no other funds are available (other than from Borrower’s general partners) or to compensate for reductions in other permanent financing sources. If at any time Borrower refinances the Permanent Loan, Borrower will apply the Net Proceeds of any such refinancing first to pay previously incurred Operating Expenses (as defined above) still owing, then fifty percent (50%) of the balance will be paid to the Authority to pay accrued interest on, and then reduce the principal amount of the LMIHAF Loan, the Measure S Loan, and the HOME Loan. b. If, there are Cost Savings with respect to the Project, the following will occur: (1) to the extent of fifty percent (50%) of the Cost Savings, any undisbursed amount of the Authority Loan plus any undisbursed capital contributions made by Borrower’s Investor Limited Partner will be released to the Authority as a payment of accrued interest on and then reduction of the principal amount of the Authority Loans; and (2) each Lender’s unfunded commitment will terminate. For purposes hereof, “Cost Savings”, shall mean the difference between the total sources of funds and the total cost of development as shown in the Borrower’s cost certification contained in Borrower’s application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”); provided, however, the Cost Savings will be adjusted to take into account (i) the loss of any equity investment due to an adjustment in the allowable tax credits; provided that the tax credit factor applied to the required equity contribution will be as set forth in Borrower’s limited partnership agreement; and (ii) any reduction in the first mortgage loan required by the Senior Loan Documents. The amount payable to Authority under this paragraph will be paid within sixty (60) days following submittal of the Tax Credit Report to the California Tax Credit Allocation Committee.
11. Prohibitions on Transfer.
a. Prior to the repayment in full of the HOME Loan and expiration of the Term of the HOME Regulatory Agreement, the Borrower must not, except for Permitted Transfers or as permitted by the Affordable Housing Agreement, assign or attempt to assign the Affordable Housing Agreement or this Note or any right therein or herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property (referred to hereinafter as a “Transfer”), without prior written approval of the Authority, except as expressly permitted by the Affordable Housing Agreement or this Note. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Authority shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 11, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Proposed transferees (other than an Affiliate of Borrower) must have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Authority, to fulfill Borrower’s obligations undertaken in the Affordable Housing Agreement, the HOME Regulatory Agreement , and this Note. A proposed transferee (including an Affiliate of Borrower), by instrument in writing satisfactory to the Authority and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the Authority must expressly assume all of Borrower’s obligations under the Affordable Housing Agreement, the HOME Regulatory Agreement, and this Note and agree to be subject to 235 of 422
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all conditions and restrictions applicable to Borrower. There must be submitted to the Authority for review all instruments and other legal documents proposed to affect any such transfer; and if approved by the Authority its approval will be indicated to Borrower in writing. If consent should be given, such transfer will be subject to this Section 11. c. In the absence of specific written agreement by the Authority , no unauthorized Transfer, or approval thereof by the Authority , will be deemed to relieve the Borrower or any other party from any obligations under the A ffordable Housing Agreement, the HOME Regulatory Agreement, or this Note.
d. In the event of a Transfer prior to the time the HOME Loan is paid in full without the prior written consent of the Authority, the remaining principal balance of the HOME Loan and all accrued but unpaid interest will be immediately due and payable. e. As used herein, “Transfer” means
i. the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project. ii. “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Borrower, or a conversion of Borrower to an entity form other than that of Borrower at the time of execution of the Affordable Housing Agreement, except that, a cumulative change in ownership interest of a general partner of Borrower of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Note.
12. The Authority will not unreasonably withhold, condition, or delay its approval of any matter for which its appr oval is required hereunder. The Authority’s disapproval will be in writing and contain the Authority’s reasons for disapproval.
13. The HOME Loan is funded from the Authority’s HOME Program Funds .
Accordingly, Borrower agrees for itself, its successors and assigns that the use of the property will be subject to the restrictions on rent and occupancy set forth in the HOME Regulatory Agreement.
14. Subject to the provisions and limitations of this Section 14, the obligation to repay the HOME Loan is a nonrecourse obligation of the Borrower. Borrower and each general partner or limited partner of Borrower will not have any personal liability for repayment of the loan, except as provided in this Section 14. The sole recourse of Authority will be the exercise of its rig hts against the Property and other security for the HOME Loan. Provided, however, that the foregoing will not (a) constitute a waiver of an obligation evidenced by this Note or the Authority Deed of Trust; (b) limit the right of the Authority to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Note and the Authority Deed of Trust or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment will be 236 of 422
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asked for or taken against Borrower; (c) release or impair this Note or the Authority Deed of Trust; (d) prevent or in any way hinder the Authority from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged Property or other instrument securing the Note or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder the Authority from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of , its remedies in respect of deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Note; (f) relieve Borrower of its obligations under an indemnity delivered by Borrower to Authority; or (g) affec t in any way the validity of a guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Note and the Authority Deed of Trust. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Borrower and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Borrower, its principals, shareholders, partne rs or its successors and assigns received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of this paragraph, Authority may recover directly from Borrower or from any other party (other than Borrower’s Investor Limited Partner):
a. damages, costs and expenses incurred by the Authority as a result of fraud or criminal act or acts of Borrower or a partner, shareholder, officer, director or employee of Borrower, or of a member or general or limite d partner of Borrower, or of a general or limited partner of such member or general or limited partner;
b. damages, costs and expenses incurred by Authority as a result of misappropriation of funds provided for the payment of Acquisition and Development Costs , as described in the A ffordable Housing Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; c. all amounts owing by Borrower pursuant to the indemnification regarding Hazardous Substances under the Environmental Indemnity, and d. all court costs and attorneys ’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Authority will pay Borrowe r’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in such enforcement or collection action).
15. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of an extension or extensions of the time of payment or of a due date under this Note, in 237 of 422
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whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by the holder hereof, in the enforcement of this Note, the Authority Deed of Trust or any term or provision of either thereof.
16. Upon the failure of Borrower to perform or observe a term or provision of this Note, or upon the occurrence of an event of default under the terms of the Authority Deed of Trust, the Affordable Housing Agreement, the HOME Regulatory Agreement, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, and after expiration of the applicable cure period, the holder may exercise its rights or remedies hereunder or thereunder.
17. Defaults and Remedies.
a. Subject to the extensions of time set forth in Section 18, and subject to the further provisions of this Secti on 17, failure or delay by Borrower to perform a material term or provision of this Note, the Authority Deed of Trust, the A ffordable Housing Agreement, the HOME Regulatory Agreement , or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. b. The Authority will give written notice of default to Borrower, specifying the default complained of by the Authority. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
c. Failures or delays by the Authority in asserting its rights and remedies as to a default will not operate as a waiver of default or of such rights or remedies. Delays by the Authority in asserting its rights and remedies will not deprive the Authority of its right to institute and maintain actions or proceedings which it may deem necessary to protect, assert, or enforce such rights or remedies.
d. If a monetary event of default occurs under the terms of this Note or the Authority Deed of Trust, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder the Authority will give Borrower, each general partner, and the Investor Limited Partner, concurrent written notice of such default. Borrower will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the Authority under this Note and the Authority Deed of Trust. In no event will the Authority be precluded from exercising remedies if its security becomes or is about to become materially impa ired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received.
e. If a non-monetary event of default occurs under the terms of the Affordable Housing Agreement, this Note, the Authority Deed of Trust, the HOME Regulatory Agreement , or a document implementing the A ffordable Housi ng Agreement or a deed of trust securing a Senior Loan or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder, the Authority will give Borrower, each general partner, and the 238 of 422
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Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Borrower will have such period to effect a cure prior to exercise of remedies by the Authority under the Affordable Housing Agreement, the HOME Regulatory Agreement, this Note and/or the Authority Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower ( i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Borrower will have such additional time as is reasonably necessary to cure the default prior to the Authority’s exercise of remedies. If Borrower fails to take corrective action or to cure the default within the time set forth above in this Subsection 17.e, the Authority will give Borrower, the Senior Lender, the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Borrower’ s partnership agreement, may take such corrective action, including removing and replacing a general partner. The Investor Limited Partner will have 45 days, or such longer period as is approved by the Authority Executive Director or designee, to remove and replace such general partner of Borrower. The Authority agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender , or Investor Limited Partner is precluded from curing a non - monetary default due to a bankruptcy, injunction, or similar proceeding by or against Borrower or a general partner, the Authority agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the Authority Executive Director or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will Authority be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonab ly approved by the Authority Executive Director or designee.
f. A notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; a notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Borrower; and a notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. Notices to the limited partner will be sent to the following address:
To Authority: HOUSING AUTHORITY OF
THE CITY OF GLENDALE
141 N. Glendale Avenue, Room 202,
Glendale, California 91206
Attention: Executive Director
Facsimile: 818-548-3724
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With a copy to: KANE, BALLMER & BERKMAN
515 S. Figueroa St., Suite 780
Los Angeles, California 90071-3301
Attention: Susan Apy
To Borrower: 900 E BROADWAY, L.P.
c/o Meta Housing Corporation
1150 W. Olympic Blvd., Suite 620
Los Angeles, California 90064
Attention: President
With a copy to:
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 90017
Attn: Michael A. Williamson, Esq.
Facsimile: (213) 630-5799
Matter No: B0965-0629
18. Notwithstanding specific provisions of this Note, Borrower will not be deemed to be in default for failure to perform a non-monetary obligation hereunder where delays or defaults are due to war, insurrection, strikes, lock- outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub- contractor or supplier, acts of the Authority or any other public or governmental Authority or entity, or any causes beyond 240 of 422
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the control or without the fault of the Borrower. An extension of time for any such cause (a “Force Majeure Delay”) will be for the period of the enforced delay and will commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the Authority within fifteen (15) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Delay unless and until Borrower delivers to the Authority written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Borrower will deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event. Times of performance under this Note may also be extended in writi ng by the Authority and Borrower , such revision approval may be denied by either party in its sole discretion.
19. If the rights created by this Note are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations must be completely performed and paid.
20. The Authority Deed of Trust securing this Note and all other HOME Loan Documents, except the HOME Regulatory Agreement, have been made subordinate and junior to the claims, liens or charges of the Construction Loan Deed of T rust and all other instruments securing the Construction Loan by that certain Subordination Agreement by and among Authority, Borrower and Construction Lender which is being recorded concurrently with the execution and delivery of this Note and the recordation of the Authority Deed of Trust and will also be subordinate and junior to the claims, liens or charges of the Permanent Loan Deed of Trust and all other instruments securing the Permanent Loan.
21. The Authority agrees that the lien of the Authority Deed of Trust will be subordinate to the extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Project; provided that such Extended Use Agreement, by its terms, must terminate upon foreclosure under the Authority Deed of Trust or upon a transfer of the Project by instrument in lieu of foreclosure or comparable conversion of the Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. The following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code. Borrower acknowledges and agrees that a default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Note and the Authority Deed of Trust and that all costs, damages or other amounts, including reasonable attorneys ’ fees incurred by the Authority as a result of an event of default by Borrower, and all amounts paid by Authority to cure a default under the Extended Use Agreement will be an obligation of Borrower and become a part of the debt evidenced by this Note and secured by the Authority Deed of Trust. 241 of 422
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22. With regard to an approval, consent , or other determination by the Authority required under this Note or the other HOME Loan Documents, the Authority will act reasonably and in good faith.
23. Borrower will have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, prepayment of the obligation evidenced by this Note prior to the expiration of the term of the HOME Regulatory Agreement will not entitle Borrower to a reconveyance of the Authority Deed of Trust.
24. This Note may be executed by each signatory on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF Borrower has executed this Note as of the day and year first set forth above.
BORROWER
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
By:___________________________
Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
By:___________________________
Graham Espley-Jones
President
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Recording Requested by and
When Recorded Mail to:
HOUSING AUTHOR
ITY OF
THE CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attention: Director of Housing
and Community Development
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: 5674-010-900
Document entitled to free
recording per Government
Code Section 27383
SUBORDINAT
ED LEASEHOLD DEED OF TRUST,
SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
(900 EAST BROADWAY)
This Subor
dinated Leasehold Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) is made as of __________________, 2021 by 900 E BROADWAY, L.P., a California limited partnership (“Trustor”) (whose address is 1150 W. Olympic Blvd., Suite 620, Los Angeles, California 90064), to ______ TITLE COMPANY, a California corporation (“Trustee”), for the benefit of THE HOUSING AUTHORITY OF THE CITY OF GLE NDALE, a public body corporate and politic (“Beneficiary”), whose address is 141 North Glendale Avenue, Suite 202, Glendale, California 91206.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION the following property (the “Trust Estate”):
(a) That certain real property in the City of Glendale, County of Los Angeles, State of California more particularly described in Exhibit “A” attached hereto and by this reference made a part hereof (the “Subject Property”);
(b) All buildings, structures and other improvements now or in the future located or to be constructed on the Subject Property (the “Improvements”); Attachment No. 15
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(c) all tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights -of-way and development rights (the “Appurtenances”). (The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred to as the “Real Property”); (d) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation leasing or occupancy of the Trust Estate, including those past due and unpaid (the “Rents”); (e) all present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (the “UCC”), and whether existing now or in the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor (the “Goods,” and together with the Real Property, the “Property”); and (f) all present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Prop erty or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insur ance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale 245 of 422
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proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types on intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the “Intangibles”).
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the “ Personal Property ”). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary.
Trustee and Beneficiary will have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.
Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Section 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING , in such order of priority as Beneficiary may elect, the following:
(1) due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following:
(a) a promissory note in the original principal amount of $1,725,000, executed by Trustor of even date herewith (the “LMIHAF Note”);
(b) a promissory note in the original principal amount of $11,525,000, executed by Trustor of even date herewith (the “Measure S Note”); (c) a promissory note in the original principal amount of $1,800,000, executed by Trustor of even date herewith (the “ HOME Note”) (the LMIHAF Note, the Measure S Note, and the HOME Note may collectively be referred to herein as the “Notes”);
(d) the Affordable Housing Agreement dated as of ______________, 2021 (the “Affordable Housing Agreement”), between Trustor and Beneficiary; (e) the Agreement Containing Covenants (Including Renta l Restrictions) between Trustor and Beneficiary, recorded concurrently herewith (“ Agreement Containing Covenants”); and
(f) the Agreement Containing HOME Program Requirements between Trustor and Beneficiary, recorded concurrently herewith (“HOME Regulatory Agreement”); and
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(2) payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $1,725,000 or so much thereof as will be advanced, evidenced by the LMIHAF Note secured hereby, with interest, according to the terms of the LMIHAF Note secured hereby; and
(3) payment of indebtedness of the Trustor to the Benef iciary in the principal sum of $11,525,000 or so much thereof as will be advanced, evidenced by the Measure S Note secured hereby, with interest, according to the terms of the Measure S Note secured hereby; and
(4) payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $1,800,000 or so much thereof as will be advanced, evidenced by the HOME Note secured hereby, with interest, according to the terms of the HOME Note secured hereby.
The Affordable Housing Agreement, including all Attachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the Agreement Containing Covenants, the HOME Regulatory Agreement, the LMIHAF Note, the Measure S Note, the HOME Note, the Assignment of Rents and Leases, and the Assignment of Agreements, all as described in the Affordable Housing Agreement (collectively referred to as the “Secured Obligations”) and all of their terms are incorporated herein by reference and this conveyance will secure any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances evidenced by any note reciting that it is secured hereby. Each capitalized term that is not otherwise defined in this Deed of Trust has the meaning ascribed to it in the Affordable Housing Agreement.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:
1. That Trustor will pay the Note s secured hereby at the time and in the manner provided therein, and perform the obligations of the Developer as set forth in the Secured Obligations at the time and in the manner respectively provided therein;
2. That Trustor will not permit or suffer the use of any of the property for any purpose other than the uses permitted by the Affordable Housing Agreement, Agreement Containing Covenants, and the HOME Regulatory Agreement;
3. That the Secured Obligations are incorp orated in and made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable.
4. That all rents, profits and income from the property covered by this Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured.
Permission is hereby given to Trustor so long as no default exists hereunder after the giving of 247 of 422
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notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Affordable Housing Agreement.
5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary will be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the improvements to be constructed on the Property in accordance with the Affordable Housing Agreement insured against loss by fire and such other hazards, casualties, and contingencies as may reasonably be required in writing from time to time by the Beneficiary, and all such insurance will be evidenced by standard fire and extended coverage insurance policy or policies. In no event will the amounts of coverage be less than 100 percent of the insurable value of the Property. Such policies will be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies will be deposited with the Beneficiary;
7. To pay, at least 10 days before delinquency, any taxes and assessments affecting said Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor will not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7.
8. To keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor perfor med and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon (subject to Trustor’s right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law and/or covenants, conditions and/or restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the consent of the Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 248 of 422
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10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest, or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees. Notwithstanding the foregoing, in the event of default under this Deed of Trust, the Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary will specify in writing the particular records that must be maintained and the information or reports that must be submitted;
11. Beneficiary will have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary will be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the Notes secured hereby;
13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor, after the giving of notice and the expiration of any applicable cure period, to keep and perform all the covenants, conditions, and agreements of said agreements, the principal sum and all arrears of interest, and other charges provided for in the Notes secured hereby will at the option of the Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary, and further that it will keep and maintain the property free from the claims of all persons supplying labor or material s which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor will not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor will, at Beneficiary ’s written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of Los Angeles County, a surety bond in an amount one -and-one-half (1½) times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary;
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15. That any and all improvements made or about to be made upon the premises covered by this Deed of Trust, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office;
16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14, Division 3, of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of the beneficiary of the Construction Loan Deed of Trust, the Permanent Loan Deed of Trust and any other obligation having a lien on the Property that is senior to the lien of this Deed of Trust (“ Senior Lender”), Beneficiary will be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and will be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage.
Subject to the rig hts of the Senior Lenders, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including reasonable attorney’s fees, the balance of the proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, will be applied to the amount due under the Note s secured hereby. No amount applied to the reduction of the principal will relieve the Trustor from making regular payments as required by the Notes secured hereby;
18. Upon default by Trustor in making any payments provided for in the Notes secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the Property to be sold, which notice Trustee will cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary will also deposit with Trustee this Deed of Trust , the Note s and all documents evidencing expenditures secured hereby;
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19. a. Prior to the repayment in full of the LMIHAF Loan, the Measure S Loan, and the HOME Loan and expiration of the terms of the Agreement Containing Covenants and the HOME Regulatory Agreement, the Trus tor will not assign or attempt to assign the Affordable Housing Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the Project thereon, or any portion thereof or interest therein (referred to hereinafter as a “Transfer”), without prior written approval of the Beneficiary, except for the Permitted Transfers described in Section 19.e.(3) below, or as otherwise permitted in the Notes secured hereby. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Beneficiary will not unreasonably withhold or delay its consent. If consent should be given, any such transfer will be subject to this Section 19, and any such transferee will assume all obligations hereunder and agree to be bound by all provisions contained herein, subject to the provisions of paragraph e.(3) of this Section 19, below.
b. Any such proposed transfere e will have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Beneficiary, to fulfill the obligations undertaken by Trustor in the Affordable Housing Agreement and the Authority Loan Documents. Any such proposed transferee, by instrument in writing satisfactory to the Beneficiary and in form recordable among the land records of Los Angeles County, for itself and its successors and assigns, and for the benefit of the Beneficiary will expressly assume all of the obligations of the Trustor under the Affordable Housing Agreement and the Authority Loan Documents, and agree to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust, subject to the provisions of paragraph e.(3) of this Section 19. There will be submitted to the Beneficiary for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the Beneficiary its approval will be indicated to the Trustor in writing.
c. In the absence of specific written agreement by the Beneficiary, no unauthorized Transfer, or approval thereof by the Beneficiary, will be deemed to relieve the Trustor or any other party from any obligations under the Affordable Housing Agreement or any other Authority Loan Document.
d. In the event of a Transfer without the prior written consent of the Beneficiary, prior to the time the LMIHAF Loan, the Measure S Loan, and the HOME Loan are paid in full, the net proceeds (after repayment in full of any Senior Loan and the reconveyance of the Senior Loan Deed of Trust or Permanent Loan Deed of Trust), will be paid to the Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the LMIHAF Loan, the Measure S Loan, and the HOME Loan. e. (1) As used herein, “Transfer” includes the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Project, or the 251 of 422
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lease of all or substantially all of the Property or Project, except as provided in subparagraph e.(3) of this Section 19, below.
(2) “Transfer” will also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor, or any conversion of Trustor to an entity form other than that of Trustor at the time of execution of the Affordable Housing Agreement, except that a cumulative change in ownership interest of any general partner of forty- nine percent (49%) or less will not be deemed a “transfer” for purposes of this Deed of Trust. (3) “Notwithstanding paragraphs (1) and (2), above, “Transfer” will not include any of the following Permitted Transfers , provided (except for subsection (f) below) Trustor, a general partner of Trustor, or an Affiliate of such general partner, retains day-to-day control over management of the Property and Improvements:
(a) An assignment of the Affordable Housing Agreement a nd sale of all of Trustor’s interest in the Property to an Affiliate, or a sale back to Trustor, which will be subject to the reasonable approval of Beneficiary’s Executive Director or designee; (b) A conveyance of a security interest in the Property in connection with a Senior Loan; provided that, a refinancing that increases the principal balance of the Senior Loan, increases the principal and interest payments required under the Senior Loan, changes the maturity of the Senior Loan, increases the interest rate of the Senior Loan, or otherwise changes the Senior Loan terms in a manner that creates an adverse effect upon the Authorit y will not be considered a Permitted Transfer and must be approved by Beneficiary’s Executive Director or designee;
(c) The inclusion of equity participation by Trustor by addition of limited partners to Trustor’s partnership, or similar mechanisms, and any transfers of limited partnership interests in Trustor’s partnership;
(d) The leasing for occupancy of all or any part of the Improvements on the Property, in accordance with the Affordable Housing Agreement , the Agreement Containing Covenants, and the HOME Regulatory Agreement; (e) The granting of easements or permits to facilitate the development of the Property in accordance with the Affordable Housing Agreement; (f) In addition, the withdrawal, removal and/or replacement of a general partner of Trustor ’s partnership pursuant to the terms of the Trustor ’s partnership agreement or a conveyance of Trustor’s interest in the Property and the Improvements or a transfer of limited partnership interests to a general partner pursuant to the option provided to that partner in Trustor’s partnership agreement will not constitute a default under this Deed of Trust or any of the Authority Loan Documents, nor will such actions accelerate the maturity of the LMIHAF Loan, the Measure S Loan, or the HOME Loan, provided that any required substitute general partner, is reasonably acceptable to the Beneficiary and is selected with reasonable promptness; and, 252 of 422
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(g) Any transfer approved in writing by Beneficiary’s Executive Director or designee, at his or her sole discretion.
Transfers described in clauses (a), (b), or (c) will be subject to the reasonable approval of the Beneficiary’s Executive Director or designee; provided that, the Beneficiary approves the transfer of limited partner interests in Trustor’s partnership, so long as s uch transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Trustor, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
f. The Beneficiary will not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder.
Any disapproval will be in writing and contain the Beneficiary’s reasons for disapproval.
20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, will sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee will deliver to the purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters or facts will be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee will apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee ’s fees or attorney’s fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s Deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Note s; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter will be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution will be made by written instrument executed by Beneficiary , containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, will be conclusive proof of proper appointment of the successor trustee;
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22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this Deed of Trust and the Notes to Trustee for cancellation and retention and upon payment of its fees, Trustee will reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or fact will be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”;
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” will include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the Note s secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several;
26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee will be a party unless brought by Trustee;
27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the following address:
900 E BROADWAY, L.P.
c/o Meta Housing Corporation
1150 W. Olympic Blvd., Suite 620
Los Angeles, California 90064
Attention: President
With a copy to Limited Partner:
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
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Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 90017
Attn: Michael A. Williamson, Esq.
Facsimile: (213) 630-5799
Matter No: B0965-0629
28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary.
29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the acquisition, development and construction of the I mprovements, including 66 dwelling units of affo rdable housing (including one manager’s unit) for Very Low Income and Low Income Senior Citizen H ouseholds, and such dwelling units will be occupied exclusively by such persons as set forth in the Secured Obligations.
30. Trustor agrees that, except as otherwise provided in the Notes secured hereby, upon sale or refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, will at the option of Benef iciary be immediately due and payable.
31. The obligation to repay the LMIHAF Loan, the Measure S Loan, and the HOME Loan is a nonrecourse obligation of the Trustor and its partners. Neither Trustor nor any of its general or limited partners, nor any other party, will have any personal liability for repayment of the loan. The sole recourse of Beneficiary will be the exercise of its rights against the Property and any related security for the LMIHAF Loan, the Measure S Loan, and the HOME Loan.
Notwithstanding the foregoing, Beneficiary may recover directly from Trustor or from any other party (other than Trustor’s Investor Limited Partner):
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(a) any damages, costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any partner, shareholder, officer, director or employee of Trustor, or of any member or general or limited partner of Trustor , or of any general or limited partner of such member or general or limited partner; (b) any damages, costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the construction of the Improvements, rents and revenues from the operation of the Improvements or proceeds of insurance policies or condemnation proceeds;
(c) any and all amounts owing by Trustor pursuant to the indemnification regarding Hazardous Substances pursuant to the Environmental Indemnity, and (d) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Beneficiary will pay Trustor’s reasonable court costs and attorneys’ fees if Trustor is the prevailing party in any such enforcement or collection action).
32. Notwithstanding specific provisions of this Deed of Trust, non -monetary performance hereunder will not be deemed to be in default where delays or defaults are proximately caused by any of the following Force Majeure events, provided such event actually delays and interferes with the timely performance of the matter, and, despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor:
War; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; acts of terrorism, epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority (except acts or failure to act of the Beneficiary will not excuse pe rformance by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor obtaine d knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor will deliver such written notice within fifteen (15 ) days after it obtains actual knowledge of the event.
33. If the rights and liens created by this Deed of Trust will be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the unsecured portion of such obligations will be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all 256 of 422
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performance and payments made by Trustor will be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations.
34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further provisions of this Section 34, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust.
(b) Beneficiary will give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
(c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default will not operate as a waiver of any default or of any such rig hts or remedies. Delays by Beneficiary in asserting any of its rights and remedies will not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any r emedies hereunder, prior to exercising its remedies, Beneficiary will give Trustor, each general partner, and the Investor Limited Partner, concurrent written notice of such d efault. Trustor will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the Beneficiary under this Deed of Trust. In no event will the Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received.
(e) If a non- monetary event of default occurs, prior to exercising any remedies hereunder, Beneficiary will give Trustor, each general partner, and the Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Trustor will have such period to effect a cure prior to exercise of remedies by the Beneficiary under this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor will have such additional time as is reasonably necessary to cure the default prior to the Beneficiary’s exercise of remedies. If Trustor fails to take corrective action or to cure the default within the time set forth above in this subsection (e), Beneficiary will give Trustor, the Senior Lender, and the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Trustor ’s partnership agreement, may take such corrective action, including removing and replacing a general partner. The Investor Limited Partner will have 45 days, or such longer period as is approved by the Beneficiary Executive Director or designee, to remove and replace such general partner of Trustor. Beneficiary agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender or Investor Limited Partner 257 of 422
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is precluded from curing a non- monetary default due to a bankruptcy, injunction, or similar proceeding by or against Trustor or a general partner, Beneficiary agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the Beneficiary Executive Director or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonably approved by the Beneficiary Executive Director or designee. (f) After Trustor gives written notice to Beneficiary that the Investor Limited Partner has been admitted to the Trustor, Beneficiary will send to the Investor Limited Partner a copy of all notices of default and all other notices that Beneficiary sends to Trustor, at the address for the Investor Limited Partner as provided by written notice to Beneficiary by Trustor. (g) Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Trustor; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
35. This Deed of Trust will be subordinate and junior to the Construction Loan Deed of Trust. Following the reconveyance of the lien of the Construction Loan Deed of Trust, this Deed of Trust will b e subordinate and junior to the deed of trust in favor of the maker of any permanent or take-out loan (each of which loans is referred to herein as a “Permanent Loan”), as described in the Notes secured hereby. The Executive Director of the Beneficiary or his designee will execute such instruments as may be necessary to subordinate the lien of this Deed of Trust and the Secured Obligations, to the deed of trust securing the Construction Loan, the Permanent Loan, any regulatory agreement recorded in connect ion with the issuance of the Low Income Housing Tax Credits. In the event of a default or breach by Trustor of any security instrument securing a Senior Loan described in this Section 35, Beneficiary will have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary will be entitled to reimbursement by Trustor of all reasonable costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements will be a lien against the Subject Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law.
36. The Trustor has informed the Beneficiary that Trustor intends that the Project qualify for an allocation of low -income housing tax credits under Section 42 of the Internal Revenue Code (“Tax Credits”). In order to receive an allocation of Tax Credits, the Trustor will be required to record in the real property records of the County of Los Angeles an “extended low- 258 of 422
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income housing commitment” (as defined in Code Section 42(h)(6)(B)) (the “ Extended Use Agreement”). If the Trustor demonstrates to the reasonable satisfaction of the Beneficiary that the Tax Credit Allocation Committee or applicable federal law requires that the lien of this Deed of Trust be subordinate to the Extended Use Agreement, then the Beneficiary will execute a subordination agreement (“Extended Use Subordination Agreement ”) wherein the lien of this Deed of Trust is subordinated to the Extended Use Agreement. The Extended Use Subordination Agreement will:
(a) provide that such Extended Use Agreement, by its terms, must terminate upon foreclosure under this Deed of Trust or upon a transfer of the Property by instrument in lieu of foreclosure or comparable conversion of the LMIHAF Loan, the Measure S Loan, and HOME Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code; (b) provide that the following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code;
(c) provide that Trustor acknowledges and agrees that any default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Deed of Trust and that any costs, damages or other amounts, including reasonable attorneys’ fees incurred by Beneficiary as a result of an event of default by Trustor, and any amounts paid by Beneficiary to cure any default under the Extended Use Agreement will be an obligation of Trustor and become a part of the debt evidenced by the LMIHAF Note, the Measure S Note , and/or the HOME Note, as applicable, and secured by this Deed of Trust; and
(d) otherwise be in a form reasonably acceptable to Beneficiary.
37. This Deed of Trust will be subject to the terms and conditions set forth in that certain Subordination Agreement, dated as of ______________, 2021 by and among the Trustor, Senior Lender, and the Beneficiary, as the same may be amended, restated, supplemented or modified from time to time.
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[signatures on following page]
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IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above.
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
Dated: ______________, 2021 By:___________________________ Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
Dated: _____________, 2021 By:___________________________ Graham Espley-Jones
President
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Exhibit A – Legal Description
Exhibit A
LEGAL DESCRIPTION
A leasehold interest created by that certain Ground Lease between the Housing Authority of the City of Glendale and 900 E BROADWAY, L.P., a California limited partnership, dated as of _______________, 2021 in the real property described as follows:
LOTS 2, 4, 6, 8 AND 10 IN B LOCK 17 OF TOWN OF G LENDALE, IN THE CITY OF
GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGE 95, ET SEQ., AN D IN BOOK 52 PAGE 8 OF
MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF S AID COUNTY.
EXCEPT THE NORTH 20 FEET OF LOT 2 CONDEM NED BY THE CITY OF G LENDALE FOR STREET PURPOSES.
APN: 5674-010-900
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
HOUSING AUTHOR
ITY OF THE
CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Director of Housing
and Community Development
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: 5674-010-
900 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
ASSIGNME
NT OF RENTS AND LEASES
THIS AS
SIGNMENT OF RENTS AND LEASES (the “Assignment” ) is made as of _______________________, 2021 by 900 E BROADWAY, L.P., a California limited partnership (“Borrower”), in favor of the HOUSING AUTHORITY OF THE CITY OF GLENDALE , a public body, corporate and politic, and its successors and assigns (collectively, the “Authority”).
RECITAL
S
A. Borro
wer is the owner of a leasehold interest in real property described in Exhibit “A” attached hereto, and the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the “Premises”.
B. Authority
has agreed to make three loans to Borrower in the original principal amounts of ONE MILLION SEVEN HUNDRED TWENTY- FIVE THOUSAND DOLLARS ($1,725,000) (“LMIHAF Loan ”), ELEVEN MILLION FIVE HUNDRED TWENTY- FIVE THOUSAND DOLLARS ($11,525,000) (“Measure S Loan ”), and ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000) (“HOME LOAN”), pursuant to the terms of an Affordable Housing Agreement by and between Borrower and Authority dated as of ______________________, 2021 (“Loan Agreement”). The LMIHAF Loan, the Measure Loan, and the HOME Loan are each evidenced by a promissory note of even date herewith (each, the “Note”) and are secured by a Subordinated Leasehold Deed of Trust, Security Agreement and Attachment No. 16
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Fixture Filing, of even date herewith, executed by Borrower, as Trustor, for the benefit of Authority, as Beneficiary (“Deed of Trust”).
C. In order to induce Authority to make the Authority Loan to Borrower, Borrower has agreed to execute this Assignment.
NOW, THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt of which is hereby acknowledged, Borrower agrees as follows:
AGREEMENT
1. All initially capitalized terms used herein, unless otherwise defined or required by context, have the meaning ascribed to them in the Loan Agreement.
2. Borrower hereby absolutely grants, sells, assigns, transfers, and sets over to Authority, by this Assignment, all of Borrower ’s interests, whether no w existing or hereafter acquired, in all leases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises, together with all extensions, renewals, modifications, or replacements of said leases and occupancy agr eements, and together with any and all guarantees of the obligations of the lessees and occupants ( “Lessees”) thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. (Said leases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof, are hereinafter referred to collectively as the “Leases” and individually as a “Lease”.)
3. Borrower’s purpose in making this Assignment is to relinquish to Authority its right to collect and enjoy the rents, royalties, issues, profits, income, and other benefits at any time accruing by virtue of the Leases (hereinafter called “Rents and Profits”).
4. T his Assignment is a present, absolute and unconditional assignment , subordinate to the rights of Bank of America, NA, a national banking association,and its successors and assigns (“Senior Lender”) and, immediately upon execution, give s the Authority the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the Indebtedness and other Obligations under each Note and other loan documents, as well as all other sums payable under the Deed of Trust or any other instrument given as security for the Indebtedness, subject to the rights of the Construction Lender and Permanent Lender .
However, the Authority hereby grants to Borrower a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Leases, so long as there is no Default by Borrower in performance of the terms, covenants, or provisions of the Deed of Trust, any Note, or the Loan Agreement, this Assignment or any other loan document, after the expiration of any applicable notice and cure periods. Nothing contained herein, nor any collection of Rents and Profits by Authority or by a receiver, will be construed to 263 of 422
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make Authority a “mortgagee in possession” of the Premises so long as Authority has not entered into actual possession of the Premises.
5. Upon the occurrence of any Default or Event of Default, after the expiration of any applicable notice and cure periods, under the terms and conditions of this Assignment, each Note, the Deed of Trust, the Loan Agreement or any other loan document, this Assignment will constitute a direction and full authority to each Lessee under any Lease and each guarantor of any Lease to pay all Rents and Profits to Authority without proof of the Default relied upon. Borrower hereby irrevocably authorizes each Lessee and guarantor to rely upon and comply with any notice or demand by Authority for the payment to Authority of any Rents and Profits due or to become due.
6. Borrower represents and warrants as to each Lease now or hereafter covering all or any portion of the Premises, unless Authority has been otherwise advised in writing by Borrower:
a. That each Lease is in full force and effect;
b. That no material default exists on the part of the Lessee thereunder or Borrower;
c. That no rent in excess of one month’ s rent has been collected in advance;
d. That no Lease or any interest therein has been previously assigned or pledged;
e. That no Lessee under any Lease has any defense, setoff or counterclaim against Borrower; and
f. That all rent due to date under each Lease has been collected and no concession has been granted to any Lessee in the form of a waiver, release, reduction, discount, or other alteration of rent due or to become due except as previously disclosed to Borrower in writing.
7. Borrower agrees with respect to each Lease:
a. If any Lease provides for a security deposit paid by the Lessee to Borrower, this Assignment transfers to Authority all of Borrower’s right, title, and interest in and to each such security deposit; provided, however, that Borrower will have the right to retain said security deposit so long as Borrower is not in Default, after the expiration of any applicable notice and cure periods, under this Assignment, the Deed of Trust, each Note, the Loan Agreement or any other Loan Document; and provided further that Authority will have no obligation to the Lessee with respect to such security deposit unless and until Authority comes into actual possession and control of said security deposit.
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b. If any Lease provides for the abatement of rent during repair of the leased premises by reason of fire or other casualty, Borrower will furnish rental insurance to Authority , the policies to be with companies and in form, content, policy limits, and terms as are customary in the case of entities owning similar property or assets similarly situated.
c. Each Lease will remain in full force and effect despite any merger of th e interest of Borrower and any Lessee thereunder. Except as otherwise provided in the Loan Agreement, Borrower will not terminate any Lease (except pursuant to the terms of the Lease upon a Default by any Lessee thereunder), or materially modify or amend any Lease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of Authority, which consent will not be unreasonably withheld.
d. Except as otherwise provided in the Loan Agreement, Borrower will not hereafter execute any Lease, the terms and conditions of which have not been previously approved in writing by Authority, which approval will not be unreasonably withheld or delayed.
e. Borrower will not collect any Rents and Profits more than thirty (30) days in advance of the date on which they become due under the terms of any Lease, provided that Borrower may collect customary security deposits more than 30 days in advance.
f. B orrower will not discount any future accruing Rents and Profits.
g. Borrower will not consent to any assignment of any Lease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm’s length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without the prior written consent of Authority, except as otherwise provided in the Loan Agreement.
h. Except as ot herwise provided in the Loan Agreement, Borrower will not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law.
i. Borrower will not request, consent to, agree to, or accept a subordination of any Lease to any mortgage, deed of trust or other encumbrance, or any other lease, now or hereafter affecting the Premises or any part thereof, or suffer or permit conversion of any Lease to a sublease, without Authority’s prior written consent.
j. Borrower will faithfully perform and discharge all obligations of the lessor under each Lease, and will give prompt written notice to Authority of any notice of Borrower ’s default received from any Lessee or any other person and furnish Authority with a complete copy of said notice. Borrower will appear in and defend, at no cost to Authority, any action or proceeding arising under or in any manner connected with any Lease. If requested by Authority, Borrower 265 of 422
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will enforce each Lease and all remedies available to Borrower against the Lessee in the case of default under the Lease by the Lessee.
k. Except as otherwise provided in the Loan Agreement, Borrower will give Authority written annual reports of al l L eases entered into during the previous year, and will promptly upon request of Authority provide to Authority a true and correct copy of each executed Lease. All Leases entered into by Borrower will be deemed included in this Assignment as though originally listed herein. At Authority’ s option, such reports may be recorded in the Official Records of Los Angeles County, California, which report will refer to this Assignment.
l. Except as otherwise provided in the Loan Agreement, at Authority’s option, Borrower will not hire, retain, or contract with any third party for property management services with respect to the Premises, without the prior written approval of Authority of such party and the terms of its contract for management services.
m. Nothing herein will be construed to impose any liability or obligation on Authority under or with respect to any Lease. Borrower will indemnify, defend, and hold Authority, its officers, directors, agents, employees, and representatives (the Indemnitees) harmless from a nd against any and all liabilities, losses, and damages that any Indemnitee may incur under any Lease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any al leged obligations to be performed or discharged by Authority under any Lease or this Agreement, unless any of the foregoing arises from or results from the gross negligence or willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss, or damage under any Lease or by reason of this Assignment and such liability, loss, or damage falls within the foregoing indemnification, Borrower will immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys ’ fees (based on itemized invoices for time and charges) and court costs incurred by such Indemnitee. All of the foregoing sums will bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by Authority may be applied by Authority, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense, or fees.
8. Subject to the rights of Senior Lender, Borrower hereby gran ts to Authority the following rights:
a. Upon an Event of Default as defined in the Loan Agreement, Authority will be deemed to be the creditor of each Lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership, or other debtor relief proceedings affecting such Lessee, without obligation on the part of Authority, however, to file timely claims in such proceedings or otherwise pursue creditor’s rights therein.
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b. Authority will have the right to assign Borrower ’s right, title, and interest in the Leases to any subsequent holder of the Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Premises through foreclosure or otherwise.
Any subsequent Authority will have all the rights and powers herein provided to Authority.
c. Authority will have the right (but not the obligation), upon any Event of Default under the Deed of Trust or the Loan Agreement, to take any action as Authority may deem necessary or appropriate to protect its security, including but not limited to appearing in any action or proceeding and performing any obligations of the lessor under any Lease; and Borrower agrees to pay, on demand, all costs and expenses, including without limitation reasonable attorneys’ fees and court costs incurred by Authority in connection therewith, together with interest thereon at the rate of ten percent (10%) per annum.
d. Upon any Default under this Assignment, the Deed of Trust, any Note, the Loan Agreement, or any other loan document (subject to any notice and cure provisions), and without notice to or consent of Borrower, Authority will have the following rights (none of which will be construed to be obligations of Authority):
i. Authority will have the right under this Assignment to use and possess, without rental or charge, the Fixtures, Equipment, and Personal Property of the Borrower located in or on the Premises and used in the operation or occupancy thereof. Authority will have the right to apply any of the Rents and Profits to pay installments due for Personal Property rented or purchased on credit, insurance premiums on Personal Property, or other charges relating to Personal Property in or on the Premises. However, this Assignment will not make Authority responsible for the control, care, management, or repair of the Premises or any Personal Property or for the carrying out of any of the terms or provisions of any Lease.
ii. Authority will have the right to apply the Rents and Profits and any sums recovered by Authority hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises.
iii. Authority will have the right to tak e possession of the Premises, manage and operate the Premises and Borrower’s business thereon, and to take possession of and use all books of account and financial records of Borrower and its property managers or representatives relating to the Premises.
iv. Authority will have the right to execute new Leases of any part of the Premises, including Leases that extend beyond the term of the Deed of Trust.
v. Authority will have the right to cancel or alter any existing Leases. 267 of 422
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vi. Authority will have the irrevocable authority, as Borrower ’s attorney-in-fact, such authority being coupled with an interest, to sign the name of Borrower and to bind Borrower on all papers and documents relating to the operation, leasing and maintenance of the Premises.
e. All of the foregoing rights and remedies of Authority are cumulative, and Authority will also have upon the occurrence of any such Default or Event of Default all other rights and remedies provided under each Note, the Loan Agreement, the Deed of Trust, or any other loan document or other agreement between Borrower and Authority or between Borrower and Authority, or otherwise available at law or in equity or by statute subject to the nonrecourse clause set forth in each Note.
9. Failure of Authori ty to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason will not constitute a waiver thereof.
10. Notwithstanding any future modification of the terms of any Note, the Deed of Trust, the L oan Agreement , or any other loan document, this Assignment and the rights and benefits hereby assigned and granted will continue in favor of Authority in accordance with the terms of this Assignment.
11. This Assignment will be binding upon and inure to the benefit of the respective heirs, legal representatives, successors, and assigns of the parties hereto (including without limitation in the case of Authority, any third parties now or hereafter acquiring any interest in the Indebtedness or other obligations of Borrower under each Note or Deed of Trust or a part thereof, whether by virtue of assignment, participation, or otherwise). The words Borrower, Authority, and Lessee, wherever used herein, will include the persons and entities named herein or in any Le ase and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named Authority or any successor, designated as such by an instrument recorded in the Official Records of Los Angele s County, California, referring to this Assignment, will be sufficient for all purposes notwithstanding that Authority may have theretofore assigned or participated any interest in the obligation to a third party. All words and phrases will be taken to include the singular or plural number, and the masculine, feminine, or neuter gender, as may fit the case.
12. Any change, amendment, modification, abridgment, cancellation, or discharge of this Assignment or any term or provision hereof will be invalid without the written consent of Authority.
13. Upon payment to Authority of the full amount of the Indebtedness and other obligations secured hereby and by each Note and Deed of Trust, as evidenced by a recorded satisfaction or release of the Deed of Trust, this Assignment will be void and of no further effect. 268 of 422
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14. All notices, demands, approvals, and other communications provided for in the Loan Documents will be in writing and be delivered by telegraph, cable, overnight air courier, personal delivery, or registered or certified U.S. mail, postage prepaid with return receipt requested to the appropriate party at its address as follows:
If to Borrower
:
900 E BROADWAY, L.P.
c/o Meta Housing Corporation
1150 W. Olympic Blvd., Suite 620
Los Angeles, California 90064
Attention: President
With a copy to Investor Limited Partner at:
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
If to Authority
:
Glendale Housing Authority
141 N. Glendale Avenue, Room 202
Glendale, California 91206
Attn: Executive Director
Facsimile: 818-548-3724
Addresses for notice may be changed from time to time by written notice to all other parties. Any communications given by telegram or cable must be confirmed within forty -eight (48) hours by 269 of 422
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overnight air courier or mail in the manner hereinbefore described. If any communication is given by mail in the manner hereinabove described, it will be effective upon the earlier of (a) three (3) days after deposit in a post office or other official depository under the care and custody of the United States Postal Service, or (b) actual receipt, as indicated by the return receipt; if given by telegraph or cable, when delivered to the telegraph company with charges prepaid; and if given by personal delivery, or by overnight air courier, when del ivered to the appropriate address set forth above.
15. This Assignment may be recorded in the Official Records of Los Angeles County, California, and Borrower will pay all fees, charges, costs, and expenses of such recording.
16. If any provision hereof is determined to be illegal or unenforceable for any reason, the remaining provisions hereof will not be affected thereby.
17. This Assignment will be governed by and construed in accordance with the laws of the State of California.
18. If Authority should bring any action to enforce its rights hereunder at law or at equity, Borrower will reimburse Authority for all reasonable attorneys ’ fees and costs expended in connection therewith.
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IN WITNESS WHEREOF, the undersigned Borrower has executed this Assignment as of the date first above written.
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
Dated: ______________, 2021 By:___________________________ Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
Dated: _____________, 2021 By:___________________________ Graham Espley-Jones
President
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Exhibit A – Legal Description
EXHIBIT “A”
TO ASSIGNMENT OF RENTS AND LEASES
LEGAL DESCRIPTION
A leas
ehold interest created by that certain Ground Lease between the Housing Authority of the City of Glendale and 900 E BROADWAY, L.P ., a California limited partnership, dated as of _______________, 2021 in the real property described as follows:
LOTS
2, 4, 6, 8 AND 10 IN BLOCK 17 OF TO WN OF GLENDALE, IN T HE CITY OF
GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGE 95, ET SEQ., AN D IN BOOK 52 PAGE 8 OF
MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THE N
ORTH 20 FEET OF LOT 2 CONDEM NED BY THE CITY OF G LENDALE FOR STREET PURPOSES.
APN: 5674-
010-900
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ASSIGNM
ENT OF AGREEMENTS
FOR VALUE RECEIVED, the undersigned, 900 E BROADWAY, L.P. , a California limited partnership (“Borrower”), assigns to the HOUSING AUTHORITY OF THE CITY OF GLENDALE (“Authority”), all of its rights, title and interest in and to:
1. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, “Architectural Agreements”); and
2. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively “Plans and Specifications”)
heretofore or hereafter into or prepared by any architect, engineer or other person or entity (collectively “Architect”), for or on behalf of Borrower in connection with the construction of the Improvements. The Plans and Specifications, as of the date hereof, include the entitlement package prepared by KFA, LLP and those further Plans and Specifications which Borrower has heretofore, or will hereafter deliver to Authority. The Architectural Agreements include, but are not limited to, the architectural contract between Borrower and ________________, located at _________________________________.
This ASSIGNMENT OF AGREEMENT S AND PLANS AND SPECIFICATION (“Assignment”) constitutes a present and absolute assignment to Authority as of the Effective Date, subordinate to the rights of Bank of America, NA, a national banking association (“Construction Lender ”); provided, however
, Authority confers upon Borrower the right to
enforce the terms of the Architectural Agreements and Borrower’ s rights to the Plans and Specifications so long as no Default or event which would constitute a Default after notice or the passage of time, or both, has occurred and is continuing under the Affordable Housing Agreement dated as of __________________________, 2021, between Authority and Borrower (the “Affordable Housing Agreement”), as well as any amendments and implementation agreements.
Capitalized terms not otherwise defined herein have the meaning set forth in the Affordable Housing Agreement. Upon the occurrence of a Default or event which would constitute a Default after notice or the passage of time, or both, under the Affordable Housing Agreement, Authority may, in its sole discretion, give notice to Architect of its intent to enforce the ri ghts of Borrower under the Architect Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Borrower acknowledges that by accepting this Assignment, Authority does not assume any of Borrower’s obligations under the Architectural Agreements or with respect to the Plans and Specifications.
Attachment No. 17
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Borrower represents and warrants to Authority, as of the Effective Date, that: (a) all Architectural Agreements entered into by Borrower are in full force and effect and are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Authority are complete and correct; and (c) Borrower has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications.
Borrower agrees: (a) to pay and perform all obligations of Borrower under the Architectural Agreements; (b) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements; (c) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without Authority ’s prior written approval except as otherwise may be permitted in the Affordable Housing Agreement; and (d) not to further assign (other than assignment in connection with a loan from the Construction Lender), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications with Authority’s prior written consent.
This Assignment secures performance by Borrower of all obligations of Borrower under the Affordable Housing Agreement. This Assignment is supplemented by the provisions of the Affordable Housing Agreement and said provisions are incorporated herein by reference.
This Assignment will be governed by the laws of the State of California, without reference to the principles governing conflicts of laws , and Borrower consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the f iling and maintenance of any action arising hereunder and agrees that the prevailing party in any such action will be entitled, in addition to any other recovery, to reasonable attorney’s fees and costs.
This Assignment will be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Borrower and Authority; provided, however ,
this will not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Borrower contained in any of the Affordable Housing Agreement.
The attached Architect’s Consent, Schedule 1 and Exhibit A are incorporated by reference.
[SIGNATURES ON FOLLOWING PAGE]
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BORROWER:
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
Dated: ______________, 2021 By:___________________________ Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
Dated: _____________, 2021 By:___________________________ Graham Espley-Jones
President
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Architect’s Consent
ARCHITECT’S CONSENT
The undersigned architect ( “Architect”) hereby consents to the foregoing Assignment to which this Architect’s Consent (“Consent”) is part, and acknowledges that there presently exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Borrower and/or the performance of the Architect’s obligations under the Assignment.
Architect agrees that if, at any time, Authority will become the owner of said Property, or, pursuant to its rights under the Affordable Housing Agreement, elects to undertake or cause the completion of construction of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; THEN, so long as Architect has received, receives or continues to receive the compensation called for under the Agreements, Authority may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Agreements for the benefit and account of Authority in the same manner as if performed for the benefit or account of Borrower in the absence of the Assignment.
Architect further agrees that, in the event of a breach by Borrower of the Agreements, or any agreement entered into with Architect in connection with the Plans and Specifications, so long as Borrower’s interest in the Agreements and Plans and Specifications is assigned to Authority, Architect will give written notice to Authority of such breach at the address shown below.
Authority will have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein will require Authority to cure said default or to undertake completion of construction of the Improvements.
[Architect’s Signature on Following Page]
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Architect’s Consent
Architect warrants and represents that it/he/she has no knowledge of any prior assignment(s) of any interest in the Plans and Specifications and/or the Agreements. Except as otherwise defined herein, the terms used herein will have the meanings given them in the Assignment.
Executed as of___________, 2021.
[ARCHITECT NAME]
By: __________________________
Name:
Title:
[architect address]
Authority’s Address
:
HOUSING AUTHORITY OF THE
CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Executive Director
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Schedule of Unpaid Claims
SCHEDULE OF UNPAID CLAIMS
Schedule 1 to Assignment of Architectural Agreements and Plans and Specifications dated as of____________, 2021 between 900 E BROADWAY, L.P . as Borrower, and HOUSING AUTHORITY OF THE CITY OF GLENDALE, as Authority.
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Legal Description
PROPERTY DESCRIPTION
Exhibit A to Assignment of Agreement and Plans and Specifications dated as of ___________, 2021, between 900 E BROADWAY, L.P , as Borrower, and THE HOUSING AUTHORITY OF THE CITY OF GLENDALE.
A leasehold interest created by that certain Ground Lease between the Housing Authority of the City of Glendale and 900 E BROADWAY, L.P., a California limited partnership, dated as of _______________, 2021 in the real property described as follows:
LOTS 2, 4, 6, 8 AND 10 IN BLOCK 17 OF TO WN OF GLENDA LE, IN THE CITY OF
GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGE 95, ET SEQ., AN D IN BOOK 52 PAGE 8 OF
MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THE NORTH 20 FEET OF LOT 2 CONDEMNED BY THE CITY OF GLENDALE FOR STREET PURPOSES.
APN: 5674-010-900
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Environmental Indemnity
ENVIRONMENTAL INDEMNITY
THIS E
NVIRONMENTAL INDEMNITY (“ Indemnity”), dated as of
_________________, 2021, made by 900 E BROADWAY, L.P., a California limited partnership (“Borrower”), in favor of the HOUSING AUTHORITY OF THE CITY OF GLENDALE , a public body corporate and politic (“Authority”).
WITNESSETH
WHEREAS, Borrower is the owner of a leasehold interest in the real property in the City of Glendale, as more particularly described on Exhibit A attached hereto and made a part hereof, and the real property improvements thereon (collectively referred to as the “Property”); WHEREAS, Borrower and the Authority, entered into that certain Affordable Housing Agreement, dated as of ______________, 2021 (“Affordable Housing Agreement”), pursuant to which the Authority agreed to make three loans to Borrower in the original principal amounts of ONE MILLION SEVEN HUNDRED TWENTY- FIVE THOUSAND DOLLARS ($1,725,000) (“LMIHAF Loan ”), ELEVEN MILLION FIVE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($ 11,525,000) (“Measure S Loan ”), and ONE MILLION EIGHT HU NDRED THOUSAND DOLLARS ($1 ,800,000) (“HOME Loan”), collectively referred to herein as the “Authority Loan”, to provide part of the financing for the acquisition, development, and operation of a 127-unit housing project thereon (the Affordable Housing Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the “Loan Documents”);
WHEREAS, Borrower has agreed to execute and deliver to the Authority this Indemnity to induce the Authority to make the Authority Loan.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees with the Authority as follows:
Section 1. DEFINITIONS
For the purpose of this Indemnity, “Hazardous Materials” or “Hazardous Substances” will include, but not be limited to, substances defined as “extremely hazardous substances,” “hazardous substances,” “hazardous materials,” “hazardous waste” or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 11001-11050; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; and those substances defined as “hazardous waste” i n Section 25117 of the California Health and Safety Code, as “infectious waste” in Section 25117.5 of the California Health and Safety Code, or as “hazardous substances” in Section 25316 of the California Health and Safety Code or “hazardous materials” as defined in Section 353 of the California Vehicle Code; and in the Attachment No. 18
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regulations adopted and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity will have the meanings ascribed to them in the Affordable Housing Agreement with the same force and effect as if set forth in full below.
Section 2. COVENANTS AND INDEMNITY
The following covenants and indemnities are hereby given and made by Borrower:
2.1 Covenants.
( a) Borrower covenants that it will comply with any and all laws, regulations, and/or orders which may be promulgated, from time to time, with respect to the discharge and/or removal of Hazardous Materials, to pay immediately when due the costs of the removal of, or any other action required by law with respect to, any such Hazardous Materials, and to keep the Property free of any lien imposed pursuant to any such laws, regulations, or orders. (b) Borrower covenants that the Property will not, while Borrower is the owner thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property. (c) Borrower further agrees that Borrower will not release or dispose of any Hazardous Materials at the Property without the express written approval of the Authority and that any such release or disposal will be effected in strict compliance with all applicable laws and all conditions, if any, established by the Authority.
(d) The Authority will have the right, at any time, to conduct an environmental audit of the Property at the Authority’s expense, unless Hazardous Materials are found, then at Borrower’s sole cost and expense, and Borrower will cause Borrower to cooperate in the conduct of any such environmental audit but in no event will such audit be conducted unless the Authority believes that such audit is warranted. Other than in an emergency, such audit will be conducted only after reasonable prior notice has been given to Borrower and onl y in the presence of a representative of Borrower. Borrower will give the Authority and its agents and employees access to the Property at all reasonable times to remove, or otherwise to mitigate against the effects of, Hazardous Materials.
(e) Borrowe r will not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations respecting such material, and, with respect to any such material currently present in the Property, Borrower will promptly either (i) remove or cause to be removed any material that such regulations deem hazardous and require to be removed, or (ii) otherwise comply with such federal and state regulations, at Borrower’s sole cost and expense . If Borrower will fail to so do within the cure 281 of 422
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period permitted under applicable law, regulation, or order, the Authority may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with the applicable law, regulati on, or order, and the costs thereof will be added to the Obligations (as hereinafter defined) of Borrower under this Section 2.
(f) Borrower will immediately advise the Authority in writing of any of the following: (i) any pending or threatened environ mental claim against Borrower or the Property, (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower with any applicable environmental law, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law, or (C) could reasonably be anticipated to form the basis of an environmental claim against the Property or Borrower.
2.2 Indemnity
. Borrower will indemnify, protect, and hold the Authority harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, reasonable attorneys’ and experts’ fees and disbursements) of any kind or of any nature whatsoever (collectively, the Obligations) which may at any time be imposed upon, incurred by or asserted or awarded against the Authority and arising from or out of:
(a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property or any surrounding areas;
(b) The breach of any covenant made by Borrower in Section 2.1 hereof; or (c) The enforcement by the Aut hority of any of the provisions of this Section
2.2 or the assertion by Borrower of any defense to its obligations hereunder.
Subject to the qualifications set forth in Section 2.3, below, Borrower will be liable for payment and performance of the Obligati ons to the full extent (but only to the extent) of the property and assets (including the Property) which constitute security for such Obligations. If default occurs in the timely and proper payment and performance of any such Obligations (after notice an d reasonable opportunity to cure), any judicial proceedings brought by the Authority against Borrower will be limited to the protection and preservation of the Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, ri ghts and security interests securing such Obligations and enforcement and collection of such Obligations for which Borrower remains directly liable as provided in this Section. If there is a foreclosure of any such liens, mortgages, assignments, rights and security interests by power of sale or otherwise, no personal judgment for any deficiency thereon will be sought or obtained by the Authority against Borrower, or its officers, directors, agents, attorneys, servants or employees. In no event shall Borrower be liable for any Obligations resulting exclusively from the gross negligence and/or willful misconduct of the Authority.
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2.3 Exceptions to Non-Recourse Liability. Notwithstanding the foregoing provisions of Section 2.2 or any other agreements,
(a) the Authority may proceed against any other person or entity whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and (b) The Authority m ay recover personally from any person or entity other than Borrower’s Managing General Partner and Limited Partners:
(1) any damages, costs and expenses incurred by the Authority as a result of the negligence of such person or entity, involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials by such person or entity or by others; provided, however, that neither Borrower nor any officer, partner, agent, attorney, servant or employee of Borrower will have any personal liability if the act or omission complained of was performed in good faith and was not reckless, wanton, intentional or grossly negligent; (2) any damages, costs and expenses incu rred by Authority as a result of fraud or any criminal act or acts of Borrower or any partner, shareholder, officer, director or employee of Borrower, or of any general or limited partner of Borrower; and (3) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Authority will pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in any such enforcement or collection action).
Section 3. BORROWER’S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations
. Borrower hereby agrees that the Obligations will be
paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereaf ter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the Authority with respect thereto. The obligations of Borrower hereunder will be absolute and unconditional irrespective of:
(a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents;
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(c) Any extension of the maturity of the Authority Loan or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents;
(d) Any exculpatory provision in any of the Loan Documents limiting the Authority’s recourse to property encumbered by the Deed of Trust securing the Authority Loan, or to any other securit y, or limiting the Authority’s rights to a deficiency judgment against Borrower;
(e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Authority Loan, or any release, amendment, waiver of, or consent to any departure from any provision of, any other Borrower or guarantee given in respect of the Authority Loan; (f) The insolvency or bankruptcy of Borrower, Borrower, or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Authority Loan; or
(g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, Borrower, or any other indemnitor or guarantor with respect to the Authority Loan or any or all of the Obligations.
3.2 Continuation. This Indemnity (a) is a continuing indemnity and will remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Authority Loan or the release or other extinguishment of any security for the Authority Loan); and (b) will continue to be effective or will be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Authority upon the insolvency, bankruptcy, or reorganization of Borrower, Borrower or otherwise, all as though such payment had not been made.
3.3 Termination. Notwithstanding the payment (and performance) in full of all of the Obligations and the payment (or performance) in full of all of Borrower’s obligations under the Loan Documents, this Indemnity will not terminate if any of the following will have occurred:
(a) The Authority has at any time or in any manner participated in the management or control of, taken possession of (whether personally, by agent or by appointment of a receiver), or taken title to the Property or any portion thereof, whether by foreclosure, deed in lieu of foreclosure, sale under power of sale or otherwise; or
(b) There has been a change, between the date hereof and the date on which all of the Obligations are paid and performed in full, in any Hazardous Materials laws, the effect of which may be to make a lender or mortgagee liable in respect of any 284 of 422
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of the Obligations, notwithstanding the fact that no event, circumstance, or condition of the nature described in paragraph (a) above ever occurred.
Section 4. WAIVER
Borrower hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any obligation by Borrower;
(c) Notice of any action taken by the Authority, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto;
(d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder;
(e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity;
(f) Any requirement that the Authority prote ct, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the Authority exhaust any right or take any action against Borrower or any other person or collateral; and (h) Any defense that may arise by reason of:
(1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons;
(2) The failure of the Authority to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the Authority, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of the Authority or any other right of the Authority to proceed against Borrower.
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Section 5. NOTICES
Any notice, demand, statement, request, or consent made hereunder will be in writing and will be personally served, mailed by first -class registered mail, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, or given by telecopier to the telecopier numbers stated below, with confirmations mailed by first class registered mail, return receipt requested to the address set forth above, of the party to whom such notice is to be given (or to such other address as the parties hereto, will designate in writing):
In the case of the Authority
:
The Housing Authority of the City of Glendale
141 N. Glendale Avenue, Room 202
Glendale, California 91206
Attn: Executive Director
Facsimile: 818-548-3724
In the case of Borrower
:
900 E BROADWAY, L.P.
c/o Meta Housing Corporation
1150 W. Olympic Blvd., Suite 620
Los Angeles, California 90064
Attention: President
With a copy to Investor Limited Partner at:
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
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Any notice that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; any notice tha t is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
Section 6. MISCELLANEOUS
6.1 Borrower will make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the Authority at its address specified in the first paragraph hereof.
6.2 No amendment of any provision of this Indemnity will be effective unless it is in writing and signed by Borrower and the Authority, and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, will be effective unless it is in writing and signed by the Authority, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given.
6.3 No failure on the part of the Authority to exercise, and no delay in exercising, any right hereunder or under any other Loan Document will operate as a waiver thereof, nor will any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Authority provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Authority under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Authority to exercise any of its rights under any other Loan Document against such party or against any other person or collateral.
6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction.
6.5 This Indemnity will (a) be binding upon Borrower, and Borrower’s successors and assigns; and (b) inure, together with all rights and remedies of the Authority hereunder, to the benefit of the Authority, its respective directors, officers, employees, and agents, any successors to the Authority’s interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the Authority’s rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforement ioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, the Authority may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any other Loan Document, to any other person, and such other person 287 of 422
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will thereupon become vested with all of the rights and obligations in respect thereof that were granted to the Authority herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the Authority.
6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Los Angeles County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non convenient or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court.
Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity, above. Borrower agrees that a final judgment in any such action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.
6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and will in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof.
6.8 This Indemnity will be governed by, and construed and interpreted in accordance with, the laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California.
[Remainder of Page Intentionally Left Blank; Signatures on Following Page]
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6.9 This Indemnity may be executed in any number of counterparts, each of which will constitute an original and all of which together will constitute one agreement.
IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date first set forth above.
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
Dated: ______________, 2021 By:___________________________ Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
Dated: _____________, 2021 By:___________________________ Graham Espley-Jones
President
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Exhibit A – Legal Description
Exhibit A
to Environmental Indemnity
LEGAL DESCRIPTION
Real Property in the City of Glendale, County of Los Angeles, State of California, described as follows:
LOTS 2, 4, 6, 8 AND 10 IN BLOCK 17 OF TO WN OF GLENDALE, IN T HE CITY OF
GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGE 95, ET SEQ., AN D IN BOOK 52 PAGE 8 OF
MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF S AID COUNTY.
EXCEPT THE NORTH 20 FEET OF LOT 2 CONDEM NED BY THE CITY OF G LENDALE FOR STREET PURPOSES.
APN: 5674-010-900
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DISBURSEMENT AGREEMENT
(900 E. Broadway)
THIS DISBURSEMENT AG REEMENT is entered into by and among the HOUSING AUTHORITY OF THE CITY OF GLENDALE ( “Authority”), 900 E BROADWAY, L.P. , a California limited partnership (“Borrower”), and BANK OF AMERICA, NA, a national banking association, in its capacity as Servicer (“Construction Lender”), as of _______________, 2021.
R E C I T A L S
A. Authority and Borrower have heretofore entered into that certain Affordable Housing Agreement dated as of ______________, 2021 (“Affordable Housing Agreement ”), relating to the real property described in Attachment No. 2 to the Affordable Housing Agreement (the “Property”). Terms not defined herein will have the meaning given to them in the Authority Loan Documents.
B. In accordance with the Affordable Housing Agreement, Borrower intends to construct a multifamily rental development consisting of 127 total dwelling units (the “Units”) and ancillary facilities , as described in the Scope of Development attached to the Affordable Housing Agreement as Attachment No. 4 (the “Project”). One hundred twenty-six of the Units will be rented to and occupied by Extremely Low Income, Very Low Income, and Low Income Senior Citizen Households. The costs of acquiring the Property and developing the Project ( the “Costs”) are set forth in the Project Budget approved by the Authority and Construction Lender as the final project budget, which is attached to this Agreement as Exhibit “A” and incorporated herein by this reference (the “Project Budget”). The Project Budget will be subject to amendment from time to time, subject to prior written approval by the Construction Lender and the Authority Executive Director or designee, to the extent applicable, upon which approval the Project Budget will be replaced by the approved revised Project Budget.
C. Pursuant to the Affordable Housing Agreement, the Authority has agreed to make three loans to Borrower in the original principal amounts of $1,725,000 (“LMIHAF Loan ”), $11,525,000 (“Measure S Loan”), and $1,800,000 (“HOME LOAN”), (collectively referred to as the “Authority Loans” and the “Authority Funds”) to be used to finance a portion of the Costs.
The Affordable Housing Agreement, the promissory notes evidencing the Authority Loans, the deed of trust securing the Authority Loans, an Agreement Containing Covenants, and an Agreement Containing HOME Program Requirements, each dated on or around the date hereof, and other instruments referred to in the Affordable Housing Agreement, are sometimes referred to collectively as the “Authority Loan Documents.”
D. California Public Finance Authority (“ Governmental Lender”) is making a loan to Borrower in the amount of $___________, (the “Construction Loan”) from proceeds of a loan made by Construction Lender to Governmental Lender in the amount of $___________. The Construction Loan is evidenced by, among other things, a _____________________ (“Construction Loan Note ”). Pursuant to the Construction Loan Documents (as hereinafter defined) Governmental Lender has appointed Construction Lender as the “Servicer” under the Construction Loan. The Construction Loan will be disbursed pursuant to that certain Construction Attachment No. 19
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Disbursement Agreement between Borrower and Construction Lender dated on or around the date hereof (“Construction Loan Agreement”), pursuant to which Construction Lender has agreed to disburse funds in the amount of approximately $__________ _ (referred to as the “ Construction Lender Funds ”) to finance a portion of the Costs. The Construction Loan Agreement, the Construction Loan Note evidencing the Construction Loan, the deed of trust securing the Construction Loan and other instruments refer red to in the Construction Loan Agreement are sometimes referred to collectively as the “Construction Loan Documents”.
E. In addition, Borrower has agreed to provide at least $___________ in Borrower’s funds during the construction period, as set forth in subsection 1.a. below, (“Borrower’s Funds”), to pay that portion of the Costs in excess of the sum of the Authority Funds and the Construction Lender Funds.
F. The Authority Funds , Construction Lender Funds, and Borrower ’s Funds are referred to collectively as the “Project Funds .” The Authority and Construction Lender are referred to collectively as the “Lenders” or individually as a “Lender”.
G. The Lenders and Borrower desire to enter into this Disbursement Agreement solely to provide for the disbursement of the Project Funds for approved Costs and to provide for cooperation among the Lenders.
NOW, THEREFORE, the parties agree as follows:
1. Deposit and Use of Funds.
a. Borrower’s Account. The Borrower’s Funds consist of the following:
(1) Borrower will be responsible, during the construction period, to provide funds if and as needed to pay for cost overruns and contingencies not otherwise funded by other sources of construction financing, in accordance with the requirements and procedures of the Construction Loan Documents; (2) In addition, Borrower will defer $1,490,000 of the Developer Fee set forth in the Project Budget, $1,490,000 of which will be paid at Conversion and the balance to be paid from the Revenue of the Project remaining after payment of operating expenses and debt service but prior to any payment of Residual Receipts to the Authority.
(3) In addition, Borrower’s Investor Limited Partner will disburse advances and capital contributions in the approximate amount of $__________. (4) In addition, Borrower will defer to Conversion the payment of other Costs, consisting of the capitalization of the Operating Reserve and payment of permanent financing costs, in the approximate amount of $_________. b. Except to the extent Borr ower’s Funds have been spent on Costs prior to the Construction Financing Event, or as otherwise agreed to between the Authority and 292 of 422
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Construction Lender , Borrower will deposit Borrowe r’s Funds (except for the deferred Developer Fee and Costs deferred until Conversion), into a fully segregated disbursement account held by a fiscal agent (“ Fiscal Agent ”) (the “Borrower’s Account”), at such times as the amounts are payable by the Investor Limited Partner pursuant to the Partnership Agreement.
2. Loan Balancing.
a. If either of the Lenders reasonably determines, from time -to-time, that the combined amounts of the Authority Funds , Construction Lender Funds, and Borrower’s Funds, as set forth in the attached Project Budget, are insufficient to pay all Costs at Completion, plus payment of increased costs due to change orders, cost overruns or otherwise , which have not been funded by Borrower , then, upon ten (10) days’ advance notice from such Lender (“Balancing Call”), Borrower will deposit into the Borrower ’s Account held by the Fiscal Agent such additional Borrower’s Funds as may be necessary to pay all such obligations. b. If Borrower fails to deposit such additional Borrower’s Funds into the Borrower’s Account, the Lenders, subject to the terms of applicable subordination agreements, will each have the right (but not the obligation) to exercise all rights and remedies, including, without limitation, to declare a default, to commence judicial and non - judicial foreclosure actions, to seek the appointment of a receiver or to advance additional money to pay such additional costs as such Lender may deem necessary to protect its collateral and complete construction of the Project. Additional amounts advanced by a Lender to pay such c osts will (to the extent such c osts constitute Approved Costs, as her einafter defined) be added to the stated loan amount of the applicable Loan.
c. To the extent funds from Borrower ’s Account or any other Borrower Funds are used to pay such obligations, such funds will be disbursed in accordance with the terms of the Construction Loan Documents, before any further disbursement of the Authority Funds and the Construction Lender Funds.
d. As used in this Disbursement Agreement, the term “Approved Costs” will mean all hard and soft cost line items (and modifications thereto), which were approved or deemed approved by the Authority and Fiscal Agent pursuant to this Disbursement Agreement and which are needed for the completion of the Project.
3. Amendments to Project Budget.
a. Subject to the terms and provisions of this Disbursement Agreement, the Authority Loan Documents, and the Construction Loan Documents, a change order or Project Budget amendment (collectively referred to as a “Revision”) will require the approval of the Authority and the Construction Lender . The Authority will be deemed to have approved a requested Revision for which Construction Lender’s approval is not required under the terms of the Construction Loan Agreement, or which has been approved by the Construction Lender, if, within f ive (5) business 293 of 422
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days after receipt of the request for Revision, the Authority receives such explanation and/or back -up information as was received and relied upon by the Construction Lender in connection with its approval of the Revision, and if the following conditions are satisfied:
(1) To the extent the Revision is limited to a reallocation of budgeted funds among Project Budget line items without any increase in the total Project Budget, (a) the amount of the Revision does not exceed $ 100,000, (b) the funds in the line item(s) to be reduced remain sufficient for completion of the Project, and (c) the requested increase in one or more line item(s) is to be used to pay Approved Costs.
(2) To the e xtent the Revision involves an increase in the total Costs, (a) additional funds in an amount equal to the increase in the total Costs will be provided by Borrower or a Lender pursuant to the Loan Balancing procedure described in Section 2, above, and (b) the requested increase in the total Costs is to be used to pay Approved Costs.
(3) The Revision will not shorten the useful life of the Project or any element of the Project or impair the functionality of any system or component of the Project.
(4) The Revision will not reduce the quality or functionality of the fixtures, finishes, furnishings, window materials, doors, hardware or appliances in the residential units or the common use facilities.
(5) The Revision will not change the interior layout of any of the residential units.
4. Lender Funds.
a. Authority Funds . The Authority Funds will be held by the Authority as the Authority will determine, to be disbursed as provided in this Disbursement Agreement. The Authority Funds are not pledged to the Construction Lender or any other lender, nor will they constitute security for the Construction Loan or any other loan.
b. Construction Lender Funds. The Construction Lender Funds will be deposited and held by the Fiscal Agent as the Construction Lender will determine, to be disbursed as provided in the Construction Loan Agreement. The Construction Lender Funds are not pledged to the Authority or any other lender, nor will they constitute security for the Authority Loan or any other loan.
5. Use of Funds to Pay Costs.
a. Disbursement Schedule. The Disbursement Schedule attached to this Disbursement Agreement as Exhibit “B” represents a good faith estimate of when the Project 294 of 422
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Funds will be disbursed to pay Approved Costs. The Lenders and the Borrower will meet monthly, or more frequently as ne cessary, to update the Disbursement Schedule throughout the construction period.
b. Approved Costs . The Authority Funds , Construction Lender Funds, and the Borrower’s Funds will be used exclusively for the payment of, or reimbursement for, the Costs shown in the Project Budget, as the same may be amended from time to time with the written approval of the Construction Lender and the written approval or deemed approval of the Authority (subject to paragra ph c. of this Section 5). Payment of, or reimbursement for, Approved Costs will be made only after they have been incurred by the Borrower.
c. Budget Amendments: Fiscal Agent’s Right to Disburse Funds without Authority Approval. Notwithstanding any provision of this Disbursement Agreement requiring approval by the Authority of amendments to the Project Budget, the Fiscal Agent will have the right, without Authority approval, to disburse Borrower ’s Funds and Construction Lender Funds (as applicable) to pay interest on the Construction Loan and Approved Costs which the Authorit y is deemed to have approved. The parties acknowledge and agree that the Project Budget attached to this Disbursement Agreement is approved as of the date hereof.
6. Application for Payments.
a. Applications for Payment . Disbursements of Project Funds will be made upon submission of a written itemized statement or draw request in a form that is mutually acceptable to the Lenders (the “Application for Payment ”), subject to the conditions set forth below. Each Application for Payment will include a representation by Borrower that it has obtained the approval of the Investor Limited Partner, to the extent such approval is required by the Partnership Agreement. The term “disbursement” will include, without limitation, disbursement of the Authority Funds, Borrower’s Funds that have been delivered to Fiscal Agent as “Borrower’s Funds,” Borrower’s prior expenditures of Borrower ’s Funds and Construction Lender Funds. Applications for Payment may be submitted not more frequently than once monthly. Each Lender will determine whether or not the conditions precedent to its obligation to advance its funds have been satisfied or whether or not to waive a condition precedent to such obligation to advance its loan. b. Order of Disbursement. Each Lender and the Borrower will disburse its respective Project Funds as follows:
(1) First, the Authority will be deemed to have disbursed $6,050,000 of the Measure S Loan at the Construction Financing Event to pay the fully capitalized value of Borrower’s ground rent under the Lease. (2) Second, approximately $_______ of the Borrower’s Funds will be disbursed to pay Approved Costs.
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(3) Third, the Authority will disburse the following:
(i) $4,927,500 (consisting of the $5,475,000 balance of the Measure S Loan after the disbursement described in paragraph (1), less the hold-back of ten percent (10%) described in paragraph (4) below), (ii) $1,620,000 (consisting of the $1,800,000 HOME Loan less the hold- back of ten percent (10%) described in paragraph (7) below), and (iii) $1,552,500 (consisting of the $1,725,000 LMIHAF Loan less the hold-back of ten percent (10%) described in paragraph (4) below).
The Measure S Loan disbursements, the LMIHAF Loan disbursements, and the HOME Loan disbursements will each be made pari passu and pro rata with Fiscal Agent’s disbursement of the Construction Loan, or on such other basis requested by Borrower as the Authority Executive Director reasonably determines protects the Authority’s investment of funds in the Project and ensures the completion of construction of the Improvements. Prior to the date of this Disbursement Agreement, Authority has previously disbursed $601,093 to Borrower of the Measure S Loan for utility removal and relocation.
(4) The Authority will hold back ten percent (10%) of disbursements of the $5,475,000 portion of the remaining Measure S Loan referenced in paragraph (3), which will be disbursed to Borrower to pay Approved Costs as set forth in Section 8 below.
(5) The Authority will hold back ten percent (10%) of disbursements of the $1,725,000 LMIHAF Loan, which will be disbursed to Borrower to pay Approved Costs as set forth in Section 8 below.
(6) The Authorit y will hold back ten percent (10%) of disbursements of the $1,800,000 HOME Loan, which will be disbursed to Borrower to pay Approved Costs as set forth in Section 8 below.
(7) Disbursement of the Construction Loan will be subject to such retention as may be provided for in the Construction Loan Agreement. The Construction Loan retention will be disbursed when and as required by the Construction Loan Agreement. The Fiscal Agent will disburse to Construction Lender, from principal of the Construction Loan, on a monthly basis, an amount equal to interest accrued on the outstanding principal of t he Construction Loan during the previous month, and each amount so disbursed will reduce the undisbursed balance of the Construction Loan for purposes of calculation of the proportionate disbursement with the Measure S Loan, the LMIHAF Loan, and the HOME Loan.
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c. Contents of Application for Payment . Subject to any additional requirements of the Construction Lender (which will not, in any event, apply to the disbursement of Authority Funds), each Application for Payment will set forth: (1) a description of the work performed, material supplied and/or Costs incurred or due for which disbursement is requested with respect to any Costs shown as a line item ( “Item”) in the Project Budget; (2) the total amount incurred, expended and/or due for each requested Item, less prior disbursements; and (3) the percentage of co mpletion of the portion of the work to be paid from the Item. The Authority hereby consents to the use of the form of Application for Payment attached to the Construction Loan Agreement for draw requests.
d. Delivery of Applications for Payment . Borrower will deliver copies of each Application for Payment concurrently to each of the Lenders. Each Application for Payment will be subject to the approval of the Lenders, with respect to their respective loans, in accordance with this Disbursement Agreement , and, if prevailing wage requirements are applicable, will be subject to review and approval by the Authority’s prevailing wage consultant, if needed to determine compliance with applicable state and federal prevailing wage requirements. e. Documentation. Each Application for Payment will be accompanied by the following: (i) change order(s) to the general contract , if any, (ii) copies of paid invoices and (except for the first Application for Payment) unconditional lien releases for construction costs paid with the proceeds of the prior Application for Payment, and (iii) conditional (upon receipt of payment) lien releases for construction costs to be paid with the proceeds of the instant Application for Payment, which invoices and lien releases will be considered a part of each Application for Payment. Where Borrower is requesting Project Funds for Costs other than general contract payments, Borrower will attach to the Application for Payment copies of invoices or such other appropriate documentation to evidence, document, justify and support the request, which will be an amount within the amount of the applicable line item in the Project Budget. Lenders may require Borrower to separate lien waivers and hard cost invoices from the other materials provided with Applications for Payment. Each Application for Payment submitted to the Authority will be accompanied by documentation satisfactory to the Authority to demonstrate Borrower’s compliance with applicable prevailing wage requirements.
f. Submittal of Inspection Report to Authority. Immediately after each disbursement pursuant to an Application for Payment, the Construction Lender will transmit to the Authority a copy of its inspection report or other documentation indicating the determination by Construction Lender ’s inspector of the percentage of work completed, pertaining to such Application for Payment. No representation or warranty of Construction Lender is made or will be implied with respect to any matter shown in such inspection report or other documentation. 297 of 422
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7. Approval of Applications for Payment
a. General. Approval of each Application for Payment will be subject to satisfaction of the requirements of this Agreement an d the Lenders’ respective Loan Documents.
b. Procedure. Except as otherwise provided in the Construction Loan Agreement with respect to the Construction Loan, e ach Lender will, within fifteen (15) business days after receipt of an Application for Payment con taining all of the items described in Section 6, above, determine the amount of the Application for Payment that is approved, notify Borrower, appropriate members of the construction team and the other Lenders of such amount, and, if and as requi red by paragraph b of Section 6 above, disburse the approved amount. With respect to disbursements of Authority Funds, The Authority will promptly disburse the approved amounts, by check, in either of the following ways (as the Authority may determine in its sole discretion): (i) to Borrower , and Borrower will promptly disburse such funds as provided in the Application for Payment, (ii) to subcontractors and/or sup pliers entitled to such payment as provided in the Application for Payment, or (iii) jointly to Borrower and such subcontractors and/or suppliers.
c. Disapprovals. An item in an Application for Payment which is not specifically approved within fifteen (15) business days will be deemed disapproved. On the basis of the progress of the work performed on the Project and the conditions precedent to making disbursements contained in their respective agreements with Borrower, each Lender may disapprove all or part of an Application for Payment.
If a Lender disapproves any portion of the amount requested by Borrower in an Application for Payment, such Lender will promptly notify the other Lenders and the Borrower of the disapproved amoun t and the reason therefor. A Lender’s disapproval of an amount requested in an Application for Payment is not binding on the other Lenders.
d. Concurrent Review of Applications for Payment. If requested payment for an item in the Application for Payment is disapproved or deemed disappr oved, the representatives of Borrower and the Lenders will meet promptly and in good faith to attempt to resolve the matter to their mutual satisfaction. To effectuate this paragraph, the Lenders will review each Application for Payment concurrently, and notify the other Lenders of its approval or disapproval (in whole or in part) of such request as soon as possible. Each Lender will signify its approval of an Application for Payment by signing and transmitting to the other Lenders a copy of the Application for Payment, by hard copy or facsimile transmission. e. Disbursement of Undisputed Amounts. If there is a dispute over an item included in an Application for Payment , the Lenders and Borrower will each, if and as required by paragraph b of Section 6 above, disburse the portion of the Application for Paym ent not in dispute, and fund the disputed amounts promptly upon resolution of the dispute. If a Lender elects to fund an amount disputed by another Lender, and the Lenders and Borrower subsequently resolve such dispute so that 298 of 422
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the Lender that disputed the amount agrees to fund the previously disputed amount, the Lender that disputed the amount will so disburse its funds to reimburse the other Lender for the amount such Lender previously funded. Disputed amounts will not be deducted fr om the Lenders ’ respective loans, but will be available for disbursement for other approved Costs in accordance with the Project Budget. f. Disbursement by Fiscal Agent to Pay Disputed Amounts . Notwithstanding any provision of this Disbursement Agreement requiring approval by all Lenders of disbursements to be made by any Lender, the Fiscal Agent will have the right, without the other Lender s’ approval, to disburse Borrower’s Funds and Construction Lender Funds to pay Approved Costs as provided in an Application for Payment that is not approved by the Authority, including amounts to pay cost overruns, without regard to whether such advance would cause the outstanding principal amount of the Construction Loan to exceed the original stated amount thereof. With respect to disbursements by the Fiscal Agent, all such amounts so advanced to pay Approved Costs will be and remain senior to the liens of the deeds of trust securing the Authority Loan all on the terms and conditions set forth in the applicable subordination agreement. Notwithstanding any provision in this Agreement or any o ther document or instrument, disbursements of Construction Lender’s Funds pursuant to this paragraph to pay Approved Costs will be deemed approved disbursements for purposes of subordination of the Authority Loan to the Construction Loan, and the subordination of the Authority Loan to the Construction Loan will include all such disbursements and advances by the Fiscal Agent, all on terms and conditions set forth in the respective subordination agreement. g. Right to Condition Disbursements . The Lender s will each have the right to condition a disbursement upon receipt and approval of such documentation, evidence or information that such Lender may request, including, but not limited to, vouchers, invoices, and architect ’s inspector ’s and/or engineer ’s periodic certifications of the percentage and/or stage of construction that has been completed.
h. General Conditions Applicable to Disbursements. Disbursements will be subject to the following conditions:
(1) Each Lender will use the disbursement procedures set forth in the respective Loan Documents and this Agreement; provided, however, none of the Lenders will be obliga ted to disburse any Project Funds until the other Lender has approved, or is deemed to have approved, all or a portion of the Application for Payment for the funds to be disbursed; and (2) The Lenders will make agreed disbursements of Project Funds: (a) to Borrower for reimbursement of soft costs incurred and paid by Borrower and for payment to third-party contractors, subcontractors or creditors of the Project, as the case may be; or (b) to Construction Lender for financing costs, including without limitation, loan fees, interest and reimbursement for Construction Lender ’s costs as set forth in the Construction Loan 299 of 422
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Documents and included in the Project Budget. Notwithstanding the foregoing, the Authority and Fiscal Agent will each have the right in their sole discretion to make disbursements of Project Funds directly to third parties entitled to such payment.
8. Approval of Final Application for Payment
Subject to additional conditions set forth in the Construction Loan Agreement (which will not, in any event, ap ply to any disbursement of Authority Funds), the final contractor ’s invoice (representing retention on the construc tion contract) will be disbursed by the Fiscal Agent to Borrower upon the submission by Borrower of documentation of the final cost of completing the Project, and the following (referred to as the “Completion”): (a) issuance of a permanent certificate of occupancy for the Project by the City of Glendale, (b) recordation of a Notice of Completion, (c) submission to the Lenders of unconditional lien releases or waivers obtained by Borrower or Borrower’s agent, (d) certification by the project architect that the Project has been completed in a good and workmanli ke manner and in substantial accordance with the approved plans and specifications, (e) disposition of any mechanic ’s liens that have been recorded or stop notices that have been delivered to any Lender, so that any such liens will have been paid, settled, bonded or insured around or otherwise extinguished or discharged and the Lenders have been provided satisfactory evidence of such payment, settlement, bond, title insurance or title insurance commitment or discharge, including without limit ation all statutory waivers, and (f) issuance by the Authority of its Release of Construction Covenants pursuant to the Affordable Housing Agreement. Subject to additional conditions set forth in the Authority Loan Documents (which will not, in any event, apply to a disbursement of Construction Lender Funds), the Authority will disburse to Borrower the portion of the Authority Funds held back as retention upon Borrower’s documentation of satisfaction of all conditions precedent to Conversion.
9. Disbursement of Borrower’s Funds.
Subject to the terms of the Construction Loan Agreement, Fiscal Agent will disburse all of the Borrower’s Funds (other than the Borrower’s Funds that will be disbursed at closing) to pay Costs on the basis of Applications for Payment approved by the Construction Lender and approved or deemed approved by the Authority and the Lender in accordance with this Agreement.
10. Allocation of Cost Savings
If, there are Cost Savings with respec t to the Project , the following will occur: (1) to the extent of fifty percent (50%) of the Cost Savings, any undisbursed amount of the Authority Loan plus any undisbursed capital contributions made by Borrower’s Investor Limited Partner will be released to the Authority as a payment of accrued interest on and then reduction of the principal amount of the Authority Loans; and (2) each Lender’s unfunded commitment will terminate. For purposes hereof, “Cost Savings”, shall mean the difference between the total sources of funds and the total cost of development as shown in the Borrower’s cost certification contained in Borrower’s application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”); provided, however, the Cost Savings will be adjusted to take into account (i) the loss of any equity investment due to an adjustment in the allowable tax credits; provided that the tax credit factor applied to the required equity contribution will be as set forth in 300 of 422
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Borrower’s limited partnership agreement; and (ii) any reduction in the first mortgage loan required by the Senior Loan Documents. The amount payable to Authority under this paragraph will be paid within sixty (60) days following submittal of the Tax Credit Rep ort to the California Tax Credit Allocation Committee.
11. Inspection of the Project.
The Lenders will each have the right to inspect the Property during construction and agree, subject to the consent of such Lender’s inspector, to deliver to each other Lender copies of inspection reports created. Inspection of the Property will be for the sole purpose of protecting the respective security of the Lender and is not to be construed as a representation by such Lender or its inspector that there has been com pliance with plans or that the Property will be free of faulty materials or workmanship. The Borrower may make or cause to be made such other independent inspections as the Borrower may desire for its own protection.
12. Supervision of Construction.
Neither the Authority nor the Construction Lender will be under any obligation to perform any of the construction or complete the construction of the improvements on the Property, or to supervise any construction on the Property, and will not be responsible for inadequate or deficient contractors, subcontractors, materials, equipment or supplies. Neither the Authority nor the Construction Lender is an agent for any other Lender or for Borrower, nor are the Authority or the Construction Lender partners or joint venturers with any other Lender or with Borrower. Neither the Authority nor the Construction Lender will have any fiduciary duty or obligation to any other Lender or to Borrower.
13. Use of Authority Funds by Construction Lender or Assignee after Foreclosure.
The Authority and Construction Lender agree as follows:
a. Construction Lender or Assignee May Assume the Affordable Housing Agreement.
If there is (1) a default by Borrower under the terms of the Affordable Housing Agreement, which remains uncured after notice to the Borrower pursuant to the Affordable Housing Agreement and which results in the termination of the Affordable Housing Agreement by the Authority, and/or (2) a foreclosure by the Construction Lender , or conveyance to Construction Lender by deed in lieu of foreclosure, the Construction Lender (and the assignee of such Lender, referred to herein as the “Assignee”) will have the right, but not the obligation, to assume the rights and obligations of Borrower under the Affordable Housing Agreement as if the Affordable Housing Agreement had not been terminated. The Construction Lender or Assignee, as the case may be, will be referred to as the “Party in Possession”.
b. Conditions to Continued Disbursement of Authority Loan . The Authority will continue to disburse the undisbursed portion of the Authority Loan for the payment of Project Costs as provided herein, upon and subject to: (1) the execution of an Assignment and Assumption Agreement acceptable to the Authority and the Party 301 of 422
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in Possession, pursuant to which the Party in Possession agrees to construct and operate the Project in accordance with the terms and conditions of the Affordable Housing Agreement, as the Affordable Housing Agreement may be further amended by mutual agreement of the Authority and the Party in Possession; and (2) to the extent necessary, the execution or re -execution and recordation or re - recordation, of the promissory notes evidencing the Measure S Loan, the LMIHAF Loan, and the HOME Loan , the Authority Deed of T rust and other instruments securing the Authority Loan s, the Agreement Containing Covenants, and the HOME Regulatory Agreement; provided, however, that nothing contained herein will obligate the Party in Possession to cure a default of Borrower under the Affordable Housing Agreement, which is not curable by the Party in Possession. c. Procedure if Party in Possession Fails to Assume Agreement. If the Authority and the Party in Possession fail to enter into an Assignment and Assumption Agreement as described in paragraph b within 90 days after termination of the Affordable Housing Agreement or Construction Lender’s foreclosure of its deed of trust (or such later date as the Party in Possession and the Authority may agree to in writing), either party may terminate this Disbursemen t Agreement by providing written notice of termination to the other party. Upon termination of this Disbursement Agreement, the Authority will have no further obligation to Construction Lender or any other person to disburse the undisbursed portion of the Authority Loans and the Construction Lender will have no further obligation to the Authority or any other person to disburse the undisbursed portion of the Construction Loan. d. Reservation of Rights. Nothing contained herein will be construed as restricting, limiting, amending or modifying the rights of the parties in the Affordable Housing Agreement, or the Construction Loan Agreement, as they relate to defaults or remedies, including, inter alia, the right of each party under it s respective security instruments to foreclose on the Property, or to seek recourse under any guaranties.
14. Integrated Agreement.
This Disbursement Agreement is made for the sole benefit and protection of the parties hereto and no other person or persons will have any right of action or right to rely hereon. As this Disbursement Agreement contains all the terms and conditions agreed upon between the parties, no other agreement regarding the subject matter thereof will be deemed to exist or bind any party unless in writing and signed by the party to be charged. Notwithstanding the foregoing sentence or any other provision of this Disbursement Agreement, this Disbursement Agreement does not 302 of 422
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supersede and will not be deemed to amend the Construction Loan Documen ts or the Authority Loan Documents.
15. Termination of this Disbursement Agreement.
This Disbursement Agreement will terminate when all of the Project Funds have been fully disbursed.
16. Binding Effect.
This Disbursement Agreement will be binding on and inure to the benefit of the parties hereto and their heirs, personal representatives, successors, and assigns, except as otherwise provided herein.
17. Governing Law.
This Disbursement Agreement has been negotiated and entered into in the State of California, and will be governed by, construed and enforced in accordance with the internal laws of the State of California, applied to contracts made in California by California domiciliaries to be wholly performed in California.
18. Titles and Captions.
Titles or captions contained herein are inserted as a matter of conveniences and for reference, and in no way define, limit, extend or describe the scope of this Disbursement Agreement or any provision hereof.
19. Interpretation.
No provision in this Disbursement Agreement is to be interpreted for or against either party because that party or his legal representatives drafted such provision.
20. Waiver; Amendments.
No breach of a provision hereof may be waived un less in writing. Waiver of one breach of a provision hereof will not be deemed to be a waiver of any other breach of the same or any other provision hereof. This Disbursement Agreement may be amended only by a written agreement executed by the parties to be bound at the time of the amendment.
21. Further Assurances.
The parties hereto agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Disbursement Agreement.
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22. Severance.
If any provision of this Disbursement Agreemen t is determined by a court of competent jurisdiction to be illegal, invalid or enforceable, such provision will be deemed to be severed and deleted from this Disbursement Agreement as a whole and neither such provision, nor its severance and deletion will in any way affect the validity of the remaining provisions of this Disbursement Agreement.
23. Independent Advice of Counsel.
The parties hereto and each of them, represent and declare that in executing this Disbursement Agreement they rely solely upon their own judgment, belief and knowledge, and the advice and recommendations of their own independently selected counsel, concerning the nature, extent and duration of their rights and claims, and that they have not been influenced to any extent whatsoever in e xecuting the same by any of the parties hereto or by any person representing them, or any of them.
24. Voluntary Agreement.
The parties hereto, and each of them, further represent and declare that they carefully read this Disbursement Agreement and know the contents thereof, and that they sign the same freely and voluntarily.
25. Attorneys’ Fees.
If there is a dispute between the Lenders regarding this Disbursement Agreement, the prevailing party will be entitled to recover costs and expenses, including but not limited to reasonable attorneys’ fees.
26. Counterparts.
This Disbursement Agreement may be signed by each party on a separate signature page, and when the executed signature pages are combined, will constitute one single instrument with the same effect as if all signatories had executed the same instrument.
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Page S-1
IN WITNESS WHEREOF, the Authority , Construction Lender , and Borrower have executed this Disbursement Agreement as of the date first set forth above.
“Authority”
THE HOUSING AUTHORITY OF THE
CITY OF GLENDALE
By:____________________________
Roubik R. Golanian, P.E.
Executive Director
APPROVED AS TO FORM AND LEGALITY:
MICHAEL J. GARCIA, CITY ATTORNEY
General Counsel to the Authority
By:_____________________________
Michael J. Garcia
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the Authority
By:______________________________
[Signatures Continue On Following Pages]
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Page S-2
“Borrower”
900 E BROADWAY, L.P.,
a California limited partnership
by: 900 E Broadway, LLC,
a California limited liability company,
its Administrative General Partner
by: Meta Development, LLC,
a California limited liability company,
its Administrative General Partner
By:___________________________
Kasey Burke
Manager
by: WCH Affordable LXIII, LLC,
a California limited liability company,
its Managing General Partner
By:___________________________
Graham Espley-Jones
President
[Signatures Continue On Following Page]
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Page S-3
“Construction Lender”
BANK OF AMERICA, NA,
a national banking association
By: ________________________________
Name: _____________________________
Title: ________________________________
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Exhibit A – Project Budget
Exhibit “A” to Disbursement Agreement
PROJECT BUDGET
[Immediately Follows This Page]
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Exhibit B – Disbursement Schedule
Exhibit “B” to Disbursement Agreement
DISBURSEMENT SCHEDULE
[Immediately Follows This Page]
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Ground Lease
GROUND LEASE
By and Between
THE HOUSING AUTHORITY
OF THE CITY OF GLENDALE
and
900 E BROADWAY, L.P.,
a California limited partnership
(900 East Broadway)
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TABLE OF CONTENTS
Article I DEFINITIONS ................................................................................................................. 2 Article II LEASE OF THE PROPERTY ........................................................................................ 8 Section 201 Purpose of Lease .................................................................................................... 8 Section 202 Leased Area ........................................................................................................... 9 Section 203 Assignment of Utility Rights ................................................................................. 9 Section 204 Recorded Encumbrances ........................................................................................ 9 Article III TERM .......................................................................................................................... 10 Section 301 Commencement and Term ................................................................................... 10 Section 301 Recordable Quitclaim Deed. ................................................................................ 10 Article IV CONSIDERATION FOR THE LEASE ...................................................................... 10 Section 401 Obligations and Covenants; Rent......................................................................... 10 Article V USE OF THE PROPERTY AND SITE CONDITIONS. ............................................. 10 Section 501 Use of the Property. ............................................................................................. 10 Section 502 Compliance with Law. ......................................................................................... 13 Section 503 Site Conditions. .................................................................................................... 14 Section 504 Hazardous Materials. ........................................................................................... 14 Article VI CONSTRUCTION OF IMPROVEMENTS ON THE PROPERTY ........................... 18 Section 601 Construction of Improvements. ........................................................................... 18 Section 602 Contractors and Subcontractors ........................................................................... 19 Section 603 Permits ................................................................................................................. 20 Section 604 Performance of Construction Work ..................................................................... 20 Section 605 Release of Construction Covenants ..................................................................... 21 Section 606 Ownership of Improvements................................................................................ 21 Section 607 No Liens on Landlord’s Interest .......................................................................... 21 Section 608 Removal of Liens on Leasehold Interest ............................................................. 22 Section 609 Notice of Completion ........................................................................................... 22 Article VII ALTERATIONS. ....................................................................................................... 22 Section 701 Alterations ............................................................................................................ 22 Article VIII NO LIABILITY OF LANDLORD ........................................................................... 23 Section 801 No Liability of Landlord. ..................................................................................... 23 Section 802 Discovery of Toxic Substances ............................................................................ 24 Article IX MAINTENANCE AND REPAIRS ............................................................................. 24 Section 901 Maintenance and Repairs ..................................................................................... 24 311 of 422
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Section 902 Repairs ................................................................................................................. 25 Section 903 Landlord’s Obligation .......................................................................................... 25 Article X DAMAGE OR DESTRUCTION .................................................................................. 25 Section 1001 Tenant to Give Notice .......................................................................................... 25 Section 1002 Repair of Damage or Destruction ........................................................................ 25 Section 1003 Application of Insurance Proceeds ...................................................................... 26 Section 1004 Tenant’s Obligations ............................................................................................ 27 Section 1005 Option to Terminate ............................................................................................. 27 Article XI ENTRY BY LANDLORD .......................................................................................... 27 Article XII UTILITIES AND SERVICES ................................................................................... 28 Section 1201 Utilities and Services ........................................................................................... 28 Section 1202 Easements ............................................................................................................ 28 Article XIII PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER ........................... 28 Section 1301 Prohibitions .......................................................................................................... 28 Section 1302 Consent to Assignment ........................................................................................ 30 Article XIV TAXES AND IMPOSITIONS ................................................................................. 30 Article XV INSURANCE ............................................................................................................. 31 Section 1501 Required Insurance .............................................................................................. 31 Section 1502 Disposition of Insurance Proceeds ....................................................................... 34 Article XVI DEFENSE, INDEMNIFICATION AND HOLD HARMLESS ............................... 34 Article XVII EMINENT DOMAIN.............................................................................................. 35 Section 1701 Tenant to Give Notice .......................................................................................... 35 Section 1702 Total Taking ......................................................................................................... 35 Section 1703 Partial Taking ....................................................................................................... 35 Section 1704 Application of Awards and Other Payments ....................................................... 36 Article XVIII COMPLIANCE WITH ALL LAWS ..................................................................... 36 Article XIX PERMITS AND LICENSES .................................................................................... 36 Article XX PRODUCTION OF REPORTS, RECORDS AND STATEMENTS ........................ 37 Article XXI NONDISCRIMINATION ........................................................................................ 37 Article XXII LEASEHOLD MORTGAGES................................................................................ 39 Section 2201 Leasehold Mortgages ........................................................................................... 39 Section 2202 No Subordination ................................................................................................. 39 Section 2203 Notice to Landlord ............................................................................................... 39 Section 2204 Notice to Permitted Leasehold Mortgagee .......................................................... 39 Section 2205 Permitted Leasehold Mortgagee’s Rights ............................................................ 39 312 of 422
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Section 2206 Obligations of Permitted Lease hold Mortgagee Upon Acquisition of Leasehold Estate .................................................................................................. 40 Section 2207 No Modification or Termination of Lease Without Permitted Leasehold Mortgagee’s Consent ........................................................................................... 40 Section 2208 Right of Permitted Leasehold Mortgagee to Cure Default .................................. 41 Section 2209 Foreclosure in Lieu of Curing Default ................................................................. 41 Section 2210 Assignment of Lease Upon Foreclosure .............................................................. 42 Section 2211 New Lease to Permitted Leasehold Mortgagee ................................................... 43 Section 2212 No Merger of Estates ........................................................................................... 44 Section 2213 Amendments for Benefit of Permitted Leasehold Mortgagee ............................. 44 Section 2214 Restriction on Landlord’s Right to Encumber its Interest ................................... 44 Section 2215 Restriction on Subordination of Tenant’s Interest ............................................... 45 Section 2216 Multiple Leasehold Mortgages ............................................................................ 45 Article XXIII EVENTS OF DEFAULT ....................................................................................... 45 Section 2301 Events of Default ................................................................................................. 45 Section 2302 Procedures for Declaring an Event of Default ..................................................... 46 Article XXIV REMEDIES ........................................................................................................... 47 Section 2401 Right of Termination............................................................................................ 47 Section 2402 Transfer of Interest Upon Termination ................................................................ 47 Section 2403 Damages ............................................................................................................... 47 Section 2404 Specific Performance ........................................................................................... 48 Section 2405 Cumulative Remedies .......................................................................................... 48 Section 2406 Limited Recourse ................................................................................................. 48 Article XXV INTEREST ON PAST DUE OBLIGATIONS ....................................................... 48 Article XXVI NOTICES............................................................................................................... 49 Article XXVII ESTOPPEL CERTIFICATE ................................................................................ 51 Article XXVIII SURRENDER ..................................................................................................... 51 Section 2801 Surrender .............................................................................................................. 51 Section 2802 Title to Improvements .......................................................................................... 51 Section 2803 Removal of Personal Property ............................................................................. 51 Section 2804 Holdover .............................................................................................................. 51 Article XXIX NO CONFLICT OF INTEREST, WARRANTY .................................................. 52 Section 2901 No Conflict of Interest ......................................................................................... 52 Section 2902 Warranty Against Speculation ............................................................................. 52 Article XXX ADDITIONAL PROVISIONS ............................................................................... 53 313 of 422
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Section 3001 Time is of the Essence ......................................................................................... 53 Section 3002 Waiver .................................................................................................................. 53 Section 3003 Costs of Litigation................................................................................................ 53 Section 3004 Institution of Legal Actions ................................................................................. 53 Section 3005 Applicable Law .................................................................................................... 53 Section 3006 Acceptance of Service of Process ........................................................................ 53 Section 3007 Relationship of Parties ......................................................................................... 54 Section 3008 Captions for Convenience .................................................................................... 54 Section 3009 Entire Agreement ................................................................................................. 54 Section 3010 Binding Effect ...................................................................................................... 54 Section 3011 Construction ......................................................................................................... 54 Section 3012 Tenant’s Payment of Property Taxes ................................................................... 54 Section 3013 Recording of this Ground Lease .......................................................................... 54 Section 3014 Severability .......................................................................................................... 54 Section 3015 Counterparts ......................................................................................................... 55
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ATTACHMENTS
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - SITE MAP
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GROUND LEASE
BETWEEN THE HOUSING AUTHORITY OF THE CITY OF GLENDALE
AND 900 E BROADWAY, L.P.
(900 East Broadway)
This Ground Lease (this “Lease”) dated as of ___________________, 2021, is entered into by and between the HOUSING AUTHORITY OF THE CITY OF GLENDALE , a public body corporate and politic (the “ Landlord”) and 900 E BROADWAY, L.P. , a Califor nia limited partnership (the “Tenant”) and is made with reference to the following:
RECITALS
A. Landlord is the owner of that certain real property located within the City of Glendale, County of Los Angeles, State of California (the “ Property”), as more part icularly described in Exhibit A attached hereto and shown on the Site Map attached as Exhibit B, incorporated herein by reference.
B. To carry out its public purposes under the California Community Redevelopment Law (Health and Safety Code, §§ Sections 33000 et seq.) (the “CRL”), Measure S (the Glendale Quality of Life and Community Services Protection Measure, which enacted a .75% sales tax increase and was approved by Glendale voters in 2018) (“ Measure S”), and the United States Department of Housing and Urban Development’s Home Investment Partnerships Program (“HOME Program ”), Landlord desires to enter into this Lease with Tenant subject to and in accordance with all of the terms and conditions of the Affordable Housing Agreement (the “AHA”) dated as of _________________, 2021 by and between Landlord and Tenant.
C. The AHA requires the construction, operation, and maintenance on the Property of one hundred twenty-six (126) affordable rental housing units for low income seniors (the “Units”) plus one manager’s unit, with ancillary parking through a shared use agreement and other facilities, all as described in the Scope of Development (the “Project”). The AHA contemplates that, during the term of this Lease , four Units will be rented at Affordable Rent to Extremely Low Income Senior Citizen Households, nine Units will be rented at Affordable Rent to Very Low Income Senior Citizen H ouseholds, and thirteen Units will be rented at Affordable R ent to Low Income Senior Citizen Households. The remainder of the Units will be rented at Low Income Housing Tax Credit limits.
D. Pursuant to the AHA, and to assist in providing housing within the City of Glendale that is affordable to persons and families of low and moderate income by assisting in payment of 316 of 422
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the Acquisition and Development Costs for the Project, Landlord is making a Measure S Loan, an LMIHAF Loan, and a HOME Loan to Tenant.
E. Landlord and Tenant desire to enter into a seventy -two (72) year ground lease of the Property to allow the Tenant to construct operate and maintain the Project on the Property on the terms and conditions set forth in the AHA and herein.
NOW THEREFORE , it is mutually agreed by and between Landlord and Tenant as follows:
ARTICLE I DEFINITIONS
C apitalized terms used herein have the meanings given to them where first used in this Lease or as set forth in this Article 1. Unless otherwise defined herein, capitalized terms have the meanings given to them in the AHA.
“ Acquisition and D evelopment Costs” means all costs which are actually incurred by Tenant for the acquisition of Tenant’s leasehold interest in the Property and the financing, development, and construction of the Project, and include, without limitation, all of the items of cost set f orth in the final Project Budget and similar costs, fees and expenses as approved by Landlord’s Executive Director, but not including Operating Costs. “Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with another Person. The term “control” as used in the immediately preceding sentence, means the power to direct the management or the power to control election of the board of directors. It will be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. For purposes of this definition, each general partner will be considered an “Affiliate” of Tenant.
“Agreement Containing Covenants ” means the Agreement C ontaining Covenants entered into between Landlord and Tenant, dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest.
“Anti-Terrorism Laws ” means all laws relating to terrorism or money laundering, including, without limitation, the Currency and Foreign Transactions Reporting Act of 1970, Pub.
L. No. 91-508, 84 Stat. 1305 (1970), as amended from time to time. “Assignment of Agreements” means the assignment by Tenant to Landlord (in its capacity as lender to the Project) of plans, contracts and permits for the Project, dated on or around the date hereof.
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“ Assignment of Rents and Leases ” means the assignment by Tenant to Landlord (in its capacity as lender to the Project) of rents and leases for the Project dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest. “ Authority Loan” means, individually and collectively, the LMIHAF Loan, the Measure S Loan, and the HOME Loan.
“ Authority Note” means, individually and collectively, the LMIHAF Note, the Measure S Note, and the HOME Note.
“ City” means the City of Glendale, California.
“ Construction Financing Event ” means the point in time when (i) all conditions precedent to the Construction Financing Event as set forth in the Method of Financing have been satisfied; (ii) this Lease is executed and delivered, and the Memorandum of Lease is recorded; and (iii) the Construction Loan Deed of Trust and other Construction Loan documents, the Authority Deed of Trust and other Authority Loan Documents are executed and recorded (as applicable). “ Conversion” means the point in time when the Permanent Loan has been funded, the additional Limited Partner Capital Contribution has been funded (less that portion, not to exceed 10%, of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), and the Construction Loan has been repaid in full. “ Environmental Indemnity” means the indemnity by Tenant for the benefit of Landlord dated on or around the date hereof.
“Force Majeure” or “Force Majeure Event” means the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority (except acts or failure to act of Landlord will not excuse performance by Landlord); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay will deliver such written notice within ten (10) business days after it obtains actual knowledge of the event giving rise to a claim of Force Majeure.
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“ Force Majeure Delay ” means a delay in taking any action required by this Lease, proximately caused by the occurrence of a Force Majeure Event. “General Partners” means 900 E. Broadway, LLC and WHC Affordable LXIII, LLC, and other entity admitted as a general partner pursuant to the Limited Partnership Agreement and permitted under the terms of this Lease and the AHA.
“ HOME Loan” means the loan from Landlord to Tenant in the original principal amount of $1,800,000.
“HOME Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the HOME Loan.
“HOME Regulatory Agreement ” means the Agreement Containing HOME Program Requirements entered into between Landlord and Tenant, dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest.
“Improvements” means the improvements to be constructed on the Property in accordance with this Lease and the AHA, including but not limited to the Scope of Development. “ Investor Limited Partner” means the entity identified as such in Tenant’s Limited Partnership Agreement, and its successors and assigns.
“Leasehold Interest” means Tenant’s interest in the leasehold estate created by this Lease. “Leasehold Mortgage” means a conveyance of a security interest in Tenant’s Leasehold Interest to a lender to the Project.
“ Leasehold Mortgagee” means the authorized beneficiary of a Leasehold Mortgage. “ LMIHAF Loan” means the loan from Landlord to Tenant in the original principal amount of $1,725,000.
“LMIHAF Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the LMIHAF Loan.
“Measure S Loan ” means the loan from Landlord to Tenant in the original principal amount of $11,525,000.
“Measure S Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the Measure S Loan.
“ Memorandum of Lease” means the Memorandum of Lease dated and recorded on or around the date hereof, between Landlord and Tenant, encumbering Tenant’s Leasehold Interest. “Method of Financing ” means the Method of Financing attached to the Affordable Housing Agreement as Attachment No. 3.
“Operating Costs” has the same meaning as the definition of Operating Expenses set forth in the Authority Note.
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“ Permitted Leasehold Mortgage ” means a Leasehold Mortgage that satisfies all of the following conditions:
(a) The Leasehold Mortgage will secure a loan made for payment of Acquisition and Development Costs or for payment of the costs of rehabilitating or restoring the Improvements or for payment of other costs related to the Project or for the sole purpose of refinancing loans made for any of the foregoing permitted financing purposes so long as such refinanced loans are not in an amount greater than the loan(s) being refinanced.
(b) The Leasehold Mortgage will cover all of Tenant’ s interest in the Lease, the Property, and the Improvements and will cover no interest in any other real property other than the Property.
(c) The Leasehold Mortgage will be without subordination of Landlord’s fee title to the Property.
(d) No Leasehold Mortgage permitted by this Lease will cover more than one indebtedness; that is, there will be no cross-collateralization permitted. (e) A Leasehold Mortgage is to be originated only by a Qualified Lender. For the purposes hereof, the term “Qualified Lender” includes the California Public Finance Authority, Bank of America, National Association, and Citibank, N.A. and means:
(i) the mortgagee of purchase money financing of a Permitted Transfer or other Transfer approved by Landlord;
(ii) one or a combination of the following lending institutions authorized under applicable California or federal law to make mortgage loans and not under any order or judgment of any court or administrative authority restricting or impairing its operation as a lende r: a commercial or savings bank, a trust company, an insurance company, a savings and loan association, or a building and loan association;
(iii) a company engaged in the ordinary course of business as a lender with a net worth of not less than $50,000,000, which is duly licensed or registere d (if legally required) with a regulatory agency having jurisdiction over its operation, and is not under an order or judgment of any court or administrative authority restricting or impairing its operation as a lender, including, without limitation, the following: a real estate investment trust, an educational institution, a pension, retirement or welfare fund, a charity, or an endowment fund or foundation authorized to make loans in the State of California;
(iv) a partner of Tenant’s partnership, as provided in the AHA; and 320 of 422
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(v) governmental entities , government -sponsored entities, and other public bodies.
No Permitted Leasehold Mortgage will be binding upon Landlord in the enforcement of its rights and remedies herein, unless and until Landlord receives a copy of the fully executed original Permitted Leasehold Mo rtgage bearing the date and recording information, and a copy of the original note secured by the Permitted Leasehold Mortgage, each certified by either Tenant or the Permitted Leasehold Mortgagee, together with written notice of the address of the Permitted Leasehold Mortgagee to which notices may be sent. In the event of an assignment of such Permitted Leasehold Mortgage, such assignment will not be binding upon Landlord unless and until Landlord receives a copy thereof, certified by either the assignor or the assignee, bearing the date and recording information, together with written notice of the address of the assignee thereof to which notices may be sent.
“ Permitted Leasehold Mortgagee” means the authorized beneficiary of a Permitted Leasehold Mortgage. Landlord and Tenant expressly acknowledge that the California Public Finance Authority, Bank of America, National Association , its successors and assigns, Citibank, N.A., its successors and assigns, and the Housing Authority of the City of Glenda le, and its successors and assigns, are Permitted Leasehold Mortgagees for all purposes of this Lease. “Permitted Transfer” means any of the following , provided (except for subsection f. below) Tenant, a General Partner of Tenant, or an Affiliate of such G eneral Partner, retains day- to-day control over management and operations of the Property and the Improvements and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws:
(a) An assignment of this Lease and Tenant ’s Leasehold Interest to an Affiliate or a conveyance back from the Affiliate to Tenant;
(b) A conveyance of a security interest in the Property or any portion thereof or interest therein, in connection with a Permitted Leasehold Mortgage; (c) The inclusion of equity participation in the Project by addition of limited partners or similar mechanism, and any transfers of limited partnership interests in Tenant’s partnership;
(d) The lease for occupancy of all or any part of the Improvements on the Propert y in accordance with this Lease, the Agreement Containing Covenants, and the HOME Regulatory Agreement;
(e) The granting of easements or permits to facilitate the development of the Property in accordance with the AHA;
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(f) The withdrawal, removal and/or replacement of a general partner of Tenant’s partnership pursuant to the terms of Tenant’s partnership agreement, or a conveyance of Tenant’s interest in the Property and the Improvements and/or a transfer of limited partnership interests to a General Partner (or an affiliate of Meta Development LLC) pursuant to the option provided to that partner in Tenant’s partnership agreement, will not constitute a default under this Lease or any of the Authority Loan Documents, nor will such actions accelerate the maturity of the Authority Loan, provided that any required substitute general partner is reasonably acceptable to Landlord, as evidenced by Landlord’s written consent, and is selected with reasonable promptness;
(g) A transfer of Tenant’s leasehold estate pursuant to Article XXII; and (h) Any transfer approved in writing by Landlord’s Executive Director or designee, at his or her sole discretion.
A transfer described in clauses a. or b. or c. will be subject to the reasonable approval of the Landlord’s Executive Director or designee; provided that, Landlord approves the transfer of limited partner interests in Tenant’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Tenant, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign. “Prohibited Person” means any of the following:
(a) a Person that is listed in or is otherwise subject to the prohibitions of, any Executive Order relating to money laundering or anti-terrorism;
(b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in or is otherwise subject to the prohibitions of, any Executive Order relating to money laundering or anti-terrorism;
(c) a person or entity with whom Tenant or Investor Limited Partner is prohibited from dealing or otherwise engaging in any transaction by Anti-Terrorism Laws; (d) a Person that is named as a “specially designated national and blocked person” on the most current list published by the Office of Foreign Asset Control of the U.S.
Treasury Department.
“Project Budget ” means the most recently approved schedule of Acquisition and Development Costs in the form attached to the AHA as Attachment No. 6. “ Project Plans” means the architectural and construction plans and drawings prepared on behalf of Tenant for the Project in accordance with the AHA. 322 of 422
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“ Release of Construction Covenants ” has the meaning set forth in Section 605 of this Lease.
“Schedule of Performance” means the Schedule of Performance attached to the Affordable Housing Agreement as Attachment No. 5.
“Scope of Development ” means the Scope of Development attached to the Affordable Housing Agreement as Attachment No. 4.
“Senior Leasehold Mortgage” means a Permitted Leasehold Mortgage which secures a Senior Loan.
“Senior Loan” means a loan used to pay a portion of the Acquisition and Development Costs, secured by a Permitted Leasehold Mortgage which is approved by the Housing Authority’s Executive Director as being senior in priority to the lien of the Authority Deed of Trust. The initial holder of the first priority Senior Loan is Ban k of America, National Association and the subsequent holder is Citibank, N.A.
“Transfer” means:
(a) the sale, agreement to sell , transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sal e contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project.
(b) “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Tenant, or a conversion of Tenant to an entity form other than that of Tenant at the time of execution of this Lease, except that, a cumulative change in ownership interest of a general partner of Tenant of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Lease.
Notwithstanding paragraphs (a) and (b), “Transfer” will not include Permitted Transfers.
ARTICLE II LEASE OF THE PROPERTY
Section 201 Purpose of Lease
The purpose of this Lease is to provide for the construction of a 127-unit apartment community and related amenities, in accordance with the AHA, and the maintenance, management, and operation of the Improvements, in accordance with the Agreement Containing Covenants, the HOME Regulatory Agreement, and applicable law. Tenant will not occupy or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be done in, on or about the Property, in whole or in part, for any other purpose , or for any purpose not permitted by the AHA, this Lease, the Agreement Containing Covenants, the HOME Regulatory Agreement, and applicable law.
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Section 202 Leased Area
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Property on the terms and conditions set forth in this Lease. Landlord also leases to Tenant, and Tenant leases from Landlord, Landlord’s right, title and interest in and to any easements and rights of way, present or reversionary, which are appurtenant to the Property; provided however, that the Landlord reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following:
(a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Property or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Property, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Property; and (b) Any and all water, water rights or interests therein, no matter how acquired by Landlord, together with the right and power to explore, drill, redrill, remove and store the same from the Property or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Landlord, whether such water rights will be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual.
Notwithstanding the foregoing (a) or (b), such reservation shall be without any right to enter upon the surface of the Property in the exercise of such rights and, provided further, that the exercise of any such rights by Landlord will not result in any damage or injury to the improvements constructed on the Property by Tenant, including without limitation, any subsidence of all or any part of such improvements, or interfere with Tenant’s operation of the Project.
Section 203 Assignment of Utility Rights
Landlord, by virtue of its fee title to the Property, may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc. (the “ Utility Rights”). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its leasehold interest in the Property.
Section 204 Recorded Encumbrances
T his Lease and the interest of Tenant hereunder are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights -of-way and easements of record affecting the Property.
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ARTICLE III TERM
Section 301 Commencement and Term
The term of this Lease (“Term ”) will commence upon the date of the Construction Financing Event and will continue thereafter until the seventy second (72nd) anniversary of the date of Conversion, unless earlier terminated in accordance with its terms or extended in accordance with the option term described herein . Tenant shall have the right, but not the obligation, to extend the term of this Lease for an additional five (5) year period (the “Extension Term”) upon the termination of the Term. Tenant shall give written notice of its election to exercise the Extension Term to Landlord at least 180 days, but not more than one year, prior to the expiration date of the initial lease Term. Tenant shall have no other right to extend the term beyond the Extension Term.
Section 302 Recordable Quitclaim Deed.
At the expiration or earlier termination of this Lease, Tenant will execute, acknowledge and deliver to Landlord, within thirty (30) days after written demand by Landlord, a valid and recordable quitclaim deed covering the Property and the Improvements, free and clear of all liens and encumbrances.
ARTICLE IV CONSIDERATION FOR THE LEASE
Section 401 Obligations and Covenants; Rent
Landlord is entering into this Lease with Tenant in consideration of Tenant’s obligations and covenants contained herein. Landlord will lease the Property to Tenant for a fully capitalized rent equal to $6,050,000, which is equivalent to the fair market value of the Property (“Rent”).
Landlord hereby acknowledges that Tenant prepaid the Rent in full upon the Construction Financing Event, using proceeds of the Authority Loan.
ARTICLE V USE OF THE PROPERTY AND SITE CONDITIONS.
Section 501 Use of the Property.
Tenant will use the Property solely for the construction of the Project, in accordance with this Lease and the AHA, including the Scope of Development , and for the maintenance and operation of the Project in accordance with this Lease, the Agreement Containing Covenants, and the HOME Regulatory Agreement . Accordingly, Tenant, its successors and assign s, will use the Property exclusively to provide 127 units of rental housing, including one two-bedroom manager’s unit. Four Units will be rented at Affordable Rent to Extremely Low Income Senior Citizen Households, nine Units will be rented at Affordable Rent to Very Low Income Senior Citizen Households, and thirteen Units will be rented at Affordable Rent to Low Income Senior Citizen Households, subject to all of the terms and conditions of this Lease. The remainder of the Units will be rented at Low Income Housing Tax Credit Limits. (a) The units will be allocated as follows:
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(i) Four will be rented exclusively to Extremely Low Income Senior Citizen Households at an Affordable Rent as provided in California H ealth and Safety Code Section 50053, consisting of the following: (a) three studio units; and (b) one one-bedroom unit. (ii) Nine units will be rented exclusively to Very Low Income Senior Citizen Households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of the following: (a) six studio units; and (b) three one-bedroom units. (iii) Thirteen units will be rented exclusively to Low Income Senior Citizen Households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of the following: (a) nine studio units; and (b) four one-bedroom units. (iv) Thirty-one units will be rented exclusively to households meeting the sixty percent (60%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) twenty -two studio units; and (b) nine one-bedroom units.
(v) Sixty-nine units will be rented exclusively to households meeting the seventy percent (70%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the followi ng: (a) forty -seven studio units; and (b) twenty-two one-bedroom units.
(b) For purposes of this Agreement, the maximum incomes of eligible tenants for the Restricted Units described in paragraph s (a) (i), (a)(ii), and (a)(iii) of this Section 501 will be determined on the basis of the income limits for Extremely Low Income, Very Low Income, and Low Income H ouseholds in the Los Angeles -Long Beach SMSA, published approximately annually by the California Department of Housing and Community Development (“ HCD”). If HCD discontinues publishing such income limits, the term “Extremely Low Income” shall mean a household income that does not exceed 30% of the area median income for the Los Angeles - Long Beach SMSA, published approximately annually by HCD (“ Area Median Income ”), adjusted for family size , the term “Very Low Income” will mean a household income that does not exceed 50% of the Area Median Income, adjusted for family size, and the term “Low Income” will mean a household income that does not exceed 80% of Area Median Income. For the term of the Tax Credits, in no case will household income exceed applicable Tax Credit income limits. (c) Immediately prior to a prospective household’s occupancy of a Restricted Unit , Tenant will obtain and maintain on file an income computation and certification form from such household dated immediately prior to the date of initial occupancy. Tenant will verify that the income information provided by an applicant is accurate by following all applicable Landlord policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant’s current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department 326 of 422
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of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant’s income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Tenant will update the foregoing records annually and provide copies of updated tenant eligibility records and monthly rental records to Landlord for review. Upon review of such records, Landlord may at its option perform an independent audit of the household eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Tenant will retain the records described in this Paragraph (e) for a period of five (5) years after the date each record was created.
(d) Rents charged to a Senior Citizen Household occupying a Restricted Unit may not exceed rents that are affordable to such households (as “Affordable Rent” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by a tenant of a Restricted Unit will be the lower of the maximum rent
permitted to be charged for the unit pursuant to the Extended Use Agreement for so long as such requirements are applicable, and the maximum rent set forth below. For purposes of determining Affordable Rent under paragraphs (d)(i), (d)(ii), and (d)(iii) below, household size appropriate to the unit will mean one person in the case of a studio and two persons in the case of a one-bedroom unit.
(i) In the case of a Senior Citizen Household occupying a n Extremely Low Income Restricted Unit, the maximum rent will be a rent that does not exceed thirty percent (30%) of thirty percent (3 0%) of Area Median Income, adjusted for household size appropriate to the unit.
(ii) In the case of a Senior Citizen Household occupying a Very Low Income Restricted Unit, the maximum rent will be a rent that does not exceed thirty percent (30%) of fifty percent (50%) of Area Median Income, adjusted for household size appropriate to the unit. (iii) In the case of a Senior Citizen Household occupying a Low Income Restricted Unit, the maximum rent will be a rent that does not exceed thirty percent (30%) of sixty percent (60%) of Area Median Income, adjusted for household size appropriate to the unit. (iv) In the case of a household occupying a unit described in paragraphs (a)(iv) and (a)(v) of this Section 501, the maximum rent will be the maximum allowable rent under the Extended Use Agreement.
(e) Tenant, its successors or assigns, may not terminate a lease or refuse to renew the lease of a household described in this Section 501, except: for serious or repeated violation of the terms and conditions of the lease; for violation of applicable federal, state, or local law; in order to comply with applicable requirements of federal law relating to the Low Income Housing Tax Credit, or for other good cause. Any termination or refusal to renew must be provided by Tenant’s 327 of 422
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service upon such household of a written notice specifying the grounds for the action in the time and manner proscribed by law.
(f) The affordability requirement set forth in this Section 501 will continue in full force and effect for the full Term of this Lease, whether or not the Agreement Containing Covenants or the HOME Regulatory Agreement continue to be an encumbrance on the Property . Tenant will submit to Landlord on an annual basis the report required by Health and Safety Code s ection 33418. The annual report will include for each residential unit the rental rate and the income and family size of the occupants. The income information will be supplied by the occupants in a certified statement on a form provided by Landlord. Tenant will provide for the submission of such information in its lease or occupancy agreements for the Restricted Units.
Section 502 Compliance with Law.
Tenant will carry out the development, construction (as defined by applicable law) , and operation of the Project on the Property, including, without limitation, any and all public works (as defined by applicable law), if any, in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any applicable requirement to pay state prevailing wages). Tenant hereby agrees that Tenant will have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law.
Tenant hereby agrees that Tenant will have the obligation to provide and maint ain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Tenant will indemnify, protect, defend and hold harmless Landlord, the City of Glendale, and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Landlord and City, from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased costs” (including labor costs, penalties, reasonable attorneys ’ fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (if any) (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance b y Tenant of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Chapter 804, Statutes of 2003; (3) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (4) failure by Tenant to provide any required disclosure representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Tenant to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required 328 of 422
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by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Tenant hereby expressly acknowledges and agrees that neither City nor Landlord has ever previously affirmatively represented to the Tenant or its contractor(s) for the Project in writing or otherwise, that the work to be covered by the bid or contract is not a “public work,” as defined in Section 1720 of the Labor Code. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), if any, Tenant will bear all risks of payment or non -payment of state prevailing wages and/or the implementation of Chapter 804, Statutes of 2003 and/or Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. “Increased costs” as used in this Section will have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity will survive termination of this Agreement and will continue after recordation of the Release of Construction Covenants.
Section 503 Site Conditions.
(a) All portions of the Property, and any improve ments thereon, which are leased to Tenant by Landlord will be leased in an “as is” condition, with no warranty, express or implied, by Landlord as to the condition of the soil, its geology, or the presence of known or unknown faults or the presence of any Hazardous Materials, as defined in Section 504 below, and it will be the sole responsibility of Tenant, at Tenant’s expense, to investigate and determine the soil conditions of the Property and the suitability of the Property for the development of the Project. If the soil conditions of the Property, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the soil conditions thereof in all respects in a condition entirely suitable for the development of the Property as described in the AHA, including without limitation, the Scope of Development which may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Materials.
(b) Tenant hereby releases Landlord, the City and their respective officers, employees, agents and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or statements of fact affecting the Property concerning or related to the physical condition of the Property.
Section 504 Hazardous Materials.
(a) “Hazardous Materials” means and includes the following:
(i) a “Hazardous Substance” as defined by Section 9601 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601 et seq . or as “Hazardous Waste” as defined by Section 6903 of the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq.;
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(ii) an “Extremely Hazardous Waste,” a “Hazardous Waste,” or a “Restricted Hazardous Waste,” as defined by The Hazardous Waste Control Law under §§25115, 25117 or 25122.7 of the California Health and Safety Code, or is listed or identified pursuant to §25140 of the California Health and Safety Code;
(iii) a “Hazardous Material,” “Hazardous Substance,” “Hazardous Waste,” or “Toxic Air Contaminant” as defined by the California Hazardous Substance Account Act, laws pertaining to the underground storage of hazardous substance s, hazardous materials release response plans, or the California Clean Air Act under §§ 25316, 25281, 25501, 25501.1, 117690 or 39655 of the California Health and Safety Code;
(iv) “Oil” or a “Hazardous Substance” listed or identified pursuant to §311 of the Federal Water Pollution Control Act, 33 U.S.C. §1321; (v) materials, substances and wastes listed or defined as a “Hazardous Waste,” “Extremely Hazardous Waste,” or an “Acutely Hazardous Waste” pursuant to Chapter 11 of Title 22 of the California Code of Regulations Sections 66261.1 - 66261.126; (vi) materials, substances and wastes listed by the State of California under Proposition 65 Safe Drinking Water and Toxic Enforcement Act of 1986 as a chemical known by the State to cause cancer or reproductive toxicity pursuant to §25249.8 of the California Health and Safety Code;
(vii) a material which due to its characteristics or interaction with one or more other substances, chemical compounds, or mixtures, damages or threatens to damage, health, safety, or the environment, or is required by any law or public agency to be remediated, including remediation which such law or government agency requires in order for the property to be put to any lawful purpose;
(viii) any material whose presence would require rem ediation pursuant to the guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual, whether or not the presence of such material resulted from a leaking underground fuel tank; (ix) pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§136 et seq.;
(x) asbestos, PCBs, and other substances regulated under the Toxic Substances Control Act, 15 U.S.C. §§2601 et seq.;
(xi) any radioactive material including, without limitation, any “source material,” “special nuclear material,” “by -product material,” “low -level wastes,” “high - level radioactive waste,” “spent nuclear fuel” or “transuranic waste,” and any other radioactive materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. 330 of 422
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§§2011 et seq ., the Nuclear Waste Policy Act, 42 U.S.C. §§10101 et seq ., or pursuant to the California Radiation Control Law, California Health and Safety Code §§114960 et seq.; (xii) materials, substances and wastes regulated under the Occupational Safety and Health Act, 29 U.S.C. §§651 et seq ., or the California Occupational Safety and Health Act, California Labor Code §§6300 et seq.; and
(v) materials, substances and wastes regulated under the Clean Air Act, 42 U.S.C. §§7401 et seq . or pursuant to the California Clean Air Act, Sections 3900 et seq . of the California Health and Safety Code.
(b) Tenant hereby represents and warrants that the development, construction, and uses of the Project and Property permitted under the AHA and this Lease do not requi re the presence of any Hazardous Materials on the Property that cannot or will not be kept, stored, used and maintained in compliance with all applicable laws and the manufacturer’s guidelines. (c) If at any time during the term of this Lease, any Hazardous M aterial is present on, in or under the Property (including, without limitation, the soil and groundwater) in violation of applicable law, Tenant will at no expense to Landlord, at the earliest practicable date, remove such Hazardous Materials from the Property (including without limitation any Hazardous Materials in the soil or groundwater) and any surrounding areas to which such Hazardous Materials ma y have migrated in accordance with and to the extent required by any and all applicable legal requirements. The parties intend to require Tenant to remove all Hazardous Materials from the Property and surrounding areas to which such Hazardous Materials ma y have migrated to the extent required by applicable law, if such Hazardous Materials are present at levels of concentration which require removal under applicable law. If, at any time during the term of this Lease, Landlord has reasonable cause to believe one or more Hazardous Materials may be present on, in or under the Property in violation of applicable law, Landlord may, by written notice, inform Tenant of the basis for Landlord’s concern and require Tenant to cause the Property to be tested for such Hazardous Material(s) at Tenant’s sole expense, in accordance with a testing plan and schedule first approved in writing by Landlord. Tenant will submit a testing plan to Landlord within thirty (30) days after the date of Landlord’s notice, and cause the testing to begin within thirty (30) days from Landlord’s approval of the testing plan. (d) Tenant will not bring or allow to be brought onto the Property or use or store on the Property any Hazardous Materials without the prior express written consent of Landlord, except for those Hazardous Materials (including without limitation fuel stored in motor vehic les) customarily used in the ordinary course of business in the use and operation of the Property and the Improvements (defined herein).
(e) The following covenants pertain to Tenant’s occupancy and use of the Project and Improvements:
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(i) No underground storage tanks for Hazardous Materials will be installed without the prior written approval of Landlord’s Executive Director. (ii) Landlord, or its officers, employees, contractors or agents will at all times have the right to go upon and inspect the Property and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. Landlord will provide reasonable prior notice to Tenant of such entry, and will seek to minimize interference with Tenant’s use of the Property and Improvements as much as is reasonably feasible. Such entry will be in compliance with all applicable safety rules and regulations. If there is reasonable cause to believe in the presence of Hazardous Materials, t his inspection may include taking samples for testing of substances and materials present and/or testing soils on the Property and Improvements.
Landlord will indemnify, defend, and hold harmless Tenant from and against any claims, liabilities, losses, and d amage caused by Landlord during any such inspections, and will be responsible for the prompt repair and/or restoration of any such damage caused by Landlord during any such inspection.
(iii) Tenant will be responsible for posting on t he Property and Improvements all notices and signage required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant will also complete and file all business response plans or inventories required by Chapter 6.95 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant will concurrently file a copy of such business response plan or inventory with Landlord.
(iv) Tenant will immediately notify Landlo rd in writing of the release of any Hazardous Material on the Property or Improvements in violation of applicable law. (v) Tenant will, to the extent required by applicable law , immediately remove all Hazardous Materials located on the Pr operty and Improvements and will dispose of such Hazardous Materials in a safe and legal manner. Tenant will immediately disclose to Landlord its disposal of any Hazardous Material located on the Property and Improvements and upon Landlord’s written request will provide written documentation of its safe and legal disposal. (f) Tenant will be responsible for and bear the entire cost of removal and disposal of Hazardous Materials. Landlord may also pass through to Tenant any and all clean- up costs incurred by the Landlord as a result of Tenant’s activities on the Property and Improvements or the presence of any Hazardous Material(s) on, in or under the Property and Improvements after the commencement of this Lease. Upon termination of this Lease, Tenant is required, in accordance with all applicable laws, to remove from the Property and Improvements all equipment or improvement to the Property that is contaminated by Hazardous Materials. (g) By this Lease, Tenant provides to Landlord, effective upon the date of this Lease, an indemnification of Landlord, the City and their respective members, officers, employees, agents, contractors and consultants, relating to the environmental condition of the Property and the 332 of 422
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presence of Hazardous Materials thereon. Therefore, Tenant hereby agrees to indemnify, defend and hold harmless Landlord, the City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of Hazardous Materials, and reasonable attorneys’ fees) (collectively, the “Claims”) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any Hazardous Materials to or from, the Property; or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation or Hazardous Materials on, under, in or about, to or from, the Property, provided, however, that this indemnity shall not extend to any Claims resulting solely from the gross negligence or willful misconduct of Landlord. (h) From the date of this Lease, Tenant hereby waives, releases and discharges Landlord, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and adminis trative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys’ fees) arising out of or in any way connected with Landlord’s or Tenant’s use, maintenance, ownership or operation of the Property, any Hazardous Substances on the Property, or the existence of Hazardous Substances contamination in any state on the Property, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of Landlord, the City, or their respective employees, officers or agents. Tenant acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:
“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”
________ Initialed by Tenant’s authorized signatory.
________ Initialed by Tenant’s authorized signatory.
As such relates to Section 503 abo ve, and this Section 504, Tenant hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code.
ARTICLE VI CONSTRUCTION OF IMPROVEMENTS ON THE PROPERTY Section 601 Construction of Improvements.
Tenant will construct or cause to be constructed on the Property, with financing as provided in the Method of Financing, the Improvements in accordance with this Lease and the AHA, 333 of 422
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including the Scope of Development. Prior to the commencement of any work or construction, Tenant will:
(a) Notify Landlord in writing, at least ten (10) days in advance of commencing construction or delivery of materials to the Property, of Tenant’s intention to construct the Improvements. Landlord will have the right to post and maintain on the Property any notices of non-responsibility provided for under applicable law, and to have access to the Property at all reasonable times to satisfy itself that Tenant is carrying out construction in accordance with the terms of this Lease, the AHA and Project Plans , and is complying with all applicable laws and regulations, including without limitation, those regulations pertaining to safety of the construction site.
(b) Procure and deliver to Landlord at Tenant’s expense, evidence of issuance of all required permits and approvals, including, but not restricted to, a grading permit, building permits, zoning and planning approvals, and all required approvals from any governmental agencies and bodies having jurisdiction over the Project.
Section 602 Contractors and Subcontractors.
For purposes of this Section, the terms “contractor,” “subcontractor,” “contract,” and “subcontract,” will refer to all tradespersons, contractors, subcontractors, construction managers, materialmen or suppliers furnishing services or materials in connection with the construction of the Improvements, and contracts or agreements written or oral, with them. Landlord will have the right to disapprove the general contractor and the subcontractors performing mechanical, electrical, plumbing, framing and other trades identified by the Authority and used by Tenant for construction of the Project, to which Landlord has reasonable objection, which approval will not be unreasonably delayed or withheld.
(a) Tenant’s contracts with general contractors and subcontractors must give Landlord the right to receive notices of Tenant’s default under said contracts and must give Landlord a reasonable opportunity to cure any such default and the right (but not the obligation) to assume Tenant’s obligations and rights under such contracts if Tenant commits an Event of Default under this Ground Lease. Landlord’s exercise of its rights pursuant to this Section 602 will not be in lieu of or constitute a waiver of any other right Landlord may have against Tenant, any guarantor or surety or any other person or entity.
(b) Tenant will comply, and Tenant will require all of Tenant’s contractors and subcontractors to comply, with all laws, statutes, ordinances, regulations, building codes, zoning codes and regulations and the orders, judgments, rules, regulations and requirements of all federal, state, local and municipal governments (hereinafter “Legal Requirements ”) in connection with the performance of all work on the Property.
(c) Tenant must not, and Tenant will require that all Tena nt’s contractors and subcontractors will not, discriminate against any employee or applicant for employment on the basis of disability, race, religion or creed, sex, marital status, national origin, condition of having Acquired Immune Deficiency Syndrome, or sexual orientation. 334 of 422
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Section 603 Permits.
(a) Tenant will obtain all permits, licenses and other governmental approvals and authorizations required for the construction or operation of the Improvements. (b) Before allowing occupancy or use of any portion of the Improvements, Tenant, at its own cost and expense, will obtain and deliver to Landlord partial, temporary or final Certificate(s) of Occupancy in the form customarily issued by the appropriate governmental authority.
Section 604 Performance of Construction Work.
(a) Any and all construction work will be done diligently, in conformity with all legal requirements, in a good and workmanlike manner, and in accordance with the terms of the AHA, including without limitation, the Scope of Development, the Project Plans, and under the supervision of an architect approved by Landlord. Once Tenant commences construction of the Improvements, as set forth in the Schedule of Performance , Tenant will diligently pursue completion of construction within the time set forth in the Sche dule of Performance, subject to Force Majeure Delays. Construction will be deemed to be completed, solely for purposes of this Lease, when a Release of Construction Covenants is recorded in the Official Records, as set forth in Section 605, below.
(b) Tenant agrees it will take all safety measures reasonably required (taking into consideration usual and customary practices in the construction industry) to protect persons in, on and around the Property from injury or damage caused by or resulting from or in connection with the performance of any work during all phases of construction. All work performed under this Lease will be performed in such a manner as to meet or exceed the safety standards outlined by applicable State of California safety regulations. In addition to any other obligation set forth herein, Tenant will maintain the Property free of hazards to persons and property resulting from its operations. Any hazardous condition noted by Tenant will immediately be reported to Landlord.
(c) All work will be performed in a manner so as not to unreasonably impair or interfere with the use, occupancy or enjoyment of adjacent property, or with any business conducted on adjacent property.
(d) All areas of the Property that are used for staging areas for the storage of material and equipment, construction shacks and workers’ parking areas will be located, to the extent reasonably practicable, away from public vie w in areas remote from pedestrian and vehicular traffic, and will be fenced or otherwise barricaded as appropriate. (e) At all times during the performance of work for any phase of construction of the Project, all areas other than the actual construction site and the staging area will, to the extent reasonably practicable, be kept clean and free of mud, dust, equipment or construction materials related to the work.
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Section 605 Release of Construction Covenants.
(a) After Completion of all construction and development to be performed by Tenant upon the Property pursuant to the terms of the AHA , the Project Plans, and this Lease, Landlord will furnish Tenant with a Release of Construction Covenants, in such form as to permit it to be recorded in the Official Records, upon written request therefor by Tenant. Landlord will not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants will const itute evidence of satisfactory C ompletion of the construction required pursuant to the terms of the AHA, the Project Plans, and this Lease, and the Release of Construction Covenants will so state.
(b) If Landlord refuses or fails to furnish a Release of Construction Covenants for the Property after written request from Tenant, Landlord will provide Tenant with a written statement of the reasons Landlord refused or failed to furnish the Release of Construction Covenants for the Property. The statement will also contain Landlord’s opinion of the action Tenant must take to obtain a Release of Construction Covenants for the Property, but it need not contain technical information or instructions. If the reason for such refusal is confined to the immediate availability of specific items of landscaping or other minor items or the failure to complete “punch list” items, Landlord will issue the Release of Construction Covenants upon the posting of a bond or other security instrument in form and content reasonably acceptable to Landlord and in an amount representing the fair value of the work not yet completed, which bond or other security instrument will secure Tenant’s obligation to complete all outstanding items of construction and development within sixty (60) days following the issuance of the Release of Construction Covenants. (c) Such Release of Construction Covenants will not constitute evidence of compliance with or satisfaction of any obligation of Tenant to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements on the Property or any part thereof.
Such Release of Construction Covenants is not a notice of completion under Section 3093 of the California Civil Code.
Section 606 Ownership of Improvements.
All Improvements on the Property, whether existing on the Property as of the date this Lease is executed or thereafter constructed by Tenant, will be owned by Tenant until expiration of the Lease Term or earlier termination of this Lease. Tenant will not remove any Improvement from the Property or waste, destroy or modify any Improvements on the Property, except as permitted by this Lease. The parties covenant for themselves and all persons claiming under them that the Improvements are real property. Upon the expiration or termination of this Lease, all improvements and fixtures will become the sole property of Landlord. Tenant will not be required to remove any Improvements or fixtures on the Property upon the expiration or earlier termination of this Lease, except as otherwise expressly provided herein.
Section 607 No Liens on Landlord’s Interest.
U nder no circumstance whatsoever will any lien, including any mechanic’s lien, stop notices, materialmen’s lien, or any lien for goods, labor, material, services or work delivered or 336 of 422
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performed on the Property, attach to or encumber Landlord’s fee or reversionary interest in the Property. If any mechanic’s lien, stop notice, materialmen’s lien, or any other lien is filed against the Property for work done or claimed to have been done or for materials or services furnished or claimed to have been furnished with respect to the Property at any time during the term of this Lease, or at any time whatsoever arising because of any action or inaction by Tenant or any subtenant, or any other person claiming or having any right related to any part of the Property, then such lien will be discharged by Tenant at its sole cost and expense in a timely manner no later than ninety (90) days thereafter , whether by payment, release, or posting of a bond or other similar assurance. Landlord may, in its sole and complete discretion, bond or discharge the same by paying the amount claimed to be due, and Tenant will reimburse Landlord for all sums paid by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment, at the highest rate allowed by law.
Section 608 Removal of Liens on Leasehold Interest.
If Tenant does not cause to be recorded the bond described in California Civil Code Section 3143 or otherwise protect its leasehold interest under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, mater ialmen’s, contractor’s, or subcontractor’s lien claim, and if Tenant fails to stay the execution of the judgment by lawful means or to pay the judgment, Landlord will have the right, but not the duty, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant will reimburse Landlord for all sums paid by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment at the highest rate allowed by law.
Section 609 Notice of Completion.
On completion of construction of improvements to the Property, Tenant will file or cause to be filed a notice of completion pursuant to California Civil Code section 3093. Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to file the notice of completion on Tenant’s failure to do so after the work of improvement has been substantially completed.
ARTICLE VII ALTERATIONS.
Section 701 Alterations.
(a) After the Improvements have been constructed and completed in accordance wit h the provisions of Article VI , Tenant may, at Tenant’s sole expense, make alterations to such Improvements. Tenant may do so only in compliance wit h all applicable legal requirements and all requirements of the Project Plans, and if the alterations are material, only with the prior written approval of Landlord, which will not be unreasonably withheld or delayed. (b) All alterations will be done promptly and in a good and workmanlike manner and will be in quality and class at least equal to the original work or installations in the Property.
However, if materials of the same type as those used for the original work are unavailable, or if due to changes in technologies in the building industry, the use of materials of the same type as 337 of 422
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those used for the original work would be impractical, or if materials of the same type as those used for the original work are prohibitively expensive, then Tenant will have the right to use material of a type different from those used for the original work provided that the use of such material is in compliance with all applicable Legal Requirements and such material is of a quality and class equivalent to the original materials used.
(c) Tenant may from time to time after completion of construction of the Improvements as provided herein, without Landlord’s prior approval, perform alterations to the Improvements that are interior and nonstructural alterations, additions and improvements (“ Permitted Alterations”) so long as the Permitted Alterations:
(i) are performed in compliance with all of the provisions of this Lease, and does cause a violation of any provision of this Lease;
(ii) does not change the character of the Improvements or the use for which they were intended;
(iii) does not involve any change in the exterior design, materials, colors or appearance of the buildings, or any part thereof;
(iv) is not of lesser quality than the existing Improvements; (v) does not diminish the value of Tenant’s Leasehold Interest; (vi) would not require an exc essive expense to readapt the Property to marketable use upon the termination of this Lease; and
(vii) does not threaten the structural integrity of any part of the Improvements. (d) Tenant will not, without the prior written consent of Landlord, demolish or remove all or any part of the Improvements after recordation of the Release of Construction Covenants.
ARTICLE VIII NO LIABILITY OF LANDLORD
Section 801 No Liability of Landlord.
Tenant accepts the Property in its “as is” condition as of the date of execution of this Lease.
Tenant warrants and represents that Tenant has fully and completely inspected all aspects of the Property and has fully satisfied itself as to the condition and value of the Property and the suitability of the Property or any part thereof for the construction of the Improvements. Tenant acknowledges that Landlord has not made any representation in connection with the Property or in any way relating to this Lease except as ex pressly provided herein. In addition to the indemnifications set forth in Article XVI , Landlord will have no liability to Tenant, or its successors, assigns, residents, subtenants, or guests, of any kind whatsoever for, in connection with, or as a result of , the ownership or operation of the Property or in connection with the 338 of 422
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Property, at any time during the Lease Term, whether for any damage or injur y to any persons whatsoever or to any property of Tenant or of any other person, for any reason whatsoever, for any injury to Tenant’s residents, subtenants or others for actions or inactions after the date of the execution of this Lease, proximately caused by:
(a) Construction, operation or maintenance of any of the Improvements, or the condition of any part of the Property.
(b) Heating, ventilation or air conditioning systems, electrical wiring, plumbing, dampness, water, gas, steam, or other pipes, or sewage, o r the breaking of any electrical wire, bursting, leaking or running of water from any tank, washstand, water closet or waste pipe, supply pipe, sprinkler system, radiator, or any other pipe now or hereinafter installed on or about the Property.
(c) Fire, explo sion, discharge or release of any gas, vapor, liquid or any other substance, falling plaster, electricity or smoke, being or occurring on, at or in connection with the Property.
(d) Acts of Tenant or any subtenant, occupant, user, licensee or invitee of all or any part of the Property.
(e) Any latent defect in or condition of the Property or any Improvement or real or personal property, which at any time may be erected or situated thereon; provided that Landlord will be liable for a latent defect in the Property if Landlord knew of such latent defect and Landlord failed to disclose such latent defect to Tenant.
(f) The loss or theft of any property of Tenant or any other person at, on, or around the Property.
(g) The cessation, interruption, suspension, failure or inadequac y of any utilities furnished to the Property or any apparatus or appliance used in connection therewith.
Section 802 Discovery of Toxic Substances
During the term of this Lease, Landlord will have the right to terminate this Lease upon the discovery of any Hazardous Material which Landlord determines, in consultation with the holder of a Senior Loan, renders the Property unsuitable for its designated use without environmental mitigation measures which are determined by Landlord , in consultation with the holder of a Senior Loan, to be unacceptable, excessive, or unfeasible.
ARTICLE IX MAINTENANCE AND REPAIRS
Section 901 Maintenance and Repairs.
Tenant, at its own expense, will maintain and keep the Property and all Improvements thereon in good repair and in a decent, safe and sanitary condition, in accordance with the terms of the AHA, the Agreement Containing Covenants, and the HOME Regulatory Agreement .
Tenant will also make any repairs, structural or nonstructural, interior or exterior, to the Property 339 of 422
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made necessary by reason of alterations made by Tenant or by the acts or omissions of Tenant, or its employees, agents, subtenants, licensees, invitees or others, or by normal wear and tear, the elements, or other casualty or cause. R outine maintenance may be performed by Tenant without notice to or permission of Landlord.
Section 902 Repairs.
When used in this Section, the term “repairs” applies to all equipment, machinery, apparatus and fixtures of every kind used in connection with the operation and maintenance of the Property and all Improvements thereon and will be deemed to include replacements, restorations and renewals of the equipment, machinery, apparatus and fixtures. Tenant will have the right at any time and from time to time to remove and to dispose of the equipment, machinery, apparatus and fixtures; provided, however, that Tenant will promptly replace same with other equipment, machinery, apparatus or fixtures which are equally or more effective.
Section 903 Landlord’s Obligation.
The parties hereto intend that Landlord will have no obligation, in any manner whatsoever, to repair or maintain the Property, or any Improvements constructed thereon , or the equipment therein, whether structural or nonstructural. These obligations are the sole responsibility of Tenant. Tenant expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Tenant the right to make repairs at Landlord’s expense or terminate this Lease because of Landlord’s failure to keep the Property in good order, condition and repair.
ARTICLE X DAMAGE OR DESTRUCTION
Section 1001 Tenant to Give Notice.
If there is any damage to or destruction of the Property or the Improvements, or any part thereof, in excess of an amount equal to Twenty Five Thousand Dollars ($25,000) escalated from the date of commencement of this Lease in accordance with the applicable consumer price index, Tenant will, within ten (10) days after Tenant becomes aware or reasonably should have become aware of such damage or destruction, give written notice thereof to Landlord, generally describing the nature and extent of such damage or destruction.
Section 1002 Repair of Damage or Destruction.
(a) Tenant covenants and agrees that in case of damage to or destruction of the Property or Improvements by any cause, it will, subject to the provisions of this Section, restore, repair, replace or rebuild the Property and Improvements as nearly as possible to the condition, quality and class they were in, immediately prior to such damage or destruction. Tenant will commence the restoration, repairs, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by Landlord (such restoration repairs, replacement, rebuilding, alterations and additions, together with any temporary repairs and property protection pending completion of the work will be referred to hereinafter as “Restoration”) within thirty (30) days of such damage or destruction, plus any additional period reasonably required to obtain Net Insurance 340 of 422
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Proceeds (if any), as defined in subsection (b) below, to be used to pay all or a portion of the costs of such Restoration and will complete such Restoration within a reasonable time thereafter. (b) As used herein, the term “ Net Insurance Proceeds ” means the gross insurance proceeds paid by an insurer to Tenant for loss or damage to the Property and Improveme nts, less any and all costs and expenses (including, without limitation, reasonable attorney’s fees) incurred to recover said proceeds. Subject to the terms of the Senior Loan, Tenant agrees to promptly commence and prosecute to completion the settlement of insura nce proceeds with respect to an event of damage to or destruction of the Improvements or the Property. (c) Tenant agrees that, notwithstanding any other provision of this Lease, upon an event of damage or destruction to the Improvements, Tenant will at its sole cost and expense (whether or not Tenant terminates or intends to terminate this Lease pursuant to Section 1005 below) immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending their ultimate disposition. In any instance where Tenant has the right to terminate this Leas e, rather than restore the Improvements, if Tenant elects not to terminate this Lease, then Tenant must promptly restore the Improvements.
(d) Tenant will not be entitled to any compensation or damages from Landlord for loss of use of the whole or any part of Tenant’s Leasehold Estate or Tenant’s personal property, or any inconvenience or annoyance occasioned by damage, repair, reconstruction, or restoration of the Improvements. Tenant waives the provisions of clause 2 of California Civil Code section 1932 and clause 4 of California Civil Code section 1933, with respect to termination upon destruction of or damage to the Property or Improvements.
Section 1003 Application of Insurance Proceeds.
Insurance proceeds from policies of insurance carried under Section 1501 which are received on account of any damage to or destruction of the Property or the Improvements thereon, or any portion thereof, (les s the costs, fees and expenses incurred in the collection thereof, including without limitation, attorney’s fees and expenses), if Tenant does not make the election permitted in Section 1005 below, will be applied as follo ws, subject to the rights of Permitted Leasehold Mortgagees:
(a) Within a reasonable time and in any event within one hundred eighty (180) days after the damage to or destruction of the Property or the Improvements, Tenant will furnish, or cause to be furnished to Landlord and Permitted Leasehold Mortgagees evidence satisfactory to Landlord and each Permitted Leasehold Mortgagee, (a) of the total cost of Restoration of the damaged or destroyed Improvements, and (b) that the total amount of money available to Tenant will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section, be sufficient to pay the cost of such Restoration. (b) Net Insurance Proceeds received on account of any damage to or destruction of the Improvements, or any part thereof, will be paid to Tenant or as Tenant may direct from time to time as Restoration progresses, or to the holder of the Senior Loan, as set forth in the Senior Loan 341 of 422
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documents, solely to pay (or reimburse Tenant for) the cost of Restoration. Upon receipt by Landlord and Permitted Leasehold Mortgagees of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, which have not been adequately provided for, the balance, if any, of such proceeds will be paid to Tenant.
Section 1004 Tenant’s Obligations.
If the Net Insurance Proceeds actually available to Tenant and recovered with respect to any insured damage or destruction, less the cost of recovery, are insufficient to pay the entire cost of such Restoration, Tenant covenants to use reasonable efforts to secure additional funding to remedy such insufficiency to restore, repair, replace or rebuild the Improvements.
Section 1005 Option to Terminate.
If at any time during the term of this Lease, any buildings or improvements located on the Property are destroyed , in whole or in part , by fire, theft, the elements, or any other cause (collectively hereinafter referred to as a “ Casualty”), then this Lease will continue in full force and effect; provided, however, that Tenant, subject to the rights of Permitted Leasehold Mortgagees, will have the option of terminating this Lease on the last calendar day of any month by giving Landlord at least thirty (30) days’ prior written notice of Tenant’s intent to do so and by removing, within one hundred twenty (120) days of the Casualty, at Tenant’s own cost and expense, all debris and remains of the damaged improvements from the Property, under the following circumstances:
(a) buildings or improvements located on the Property are so damaged or destroyed by a Casualty during the last five (5) years of the Term of this Lease that such buildings or improvements cannot be repaired and restored at a cost which is less than fifty percent (50%) of the cost to replace all of the buildings and improvements located on the Property if totally destroyed; or
(b) buildings or improvements located on the Property are damaged or destroyed by a Casualty at any time during the term of this Lease and either (i) insurance proceeds available to Tenant from the insurance required in Section 1501 or by a Permitted Leasehold Mortgagee are not sufficient to cover one hundred percent (100%) of the cost, less Two Hundred Fifty Thousand Dollars ($250,000), to repair and restore such damaged or destroyed buildings or improvements , or (ii) the damage or destruction results from a Casualty that is not required to be insured by Tenant under the terms of this Lease or a Leasehold Mortgage, and for which Tenant has not obtained such insurance , and the cost to repair and restore such damaged or destroyed buildings or improvements is more than Two Hundred Fifty Thousand Dollars ($250,000).
ARTICLE XI ENTRY BY LANDLORD
Landlord and its agents, representatives, employees and independent contractors will have the right, at all reasonable times and on prior reasonable notice, to enter the Property to ascertain whether Tenant is complying with its obligations under this Lease, the AHA, the Agreement 342 of 422
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Containing Covenants, and the HOME Regulatory Agreement and for any other purpose permitted under this Lease; provided, however, that such entry does not unnecessar ily or unreasonably disturb lawful occupants of the Property. Neither the right of entry reserved by this Article, nor the exercise thereof, will impose any responsibility or liability on Landlord for the care or supervision of the Property or Improvements on the Property.
ARTICLE XII UTILITIES AND SERVICES
Section 1201 Utilities and Services
Tenant, at its sole expense, will maintain or will cause to be maintained , all utility lines, whether located on or off the Property, servicing the Property. Tenant will pay promptly all assessments, deposits, rents, costs, connection and tap-in fees and other charges for the connection of utilities, including any fees or charges imposed by any utility company or governmental entity or agency for making such connections. Tenant expressly agrees that Tenant will pay all charges for fuel, gas, water, electricity, light, heat, power, telephone or other communication services, and all oth er utilities or services necessary to carry on the operations of the Tenant. Tenant will indemnify Landlord from, and defend and hold Landlord harmless against, any claim, liability, damage, loss, cost or expense in connection with such charges. Landlord may, after giving Tenant at least ten (10) business days’ notice and an opportunity to cure, pay or cause to be paid any items or charges which are delinquent. Thereafter, on demand by Landlord, Tenant will pay and reimburse Landlord for such items or ch arges, with interest at the highest rate allowed by law , from the date of payment by Landlord until Landlord is repaid in full by Tenant.
Section 1202 Easements
Landlord agrees, at the request of Tenant and at Tenant’s sole cost and expense (or at the expense of the utility company or other third party) , to join in the grant of easements over the Property that are necessary to obtain required utility services to the Project. Any such grant of an easement over the Property must be approved in writing by Landlord, which approval will not be unreasonably withheld.
ARTICLE XIII PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER Section 1301 Prohibitions.
(a) The qualifications and identity of Tenant are of particular concern to Landlord. It is because of those qualifications and identity that Landlord has entered into this Lease with Tenant. No voluntary or involuntary successor in interest of Tenant will acquire any rights or powers under this Lease except as expressly set forth herein and in Article XXII. (b) Except for Permitted Transfers, Tenant will not assign or sublease all or any part of this Lease without the prior written approval of Landlord. Landlord agrees to reasonably give such approval if, in Landlord’s reasonable determination, the proposed reconstituted Tenant is comparable in all material respects (including experience, character and financial capability) to Tenant as of the date of this Lease. Any such change (or assignment or sublease of this Lease in 343 of 422
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connection therewith) will be subject to approval by Landlord’s Executive Director (or his/her designee) of evidence of the proposed assignee’s qualifications to meet Tenant’s obligations under this Lease and must be by instruments satisfactory to Landlord’s Executive Director (or his/her designee).
(c) For the reasons cited above, Tenant represents and agrees for itself and each successor in interest that, except for P ermitted Transfers, there will be no cumulative change in ownership interest of any general partner of greater than 49%, or with respect to the identity of the parties in control of Tenant or the degree thereof, by any method or means, without Landlord’s prior written approval.
(d) Tenant will promptly notify Landlord of any and all changes whatsoever in the identity of the parties in control of Tenant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Landlord may exercise its remedies under this Lease, if there is any significant change (voluntary or involuntary) in membership, management or control of Tenant (other than such changes occasioned by the death or incapacity of any individual), except for Permitted Transfers. (e) Tenant will not, except for Permitted Transfers or as permitted by this Lease, initiate a Transfer without prior written approval of Landlord, except as expressly permitted by this Lease. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Any such proposed transferee will have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by Landlord, to fulfill the obligations undertaken in this Lease by Tenant. Any such proposed transferee, by instrument in writing satisfactory to Landlord and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of Landlord will expressly assume all of the obligations of Tenant under this Lease and agree to be subject to all conditions and restrictions applicable to Tenant in this Lease. There will be submitted to Landlord for review all instruments and other legal documents proposed to affect any such transfer; and if approved by Landlord, its approval will be indicated to Tenant in writing. Attempts to effectuate a Transfer, except for Permitted Transfers or as permitted by this Lease, without Landlord’s approval, will be null and void and any transferee under such attempted Transfer will acquire no right or interest by reason of such attempted Transfer. (f) Notwithstanding the foregoing, Tenant may: (i) lease the Units , in conformance with the Agreement Containing Covenants and the HOME Regulatory Agreement , without the written consent of Landlord; and (ii) enter into a management agreement with an entity approved in writing by Landlord, in its reasonable discretion, and approved by the Permitted Leasehold Mortgagees. WSH Management Inc., a California corporation, is approved as the initial management agent.
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Section 1302 Consent to Assignment
Subject to the limitations on transfer set forth in Section 1301, Landlord agrees it will not unreasonably withhold its consent to a proposed assignment of this Lease to an assignee if all of the following conditions are met:
(a) Tenant is not in default of any provision of this Lease, or any other agreement with Landlord or the City in connection with this Property;
(b) Landlord has issued the Release of Construction Covenants to Tenant and Conversion has occurred;
(c) Tenant has demonstrated to Landlord’s satisfaction in Landlord’s reasonable discretion that the proposed assignee is financially sound and possesses a reputation and experience in owning and managing low-income residential units that is at least comparable to that of Tenant. Any assignment of this Lease must be in writing and must be executed by the assignee and a duplicate original of such assignment and assumption must be delivered to Landlord as a condition of its effectiveness . The original named Tenant will not be relieved of its obligation pursuant to this Lease, the Agreement Containing Covenants, the HOME Regulatory Agreement, or the AHA; and
(d) The proposed assignee has agreed in the assignment and assumption agreement delivered to Landlord to assume, and be bound by, all of the terms, covenants, conditions and obligations of Tenant pursuant to this Lease, the Agreement Containing Covenants , the HOME Regulatory Agreement, and the AHA.
ARTICLE XIV TAXES AND IMPOSITIONS
Subject to Tenant’s right to claim any exemption to which it may be entitled under State law, Tenant will directly bear, pay and discharge all Taxes and Impositions (as defined below) before the first day on which a penalty or interest may accrue or be assessed thereon for nonpayment (or, if no penalty or interest thereon may accrue or be assessed, then before such Taxes and Impositions become delinquent or past due). “ Taxes” and “Impositions” mean and include all real property taxes, possessory interest taxes, personal property taxes and special assessments imposed, levied or assessed on the Property or Improvements thereon. Taxes and Impositions include all costs, expenses and charges of any kind whatsoever (whether foreseen or unforeseen) which may become due or owing with respect to all or any part of the Property during the term of this Lease. Taxes and Impositions include, without limitation, all ad valorem taxes and other assessments, water and sewage charges, and governmental impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary, which will or may during the Lease term be charged, laid, levied, assessed, imposed upon or become payable out of, or become liens upon, or arise in connection with the ownership, leasing, operation, use, occupancy, or possession of the Property or with respect to the privilege of entering into or holding this Lease, or leasing space within the Property, regardless of whether assessed or levied upon or payable by Tenant or Landlord. Pursuant to Health & Safety Code section 37001.5, and subject to Tenant’s right to claim 345 of 422
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any exemption to which it may be entitled under State law, Tenant will pay taxes on the assessed value of the entire Property and not merely on the assessed value of its Leasehold Interest.
In the event of nonpayment of any Tax or Imposition, Landlord may, after giving Tenant at least ten (10) business days’ notice of its intention to do so, pay or cause to be paid any item or items of Taxes and Impositions which are delinquent or past due. Tenant will pay and reimburse Landlord therefor when requested to do so by Landlord, and the same will become due and payable, with interest at the highest rate permissible by law from the date of Landlord’s payment of said Tax or Imposition, until Landlord is repaid in full by Tenant.
ARTICLE XV INSURANCE
Section 1501 Required Insurance
(a) Prior to the Construction Financing Event (except as provided in the next sentence), Tenant will furnish or cause to be furnished to Landlord evidence of the following policies of insurance, naming Tenant as insured and Landlord and the City as certificate holders and, except as to the insurance described in paragraph (iv), below, Landlord and the City as additional insureds.
The insurance requirements set forth in this Subsection (a) are subject to change prior to the Construction Financing Event, as needed to satisfy Landlord’s then-applicable requirements.
Evidence of insurance must include additional insured endorsements naming both Landlord and the City as additional insureds and including a primary insurance and waiver of contribution clause, a separation of insureds clause and a cancellation notice clause, in the form provided by Landlord. The insurance described in paragraph (ii) will be obtained prior to the initial rent-up of the apartments.
(i) Fire Policies: Tenant will maintain or cause to be maintained a policy or policies of insurance against loss or damage to the Property or the Improvements and all property of an insurable nature located upon the Property, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance will be maintained in an amount not less than one hundred percent (100%) of the full insurable value of the Improvements, as defined herein in paragraph
(c).
(ii) Rental Income Insurance: Tenant will maintain or cause to be maintained use and occupancy or business interruption or ren tal income insurance against the perils of fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount that is acceptable to Tenant and Landlord.
(iii) Liability Insurance: Tenant will maintain or cause to be maintained public liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Property and the business of the Tenant on the Property, or in connection with the operation thereof, resulting directly or indirectly from any acts or activities 346 of 422
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of Tenant or its sublessees, or any person acting for Tenant , or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Property, or in connection with the operation thereof, caused directly or indirectly by or from acts or activities of Tenant or its tenants, or any person acting for Tenant , or under its control or direction. Such property damage and personal injury insurance will also provide for and protect Authority against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance will be maintained in full force and effect during the term of the Authority Loan in the following amounts: commercial general liability in a general aggregate amount of not less than Two Million Dollars ($2,000,000); and not less than One Million Five Hundred Thousand Dollars ($1,500,000) of bodily injury and property damage insurance. It is the mutual intent of the parties that the levels of insurance coverage described herein will be and remain comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County. At any time during the term of the Authority Loan, and from time to time, either party may provide notice to the other party that the level of insurance being maintained by Tenant is no longer comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County, and request that the minimum limit hereinabove designated will be changed (either increased or decreased) accordingly. The party receiving such request will not unreasonably withhold its consent to such change. Tenant agrees that provisions of this paragraph as to maintenance of insurance will not be construed as limiting in any way the extent to which Tenant may be held responsible for the indemnification of Authority or the payment of damages to persons or property resulting from Tenant’s activities, activities of its tenants or the activities of any other person or persons for which Tenant is otherwise responsible. Tenant will require its insurer to waive its subrogation rights against Landlord and the City and will provide endorsements evidencing same. (iv) Workers’ Compensation Insurance
: Tenant will maintain or cause to be
maintained workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the workers’ compensation laws now in force in California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers’ compensation insurance will cover all persons employed by Tenant in connection with the Property and will cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Property or the operation thereof by Tenant . Notwithstanding the foregoing, Tenant may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self-insure for workers’ compensation in which event Lessee will deliver to Authority evidence that such self-insurance has been approved by the appropriate State authorities. If Tenant is required to maintain Workers’ Compensation Insurance under this paragraph, Tenant will furnish Landlord with a certificate of waiver of subrogation under the ter ms of the Workers’ Compensation Insurance. Tenant will require its general contractor to waive subrogation and will require that its subcontractors waive subrogation to the extent that such a waiver is commercially available.
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(b) All policies hereunder will not be subject to cancellation, reduction in coverage, or non-renewal except after notice in writing will have been sent by registered mail addressed to Landlord and the City not less than thirty ( 30) days in advance of the effective date, except for cancellation for nonpayment of premium, in which event notice will be given not less than ten days in advance of the effective date. All policies will name Landlord, Tenant and/or any general contractor as insureds, additional insureds, and/or loss payable parti es as their interests may appear.
(c) The term “full insurable value” as used in this Section 1501 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements on the Property immediately before such casualty or other loss, including the cost of construction, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Tenant will cause the full insurable value to be determined from time to time by appraisal by the insurer, by the insurer’s automatic inflationary measure if acceptable to the Tenant and Landlord, by agreement between Tenant and Landlord or by an appraiser mutually acceptable to Landlord and Tenant, not less often than once every three years.
(d) All insurance provided under this Section 1501 will be for the benefit of Tenant, Landlord and City. Tenant agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Tenant agrees to submit policies of all insurance req uired by this Section 1501, or certificates and endorsements evidencing the existence thereof, to Authority within 30 days prior to the Construction Financing Event, indicating full coverage of the contractual liability imposed hereby. Within thirty (30) days, if practicable, but in any event prior to expiration of any such policy, copies of renewal policies, or certificates evidencing the existence thereof, will be submitted to Landlord. All insurance herein provided for under this Section 1501 will be effected under policies issued by insurers of recognized responsibility, licensed or permitted to do business in the State of California reasonably approved by Landlord. (e) Tenant must cause all contractors and subcontractors performing work relating to the Project to maintain, at a minimum, the liability insurance and workers compensation insurance described in this Section 1501. Tenant must also cause its architects and engineers to maintain Architects and Engineers Professional Liab ility (Errors and Omissions) insurance on a “claims made basis” in an amount of not less $1,000,000. When coverage is provided on a “claims made basis”, Tenant must cause all contractors and subcontractors to continue to renew the insurance for a period of five (5) years after the end of the Construction Period. Such insurance must have the same coverage and limits as the policy that was in effect during the Construction Period, and cover Tenant for all claims made by Landlord arising out of any acts or omissions of Tenant, or its officers, employees or agents during the Construction Period. 348 of 422
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