown, in such amounts as are reasonably
satisfactory to the city;
(iii) Company further agrees to procure
and deliver to the City policies of title insurance
required under Section 4.02(a)(3) issued by a
company licensed by the State;
(iv) At all times during the term of
this Project Agreement Company shall comply with
the laws of the State relating to workmen's
compensation with respect to the Project;
(b) Company will have delivered on or prior
to the date of funding of the Loan pursuant to
Section 4.02 insurance certificates evidencing proof
of coverages as indicated above;
(c) such insurance coverage may be effected
under overall blanket or excess coverage policies of
Company but all policies required hereunder shall name
the City and the Bank as additional insureds and shall
#208(tp)
10/6/81
45
San BeJ;nard,ino
(Langston-Newby)
60,009-8-1
contain a standard mortgage clause in favor of the Bank
on behalf of the city, not subject to contribution, and
lender's loss payable endorsement for the benefit of
the Bank in behalf of the City. Company shall furnish
to the Bank a signed duplicate original policy with
respect to all required insurance. If a blanket or
excess coverage policy is utilized, then Company shall
furnish to the Bank a signed certificate of insurance
for each policy setting for~1 the coverage, the limits
of liability, the name of the carrier, the policy
number, and the expiration date.
In the event of loss of or damage to the Project,
the net proceeds of any insurance provided hereunder shall
be applied as set forth in Article V of the Project Agreement
and the Resolution of Issuance; in the event of a public
liability occurrence, the net proceeds of any insurance
provided hereunder shall be applied toward extinguishment or
satisfac'tion of such liability.
Each insurance policy maintained pursuant to this
Section shall contain a provision that such policy shall not
be cancelled or amended in any material manner unless the
Bank and the city are notified at least thirty (30) days
prior to such cancellation or amendment and at least ten
(10) days prior to the expiration of any such policy Company
shall furnish evidence satisfactory to the Bank and the city
that such policy has been renewed or replaced or is no
longer required by the Project Agreement.
Section 8.05. Payment of Taxes, etc.
Company will pay and discharge promptly all State
and Federal taxes, assessments and governmental charges or
levies imposed upon it in connection with the Project or in
respect of any of its property and assets used in connection
with the Project before the same shall become in default,
including, but not limited to, all taxes to which Company
and any company, corporation, joint stock association or
limited partnership, in which the Project shall hereafter
vest, may be liable under the laws of the United states of
America, the State both present and future, which under the
provisions of such laws may be or become a lien upon the
Project and the Site, as well as all other charges or claims
of every kind and nature which may be or becor,le a prior lien
upon the Project, or which may be or become first distribu-
table or allowable or payable, before the indebtedness
secured hereby, out of the proceeds of any judicial sale of
#208(tp)
10/6/81
46
San Bernardino
(Langston-N'ewby)
60,009-8-1
the Project, except such that are contested by Company in
accordance with this Section.
Company shall keep in effect its existence and
rights as a partnership under the laws of the State and its
rights to own property and transact business in the State
during the entire time that it has any ownership interest in
the Project.
Company shall have the right if proceedings are
stayed or suspended and no increased chance of loss occurs
therefrom to contest or object to the amount or validity of
any such imposition set forth above in good faith and by
appropriate legal proceedings, but this shall not be deemed
or construed in any way as relieving, modifying or extending
Company's obligation to pay any such imposition at the time
such contest, objection and legal proceedings have been
terminated or discontinued adversely to Company, and further
provided that, during the pendency of such contest, objection
and legal proceedings, (i) Company is not in default under
the Company Note, the Mortgage or no Event of Default exists
under Section 9.01; (ii) Company has given prior written
notice to the City of its intent to so contest or object to
any imposition; and (iii) Company, at the City's option,
shall (A) demonstrate, from time to time, to the city's
satisfaction, that the legal proceedings undertaken by
Company shall conclusively operate to accomplish a stay of
any proceedings which may be instituted to enforce payment
of any such imposition and prevent the sale of the Project
or any part thereof to satisfy such imposition; and/or (B)
Company shall furnish a good and sufficient bond or sure'ty
or maintain adequate reserves on the books of Company for
the payment of such imposition and any interest and penalties
accruing thereon satisfactory to the City.
Company will pay and promptly discharge, at its
cost and expense, all other liens, encumbrances and charges
upon the Project, or any part thereof or interest therein;
provided that Company shall have the right to contest in
good faith the validity of any such lien, encumbrance or
charge; provided, however, that if any such lien, encumbrance
or charge has or may have priority over the lien of the
Mortgage, then Company shall first deposit with the City a
bond or other security satisfactory to the City in such
amounts as the City shall reasonably require; and further
provided that Company shall thereafter diligently proceed to
cause such lien, encumbrance or charge to be removed and
discharged. If Company shall fail to pay and promptly
#208(tp)
10/6/81
47
San Bernardino
(Langston-Newby)
60,009-8-1
discharge any such lien, encumbrance or charge, then, in
addition to any other right or remedy of the City, the city
may, but shall not be obligated to, discharge the same,
either by paying the amount claimed to be due, or by procur-
ing the discharge of such lien by depositing in court a bond
or the amount claimed or otherwise giving security for such
claim, or in such manner as is or may be prescribed by law,
and all expenditures and expenses incurred by the city in so
doing shall be recoverable from Company upon the terms set
forth in Article 9 and shall be deemed advances secured by
the lien of the Deed of Trust.
Section 8.06. Payment of Utilities.
Company will pay when due all utility charges
which are incurred for the benefit of the Project or which
may become a charge or lien against the Project for gas,
electricity, water or sewer services furnished to the Project
and all other assessments or charges of a similar nature,
whether public or private, affecting the Project or any
portion thereof, whether or not such taxes, assessments or
charges are liens thereon.
Section 8.07. Concerning the Project.
(a) Company shall devote the Project to
commercial uses as set forth in its Application;
(b) there shall be no discrimination against
or segregation of any person, or group of persons, on
account of sex, race, marital status, color, age,
creed, handicap, national origin or ancestry on the
enjoyment of the site, nor shall Company or any person
claiming under or through them establish or permit any
such practice or practices of discrimination or segrega-
tion with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Project or any portion
thereof.
Section 8.08. Compliance with Code.
Company shall at all times use its best efforts to
do and perform all acts and things reasonably necessary or
desirable in order to assure that interest paid on the City
Note shall, for the purposes of Federal income taxation, be
excludable from the gross income of the recipients thereof
and exempt from such taxation, except in the event that such
#208(tp)
10/6/81
48
San Bel:nard-ino
(Langston-Newby)
60,009-8-1
recipient is a "substantial user" or "related person" within
the meaning of Section 103 of the Internal Revenue Code.
For so long as the $10,000,000 limitation on bond
issuance and capital expenditures as presently contained in
Section 103 of the Internal Revenue Code is effective with
respect to the City Note, Company hereby further covenants
forthe benefit of the holders of the City Note that at no
time during the period beginning on the date of issuance of
the City Note and ending three (3) years after such date of
issuance will the aggregate total amount of the items listed
in Section 6.14 of this Agreement exceed a total of
$10,000,000. The extent of Company's liability with respect
to this Section shall be as set forth in Section 3.03 hereof.
Should the $10,000,000 limitation on bond issuance
and capital expenditures be increased during the applicable
six-year period, Company covenants not to exceed such limita-
tion contained in Section 103 of the Internal Revenue Code,
as amended; provided, that the $10,000,000 limitation as
herein above provided shall not be exceeded without obtaining
the opinion of Bond Counsel that interest on the City Note
will continue to be exempt from Federal income taxes.
Company shall cause all Principal Users of the
Project to file a copy of the statement filed by the City
pursuant to Treas. Reg. Section 1.103-10(b)(2)(vi)(a) with
regard to the issuance of the City Note with the district
director or the director of the regional service center with
whom each of the respective Principal Users is required to
file its income tax returns (as provided in Section 6091
of the Code) for the taxable year during which the City
filed the above statement.
Company shall also cause each Principal User to
file a supplemental statement which lists by date and amount
any subsequent Section 103(b)(6)(D) capital expenditures.
Such supplemental statement must be filed with the district
director or director of the regional service center with
whom each Principal User's income tax return is required to
be filed (as prescribed in Section 6091 of the Internal
Revenue Code) on the due date prescribed for filing such
returns (without regard to any extensions of time). A copy
of such supplemental statement shall be filed with the Bank
on the same date on which it is filed with the Internal
Revenue Service.
#208(tp)
10/6/81
49
San Bernardino
(Langston-Newby)
60,009-8-1
Company shall not permit at any time or times any
of the proceeds of the City Notes or other of their funds to
be used, directly or indirectly, to acquire any asset or
obligation the acquisition of which would cause the City
Notes to be "arbitrage bonds" for the purposes of
Section l03(c)(2) of the Internal Revenue Code.
Section 8.09. Compliance with Applicable Laws.
All work performed in connection with the Project
shall be performed in strict compliance with all applicable
federal, state, county and municipal laws, ordinances, rules
and regulations now in force or that may be enacted hereafter.
The existing improvements at the Project and the operation
of the Project shall also comply with all applicable federal,
state, county or municipal laws, ordinances, rules and
regulations.
Section 8.10. Financial Statements.
Company shall furnish the Bank, or cause to be
furnished to the Bank, annual financial and operating state-
ments of Company and each general partner individually and
with respect to the Project (within one hundred twenty (120)
days of the close of their fiscal year) prepared by a certi-
fied public accountant reasonably satisfactory to the City
and the Bank. Company agrees to make its books and records
relating to the Project available for inspection by the City
or the Bank, upon request at any reasonable time.
Section 8.11. Mergers, etc.
Company will not sell, assign, distribute or
otherwise transfer any interest in the partnership or sell,
assign, lease or otherwise dispose of (whether in one trans-
action or in a series of transactions) all or substantially
all of their assets (whether now owned or hereafter acquired)
including but not limited to the Project to any person,
unless specifically consented to by the Bank, in writing, in
advance which consent shall not be unreasonably withheld.
Section 8.12. Indemnification.
Company agrees to indemnify and hold harmless the
City, the Bank, any member, officer, official, employee, and
attorney, of the City, the City or the Bank against any and
all losses, claims, damages or liabilities caused by any
untrue statement of a material fact contained in its
:ft208(tp)
10/6/81
50
San BeTnard.:ino
(Langston-Newby)
60,009-8-1
Application or other information submitted to the City or to
the Bank by Company with respect to the issuance and sale of
the city Note and the funding of the Loan or caused by any
omission of any material fact necessary to be stated therein
in order to make such statements to the city or the Bank not
misleading or incomplete.
If the City or the Bank is made a party defendant
to any litigation the subject matter of which is the Loan,
the Project or any part thereof or any interest therein, or
the occupancy of the Project by Company, then Company shall
indemnify, defend and hold the city or the Bank harmless
from all liability by reason of such litigation, including
reasonable attorneys' fees and expenses incurred by the City
or the Bank in any such litigation, whether or not any such
litigation is prosecuted to jUdgment.
If any party to this Project Agreement comn\ences
an action against any other party to enforce any of the
terms hereof or because of the breach of any of the terms
hereof, or for the recovery of any sum secured hereby, the
prevailing party shall pay to the other parties reasonable
attorneys' fees and expenses, and the right to such attorneys'
fees and expenses shall be deemed to have accrued on the
commencement of such action, and shall be enforceable whether
or not such action is prosecuted to judgment.
If any party shall breach any term of this Project
Agreement or the Deed of Trust, the other parties may employ
an attorney or attorneys to protect their rights, and in the
event of such employment following any breach, the breaching
party shall reimburse the other parties for any reasonable
attorneys' fees and expenses incurred by the non-breaching
party, whether or not an action is actually commenced by
reason of such breach.
Section 8.13. Certificate of No Default.
Company agrees to deliver to the Bank as part of
the armual audit report required by Section 8.10, a certifi-
cate of a representative of Company to the effect that it is
not aware of any condition, event or act which constitutes
an Event of Default (as hereinafter defined), or which, with
notice or lapse of time, or both, would constitute such
Event of Default, or if any such condition, event or act
exists, specifying the same. Company further agrees to
notify the Bank as soon as possible after it becomes aware
of an occurrence of an Event of Default or any condition,
#208(tp)
10/6/81
51
San Bernard~no
(Langston-Newby)
60,009-8-1
event or act which, with notice or lapse of time, or both,
would constitute such Event of Default and the action which
Company proposes to take with respect thereto.
Section 8.14. Inspection of the Project. Company
agrees that the City and Bank and their duly authorized
agents shall have the right at all reasonable times to enter
upon and to examine and inspect the Project.
Section 8.15. Indebtedness of Company.
Company shall not permit any lien on the Project
other than the Loan or Permitted Encumbrances.
Company shall not directly or indirectly incur,
assume, guarantee, or otherwise become or be liable with
respect to any indebtedness for borrowed money incurred in
connection with the Project. No secondary financing shall
be permitted in connection with the Project.
Section 8.16. Duties in Case of Breach of
Covenant.
In the event that Company becomes aware of the
breach of any covenant of Company pursuant to this Article,
Company shall promptly provide written notice of such breach
to the City and the Bank.
section 8.17~ Pursuit of Remedies.
Company shall diligently pursue all rights and
r~nedies they have against any contractor or sub-contractor
in their employ of the Project or the security as set forth
in Section 3.04 of this Project Agreement.
#208(tp)
10/6/81
52
San Be~nardino
(Langston-Newby)
60,009-8-1
ARTICLE 9
DEFAULTS AND REMEDIES
section 9.01. Event of Default.
Anyone or more of the following events, shall
constitute an Event of Default hereunder:
(a) if any representation or warranty made
herein or in any closing certificate, the Purchase
Contract, financial statement, material report, material
certificate furnished by Company in connection with the
Project Agreement shall prove to be false or misleading
in any material respect;
(b) default in the payment of any installment
of the principal or interest on the Company Note or any
other sum when due under the Loan;
(c) breach of or default in the due observance
or performance of any covenant, condition or agreement
on the part of Company to be observed or performed
pursuant to the terms hereof and such default shall
continue unremedied for thirty (30) days after notice
thereof given by the Bank pursuant to Section 10.01
specifying such default and requesting that it be
remedied, provided that if such default is of such
nature that it can be remedied, but not within said
thirty (30) days, such default shall not constitute an
Event of Default so long as Company institutes prompt
corrective action; such default, however, must be cured
within six (6) months;
(d) default in the due observance or perform-
ance of any covenant, condition or agreement on the
part of Company to be observed or performed pursuant to
the terms of the Purchase Contract, Company Note or
Deed of Trust, other than the payment of principal and
interest which shall be governed by (b) above, and such
default shall continue unremedied for thirty (30) days
after notice thereof given by the Bank pursuant to
Section 10.01 specifying such default and requesting
that it be remedied, provided that if such default is
of such nature that it can be remedied, but not within
said thirty (30) days, such default shall not constitute
#208(tp)
10/6/81
53
San BeLnardiino
(Langston-Newby)
60,009-8-1
an Event of Default so long as Company institutes
prompt corrective action; such default, however, must
be cured within six (6) months;
(e) Company (as used in this Sectio "Company"
includes any general partner or any subsequent owner of
the Project if Company sells or transfers the Project
as herein provided) shall have applied for or consented
to the appointment of a custodian, receiver, trustee or
liquidator of all or a substantial part of their assets;
a custodian shall have been appointed with or without
consent of Company; shall have made a general assignment
for the benefit of creditors or have filed a voluntary
petition in bankruptcy, or shall have filed a petition
or an answer seeking reorganization or an arrangement
with creditors, or taken advantage of any insolvency
law, or shall have submitted an answer a.dmitting the
material allegations of a petition in bankruptcy,
reorganization or insolvency proceeding or a petition
in bankruptcy shall have been filed against Company and
shall not have been dismissed for a period of sixty
(60) consecutive days, or if an order for relief has
been entered under the Bankruptcy Code, or an Order,
jUdgment or decree shall have been entered, WitllOUt the
application, approval or consent of Company by any
court of competent jurisdiction approving a petition
seeking reorganization of Company, or appointing a
receiver, trustee, custodian or liquidator of Company,
or for a substantial part of any of its assets and such
order, judgment or decree shall continue unstayed for
any period of forty-five (45) consecutive days; or if
Company shall have suspended the transaction of its
usual business related to the management and operation
of the Project;
(f) a writ of execution or attachment or any
similar process shall be issued or levied against all
or any part of or interest in the Project, or any
judgment involving monetary damages shall be entered
against Company which shall become a lien on the Project
or any portion thereof or interest therein and an
appeal is not taken and actively prosecuted on such
judgment within sixty (60) days of its entry, or such
execution, attachment or similar process is not released,
bonded, satisfied, vacated or stayed within sixty (60)
days after its entry or levy.
#208(tp)
10/6/81
54
San Bernardino
(Langston-Newby)
60,009-8-1
section 9.02. Remedies.
(a) Upon the occurrence of an Event of
Default, and at any time thereafter during the continu-
ance of such Event of Default the City or the Bank on
behalf of the city may take one or more of the following
rights and remedies which shall be in addition to and
not in limitation of any other right or remedy which
may be available to the City or the Bank (whether
pursuant to agreement or by operation of law) including
but not limited to, the rights and remedies of a secured
party under the Uniform Commercial Code of the state:
(1) The City or the Bank may declare
all .amounts payable hereunder and pursuant to the
Company Note to be immediately due and payable
with applicable premiums, whereupon the same shall
become immediately due and payable to the Bank for
deposit in the Redemption Fund;
(2) The city or the Bank may cause any
or all of the Project to be sold under the power
of sale granted by the Deed of Trust in any manner
permitted by applicable law;
(3) The City or the Bank may take
whatever action or proceeding that may appear
necessary or desirable to enforce or implement the
provisions of the Assignment of Leases, Rents and
Profits; and
(4) The city or the Bank may exercise
any other right or remedy available under this
Agreement;
(b) in the event that the Company fails to
make any payment required hereby, the payment so in
default shall continue as an obligation of the Company,
subject to the provisions of Section 3.02 hereof, until
the amount in default shall have been fully paid;
(c) notwithstanding the foregoing, unless
and until the City or the Bank shall have commenced
proceedings to foreclose its interest in the Project:
(1) The Company may, at any time, pay
all accrued unpaid amounts plus applicable premiums
(exclusive of any such amounts accrued solely by
#208(tp)
10/6/81
55
San Bernardino
(Langston-Nelvby)
60,009-8-1
virtue of acceleration of the due date of the
Company Note) and fully cure all defaults;
(2) In such event, this Agreement shall
be fully reinstated, as if it had never been
terminated, and the Company shall be accordingly
restored to the use and possession of the Project;
and
(d) nothing contained in this section shall
be deemed to prevent the Company from seeking legal or
equitable relief if it disputes the existence of an
Event of Default.
Section 9.03. No Remedy Exclusive.
No remedy herein or in the Mortgage conferred or
reserved to the city is intended to be exclusive of any
other remedy or remedies herein or by law provided or permit-
ted, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under the
Project Agreement and the Company Note or Deed of Trust or
now or hereafter existing at law or in equity or by statute.
Every power or remedy given by any of the instruments set
forth in Section 3.04 to the City or to which it may be
otherwise entitled, may be exercised separately, successively,
concurrently or independently, from 'time to time and as
often as it may be deemed expedient by the City or the Bank
on behalf of the City and the City or the Bank on behalf of
the city may pursue inconsistent remedies. No delay or
omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may
be deemed expedient. Any failure by the city to insist upon
strict performance by Company of any of the terms and provi-
sions of the Project Agreement or of the Company Note or
Deed of Trust shall not be deemed to be a waiver of any of
the terms or provisions thereof, and the City or the Bank on
behalf of the City shall have the right thereafter to insist
upon strict performance by Company of any and all of them.
In order to entitle the Company or the Bank on behalf of the
City to exercise any remedy reserved to it in this Article,
it shall not be necessary to give notice, other than such
notice as may be required in this Article or by law. Such
rights and remedies as are given the city or the Bank on
tt208(tp)
10/6/81
56
San Bernardino
(Langston-Newby)
60,009-8-1
behalf of the City hereunder shall also extend to the Bank,
and the Bank shall be entitled to the benefit of all cove-
nants and agreements herein contained and may without any
prior comment of the City or the Bank on behalf of the city,
proceed to seek any remedy provided for herein.
Section 9.04. Agreement to Pay Attorneys' Fees
and Expenses.
In the event Company should default under any of
the provisions of the Project Agreement and either the city,
the Bank or the holders of the City Note shall require and
employ attorneys or incur other expenses of the nature set
forth in Section 9.02 or for the collection of payments due
or to become due or for the enforcement or performance or
observance of any obligation or agreement on the part of
Company herein contained or to preserve the Project or to
preserve the priority of the Company Note and Deed of Trust
or to defend any suit involving the Project including bank-
ruptcy proceedings or in preparution for the commencement or
defense of any proceeding or threatened suit or proceeding,
all of said fees and expenses shall be added to the indebted-
ness of the Loan and shall be secured by the Deed of Trust
and other security for the Loan provided for herein, Company
agree that they will, on demand therefor, pay to the Agency,
the Trustee or the holders of the city Note the reasonable
fees of such attorneys, such expenses as set forth in the
Project Agreement, the Company Note and Deed of Trust and
other expenses so incurred by the Agency, the Trustee or the
holders of the Ci,ty Note.
Section 9.05. No Additional Waiver Implied
By One Waiver.
In the event any agreement contained in the Project
Agreement should be breached by any party and thereafter
waived by any party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive
any other breach hereunder.
section 9.06. Repayment after Acceleration.
Upon the acceleration of the Company Note, a
tender of payment of the amount necessary to satisfy the
entire indebtedness secured hereby made at any time prior to
foreclosure sale by the city, its successors, or assigns or
by anyone in behalf of the City, its successors or assigns,
shall, to the extent permitted by law, constitute an evasion
of the prepayment terms contained in Section 3.06 of the
Project Agreement and be deemed to be a voluntary prepayment
thereunder, and the City shall not be obligated to accept
#208(tp)
10/6/81
57
San Be:r;nard;ino
(Langston-Newby)
60,009-8-1
any such tender of payment unless such tender of payment
includes the additional applicable prepayment fee required
by Section 3.03 then outstanding principal balance of the
indebtedness evidenced by the Company Note together with any
and all other sums then owing to the City and the Bank
hereunder or under the Company Note and Deed of Trust.
#208(tp)
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58
San Bernardino
(Langston-Newby)
60,009-8-1
ARTICLE 10
MISCELLANEOUS
section 10.01. Notices.
All notices, certificates, requests or other com-
munications between the City, the Company and the Purchaser
required to be given hereunder or under the Resolution of
Issuance shall be sufficiently given and shall be deemed
given when mailed by certified mail, return receipt requested,
postage prepaid, on the fifteenth Business Day after the day
on which mailed, addressed as follows: if to the City, at
its then current letterhead address, Attention: city Clerk;
if to the Company, at its then current letterhead address,
Attention: the Authorized Company Representative; if to the
Bank, at its then current letterhead address of its principal
office in Los Angeles, California, Attention: Investment
Department. A copy of each notice, certificate, request
or other communication given hereunder to either the City,
the Company or the Purchaser shall also be given to the
others, and copies of all such notices shall be given to
Bond Counsel. The City, the Company and the Purchaser may,
by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests
or other communications shall be sent.
Section 10.02
Effect of Agreement.
This Project Agreement shall inure to the benefit
of and shall be binding upon the City, the Company, the Bank
and their respective successors and assigns, subject to the
limitation that any obligation of the city created by or
arising out of this Project Agreement shall be a limited
obligation of the City, payable solely out of the Revenues
of the City derived from the Project Agreement and the other
funds held or set aside in trust under the Resolution of
Issuance and shall not constitute a pledge of the faith and
credit of the City or an indebtedness or a charge against
the general credit of the city or the general credit or
taxing powers of the City of San Bernardino or the State of
California or any political subdivision thereof within the
meaning of any constitutional or statutory provision of the
State of California whatsoever.
#208(tp)
10/6/81
59
San Bernardino
(Langston-Newby)
60,009-8-1
Section 10.03. Amendment.
This Project Agreement may be amended in any
respect but only by written agreement of the parties hereto
and, if any Bonds remain outstanding at the time of such
amendment, subject to the limitations on such amendments set
forth in the Resolution of Issuance.
Section 10.04. Counteroarts.
This Project Agreement may be executed in any
number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Project Agreement.
Section 10.05. Severability of Provisions.
If any clause, provision or section of this Project
Agreement shall be held illegal or invalid by any court, the
invalidity of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections
hereof, and this Project Agreement shall be construed and
enforced to the end that the transactions contemplated
hereby be effected and the obligations contemplated hereby
be enforced, as if such illegal or invalid clause, provision
or section had not been contained herein. In case any
agreement or obligation contained in this Project Agreement
shall be held to be in violation of law, then such agreement
or obligation shall be deemed to be the agreement or obliga-
tion of the city, the Company or the Purchaser, as the case
may be, to the full extent permitted by law.
Section 10.06. Liability of City.
Notwithstanding any provision in this Project
Agreement to the contrary, this Project Agreement is subject
to the provisions of section 19 of Ordinance No. 3815 of
the City.
Section 10.07. Constructi.on.
The laws of the State of California shall govern
the construction of this Project Agreement.
#208(tp)
10/6/81
60
Executed as of the
ber, 1981.
Attest:
4;i f,(~!{,l,:t:f
CJ. y lerk
[ EAL)
[SEAL)
San Bel;nard;i.no
(Langston-Newby)
60,009-8-3
GCT 1 5 1981
day of Octo-
THE CITY OF SAN BERNARDINO
SAN BERNARDINO, CALIFORNIA
(the "City")
By
Signature]
Mayor
L. LANGSTON AND WILTON K.
a General Partnership
pan ")
By
General Pa r ,
By I;uL~ L
" General Partner (';:f/
-
IMPERIAL BANK
(the "Bank")
By /A-- ~
V
Title I)rc't
1/1..!fjSI,o~
By
Title
4t208(tp)
10/9/81
61
San Bel!nard.ino
(Langston-Newby)
60,009-B-1
ACKNOWLEDGI>lENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
On this Jljlh ~ay of .j4fo!Jer , in the year
1981, before me, I:J/:J-hf- j,. eck.. , a Notary
Public in and for the State 0 California, residing therein,
dulYn~ommissione~ and sworn, pefsonally appeare
{gl/;erl- L. Ltin n V/d- {.(): . w ,
known to me to be General Partner of the Rober L.
Langston and Wilton K. Newby General Partnership, the person
who executed the within instrument and acknowledged to me
that such be executed the same.
IN WITNESS WHEREOF, I have hereunto subscribed my
name and affixed my official seal in the County of San
Bernardino on the day and year in this certificate first
above written.
~!::l====l:l~ .
l ~~" OfHC1AlSG'Il
~; ,.g~:tl~l~ Kl\THY A. F;~C~(
~ ~ ..., .",..".t'~. NOT....lly f~ if" if . 0; 'FUfI, ;:'~
f ~:'\~ ,}~'.:-.':--,,'\;:,:}~ ll~~j'i~;:';_;;';~ ,~~:',:':;_<,;.:~'rr'( . ';, ?~
b:.,.~,,,",,,'~.'~1;~i.~~{~;J~~;~:;d::~
-~ d..-4~L
l'l'otary ublic in and for the
State of California
[NOTARIAL SEAL]
My Commission expires:
4fH' 30, /9BL-
#208(tp)
10/6/81
62
San BeJrnardino
(Langston-Newby)
60,009-8-1
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO)
1981, befo~~ ~~s /!ij;fliY J.f Letkr ,i~ ~h~oi=;;
Public in and for the sta e of California, residin therein, .~
uly F.?mmi9,sioned and s orn, pers,qnally aPPEiared 0 rf- L. L4hCJ<,ru/)~
.f ii/lie- 8. (J 1> ill-o,t. 1J(2wb tt cL g . eW/r(j
known to me to the General Partner f the Robert L. /
Langston and wilton K. Newby General Partnership, the person
who executed the within instrument and acknowledged to me
that such be executed the same.
IN WITNESS WHEREOF, I have hereunto subscribed my
name and affixed my official seal in the County of San
Bernardino on the day and year in this certificate first
above written.
J';'
OffiCtAlSEA.l
KATHY A BEG"
NOTA01Y PUBLIC . (.~"UFCrtt.l~^ t)
PR!hC!PAi.. OfP'.'l j~J r_'.!
l(f.> .G.;';G€U.:s I,.;L:Y,;:-y ~t
., ~J!~ Coml71i~!f}n Exp. A')I. j'j, J982~
~~~i'i~~,~~
Notary PUblic in and for the
State of California
[NOTARIAL SEAL]
My Commission expires:
4-ft'. 3D, /9 g l...-
#208(tp)
10/6/81
63
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO)
On this .t::L- day of Qc 1 ,~~, 1981, before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State aforesaid,
appeared in person the within named W. R. Holcomb and Lucy Martinez, Mayor and
Deputy City Clerk, respectively, of the City of San Bernardino, California, to me
personally known, who stated that they were duly authorized in their respective
capaCltJeS to execute the foregoing instrument for and in the name and behalf of
the City, and further stated and acknowledged that said Lucy Martinez executed
manually the within document and that said document was executed by facsimile
stamp by W. R. Holcomb, and that the document was delivered for consideration,
uses and purposes therein mentioned and set forth.
IN TESTIMONY THEREOF, I have hereunto set my hand and ottical seal this
~ day of Dc H--~ ,1981.
A.o..6: - .
>4c'-V--~--^-.,....L C A<'--V CkL
Notary Public
l ~";~' [ome", SEAL}
'''')~\; SANDRA A. BAXTER
~.,.,t:.,.I".i.;"'; NOT,"RI PUSlIC ' CALIFORNIA
:;:'....}/ ~;'.N [![i;i'~}l.Rul;jQ COUNTY
1._ ~~9om~~I~sj_~_~,~~YP_i_~~~~C. 7, 1981
"'~"""""-"~'-'''''___<'''-~ > . -,.,~..,'>-_>;:r-P"'<~
(SEAL)
My Commission Expires:
San Be:r:;;nardj.no
(Langston-Newby)
60,009-8-1
ACKNOWLEDGMENT
STATE OF CALIFORNIA
)
) ss.
)
COUNTY OF ORANGE
On this /Tj-/-fJ day of (}C!okr ,1981, befoI"e
me, a Notary Public duly commissioned, qualified and acting
within and for the state and C~~nty afor~s~id~~appeared
in person the wi thin-named !)1.DlI1tJi t2L!J /llroYJ and
, , respectively of Imperial
Bank, to me personally known, who stated that they were duly
authorized in their respective capacities to execute the
foregoing instrument for and in the name and behalf of the
Bank, and further stated and acknowledged that they had so
signed, executed and delivered the foregoing instrument for
the con.; i.deration, uses and purposes therein mentioned and
set fort.h.
and Offici;~ ;~;iI~O~ ~~~F, ~a~a~~ he(7~~t ~Yl~;~~
OfTICtAL SEAL
N~J~1~' ~Jfo~",A ,;i
PRINCIPAL QI'-fr.:, IN b~l
L~~ ANOHtS v.;u~rr ~n
1~ 1-'''1')':
M Commi'.i.,:lc.n Ex;,. ".p~_ co, 1j.,':
,'y ~~,.~o~.....
Notary Public
[SEAL]
My Commission expires: hr. -3& ,19&2-
#208(tp)
10/6/81
65
San Ber.nardj.no
(Langston-Newby)
60,009-8-2
EXHIBIT A
"COMPANY NOTE"
PROMISSORY NOTE SECURED BY DEED OF TRUST
From Robert L. Langston and wilton K. Newby,
a General Partnership to the City of San
Bernardino, California, a Municipal
Corporation
$1,130,000.00
, California
October
, 1981
FOR VALUE RECEIVED, ROBERT L. LANGSTON AND WILTON
K. NEWBY, a General Partnership (the "Company"), promises to
pay to Imperial Bank, a California Corporation (the "Bank"),
on behalf of the City of Commerce, California, a municipal
corporation (the "City"), at the address indicated below or
at such other location as the Bank shall designate in writ-
ing, or at such other place as the holder of this Promissory
Note ("Company Note") may from time to time designate, the
principal sum of one million one hundred thirty thousand
dollars ($1,130,000.00), or such lesser amount as is outstand-
ing hereunder, plus interest as computed below.
This Company Note will bear interest at a rate
equal to sixty-five percent (65%) of the Prime Rate (as that
Rate may change from time to time), plus four percent (4%)
per annum, until completion of construction by the Company
of a commercial office building located at 1255 East Highland
Avenue, San Bernardino, California, known as Langston-Newby
(the "Project"). Any change in the interest rate hereunder
shall become effective as of the date of any change in the
Prime Rate. Completion of construction shall occur when the
Certificate of Completion is issued by the Redevelopment
Agency of the City of San Bernardino for the entire Project.
Thereafter, this Company Note shall bear interest at a rate
equal to sixty-five (65%) of the Prime Rate, plus two percent
(2%) adjusted annually on the unpaid balance of this Company
#208(ph)
10/8/81
66
San Berpardino
(Langston-Newby)
60,009-8-2
Note for a period of ten (10) years following completion of
construction of the Project. In no event shall the interest
rate chargeable hereunder exceed twenty-one percent (21%) per
annum. The Bank shall notify the Company, as may be appropriate
from time to time, the amount of the Prime Rate and the
amount of the payments computed in accordance therewith.
Interest shall be payable on the outstanding
principal amount of the Company Note, calculated on a 360-day
basis from the date of funding of the Loan.
Payments of principal and interest shall be payable
interest only, on a quarterly basis, until completion of
construction of the Project, then, in approximately equal
monthly installments, based on an amortization period of
twenty-five (25) years after the completion of construction
of the Project, subject to periodic adjustments to reflect
the then current interest rate as herein provided. Payment
shall be made, on the first day of each quarter until
completion of construction, thereafter on the first day of
each month commencing on the first day of the month next
following the completion of construction. All payments
shall be in lawful money of the United States of America and
shall be applied first to interest and the remainder, if
any, on principal.
It is the intent of the City, the Bank and the
Company that payments on this Company Note shall be in an
amount sufficient to fully pay all payments of principal and
interest on the city Note. Payment on this Company Note
shall be deemed to constitute payment on the City Note
without further delivery by the City.
This Company Note is subject to all of the terms
and conditions contained in:
(I) that certain Project Agreement by and between
the City, the Company and the Bank, dated as of
October I, 1981, providing for the acquisition and con-
struction of the Project, which Project the proceeds of
this Company Note are intended to finance;
(2) the Deeds of Trust securing this Company
Note;
(3) the Resolution of Issuance, being Resolution
No. of the City, authorizing the issuance of the
City Note; and
#208(ph)
10/8/81
67
San Berilardino
(Langston-Newby)
60,009-8-2
(4) the Assignmen't of Leases, Rents and Profits
to the Project, executed, acknowledged and delivered on
or prior to the date of this Company Note by the under-
signed and/or the city;
to the same extent as if such documents were set forth in
full in this Company Note and the same, including the defi-
nitions therein, are hereby incorporated by this reference.
Without limiting the generality of the foregoing, the under-
signed agrees to pay the Additional Payments as provided in
the Project Agreement.
This Company Note is secured by Deeds of Trust on
the Project, and is also secured by the Assignment of
Leases, Rents and Profits on the Project and such other
security instrumen'ts as may be provided for in the Project
Agreement.
This Company Note may be prepaid at any time after
October , 1982, at the option of the undersigned in
whole or in part without the liability of premium or penalty.
This Company Note shall become immediately due and
payable prior to maturity without notice in the amount and
under the circumstances as provided in the Project Agree-
ment. The undersigned agrees to pay all costs of collection
when incurred, including but not limited to reasonable
attorneys' fees. If any suit or action is instituted to
enforce this Company Note, the undersigned promises to pay,
in addition to the costs and disbursements otherwise allowed
by law, such sum as the court may adjudge reasonable attor-
neys' fees in such suit or action.
In the Event of Default in payment of this indebt-
edness in full upon maturity, the interest rate thereafter
shall be increased to the then current Prime Rate plus two
percent (2%) on the unpaid balance, but in no event shall
interest exceed percent (~) per annum.
This Company Note is secured by Deeds of Trust to
Imperial Bank, which contain the following provision:
"No single or partial exercise of any power here-
under, or under any deed of trust, security agreement
or other agreement in connection herewith shall pre..
clude other or further exercises thereof or the exer-
cise of any other such power. The holder hereof shall
at all times have the right to proceed against any
portion of the security for this note in such order and
#208(ph)
10/8/81
68
San Bernardino
(Langsfon-N"ewby)
60,009-8-3
in such manner as such holder may consider appropriate,
without waiving any rights with respect to any of the
security. Any delay or omission on the part of the
holder hereof in exercising any right hereunder, or
under any deed of trust, security agreement or other
agreement, shall not operate as a waiver of such right,
or of any other right, under this note or any deed of
trust, security agreement or other agreement in connec-
tion herewith."
Any payment to be made under this Company Note
shall be made when due at the office of the Bank at:
Imperial Bank
9920 La Cienega Boulevard
Inglewood, California 90301
Attention: Municipal Government Finance
Department
This Company Note will be governed by California
law.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that
all acts, conditions and things required by the Constitution
and statutes of the state of California, the Ordinance, the
Proje~t Agreement and the Resolution of Issuance referred to
therein, to exist, to have happened and to have been per-
formed precedent to and in the issuance of this Company
Note, exist, have happened and have been performed in due
time, form and manner as required by law.
Notwithstanding anything contained to the con-
trary, neither Robert L. Langston and wilton K. Newby nor
the Company shall be personally liable under the terms of
the Loan or the Project Agreement after completion of con-
struction, and the city and the Bank agree to look solely to
the Project for the security for the performance of or the
Company's obligations.
4t208(tp)
10/9/81
69
.
"
San Bernardino
~ ~
(Langston-Newby)
60,009-8-3
When the identity of the undersigned makes it
appropriate, the singular shall include the plural and the
plural shall include the singular. \
. 0&1 1 ~ ,~U
Executed this OCT 15 19S1 day of
ROBERT L. LANGSTON AND
WILTON K. NEWBY, a General
partn~J~/~
By ~otr;r~~~enE;i:al Partner
By~~~t:~~
Partner-
BYo(~ W ~
Spouse of Wilton K. Newby
#208(ph)
10/14/81
70