55852.01006\44591738.3
Loan Agreement
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of ______________________, 2026 by and between CITY OF LAGUNA BEACH, a California municipal corporation (“Lender”), and THE LAGUNA BEACH COMMUNITY LAND TRUST, a California nonprofit corporation ("Borrower”).
RECITALS
A. Lender is making a loan to Borrower in the amount of Eight Million DOLLARS ($8,000,000.00) (the "Loan"). The proceeds of the Loan will be used by Borrower for the purchase of certain real property located at 2535 Laguna Canyon Road and 2307 Laguna Canyon Road (the “Land”) located in the City of Laguna Beach, County of San Diego, State of California and more particularly described in Exhibit A.
B. Borrower intends to purchase the Land and to complete code remediations and repair of the improvements located thereon as listed on and in accordance with the attached Schedule and to manage the existing improvements on the Land as artist live work units and artist studios (the “Project”),
C. Borrower is a nonprofit public benefit corporation formed for charitable purposes to secure among other things affordable housing and expanding economic development opportunities for residents and people working in the City.
D. The Loan is intended to further goals and commitments of the City to the arts and artists and the City’s commitment to support the Trust’s use of the Land for these purposes, including using its best efforts to expedite the processing of any required permits and providing timely inspections for the Project.
E. Borrower’s obligations with respect to the Loan (i) will be evidenced by a Secured Promissory Note of even date herewith in the stated principal amount of $ 8,000,000.00 executed by Borrower in favor of Lender (the “Note”); and (ii) will be secured by, among other things, a Deed of Trust, Security Agreement and Fixture Filing With Assignment of Rents and Leases, of even date herewith executed by Borrower, as trustor, for the benefit of Lender, as beneficiary (the “Deed of Trust”), which Deed of Trust encumbers the Land.
NOW, THEREFORE, in consideration of the covenants and conditions herein contained, Borrower hereby agrees with Lender as follows:
1. Definitions. As used herein, the following terms shall have the meanings set forth below:
“Affiliate” shall mean (i) any individual, partnership, corporation, limited liability company, trust or other entity (collectively, “Person”) directly or indirectly controlling, controlled by or under common control with another Person, (ii) any Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person, (iii) any officer, director or partner of such Person, (iv) if such other Person is an officer, director or partner, any company Attachment 1
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for which such Person acts in any such capacity, and (v) any holder of a participating mortgage from another Person.
“Governmental Authority” shall mean any arbitrator, other private adjudicator, court, government or governmental authority (federal, state, local or foreign). “Loan Amount” shall mean Eight Million and No/100 Dollars ($ 8,000,000.00). “Title Insurer” means Fidelity National Title Insurance Company “Title Policy” means an ALTA loan title insurance policy issued by Title Insurer having a liability in the amount of the Loan Amount, and insuring Lender, as of the time and date that the Deed of Trust is recorded, that fee title to the Land is vested in Borrower and that the lien of the Deed of Trust is a valid first position mortgage lien on the Land, subject only to such liens and exceptions as shall be acceptable to Lender in its sole discretion and containing such endorsements as Lender may request.
2. Agreement to Lend and Borrow. Subject to the terms and conditions of this Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender the amount of the Loan. The Loan proceeds shall be used solely for (a) the purposes described in Recital B, and (b) the payment of costs incurred in connection with the Loan The Loan shall be evidenced by the Note. The interest rate, time for payment, maturity date and certain other terms of the Loan shall be as set forth in the Note.
3. Conditions Precedent to the Loan. Lender’s obligation to perform its obligations under this Agreement and to make the Loan is conditioned upon Lender’s receipt and approval of the following documents or materials, each of which shall be in the form and substance satisfactory to Lender in its sole and absolute discretion and, where appropriate, duly executed (and acknowledged where necessary) and delivered by the appropriate parties thereto:
(a) this Agreement; the Note, and the Deed of Trust, duly executed (collectively the “Loan Documents”);
(b) the Title Policy or Title Insurer’s unconditional commitment to issue the Title Policy in a form acceptable to Lender;
(c) Evidence satisfactory to Lender in the form of insurance binders, certificates, or policies, that Borrower has obtained the insurance coverage required by the Deed of Trust, with Lender named as Loss Payee and additional insured (as more particularly provided in the Deed of Trust);
(d) Lender has received a current or recent certified acceptable ALTA survey of any real property covered by the Loan, prepared by a registered land surveyor, certified to and satisfactory to Lender and the Title Insurer (the "Survey"); (e) a resolution of the board of directors, partners, manager and/or members, as applicable, of Borrower approving of the transactions contemplated by this Agreement, authorizing each representative of Borrower to execute any document on behalf of Borrower in connection with the transactions contemplated 9 55852.01006\44591738.3
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by this Agreement, and such other documents, instruments, agreements and certificates as Lender may reasonably request with respect to Borrower as to the due formation and existence of Borrower, and the power and authority by the Borrower to execute and deliver the Loan Documents, the due execution and delivery by the Borrower of the Loan Documents, and such other matters as Lender may require; and
(f) such other documents, agreements, instruments, certificates and opinions as Lender may reasonably require.
4. Representations and Warranties. As an inducement to Lender to execute this Agreement and to disburse the proceeds of the Loan, Borrower represents and warrants to Lender that the following statements are true, correct and complete as of the date hereof and will be true, correct and complete as of the date of each advance:
(a) Organization; Authority. Borrower is a nonprofit public benefit corporation duly formed and is validly existing in good standing under the laws of the State of California, is qualified to do business in the State of California, and has all requisite power and authority (i) to enter into and perform under each of the Loan Documents to which it is a party; and (ii) to own and operate its properties and assets and to carry on its business as it is currently being conducted.
The execution, delivery and performance by Borrower of each of the Loan Documents to which it is a party has been duly authorized by all necessary action on the part of Borrower and requires no approval or filing with any governmental authority which has not been obtained or performed. Each of the Loan Documents to which Borrower is a party constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms. (b) Financial Statements. Each of the most recent financial statements of Borrower delivered to Lender are complete and correct and presents fairly the financial position of the person or entity to which it relates as of the date thereof, and there has been no material adverse change in the condition, financial or otherwise, of said person or entity since the date as of which the aforementioned balance sheet related.
(c) Use of Proceeds. The proceeds of the Loan shall be utilized by Borrower as set forth in Section 2.
(d) Non-Foreign Status. Borrower is not a “foreign
corporation”, “foreign partnership”, “foreign trust”, or “foreign estate”, as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder. Borrower’s U.S. employer identification number previously provided to Lender is correct.
(e) No Conflict. The execution, delivery and performance of the Loan Documents by Borrower will not violate (i) Borrower’s organizational documents; (ii) any legal requirement affecting such Borrower or any of its properties; or (iii) any agreement to which such Borrower is bound or to which it is 10 55852.01006\44591738.3
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a party and will not result in or require the creation (except as provided in or contemplated by this Agreement) of any lien upon any of such properties. (f) Governmental and Private Approvals. All governmental or regulatory orders, consents, permits, authorizations and approvals within the jurisdiction of the City required for the Loan have been obtained and are in full force and effect. No additional governmental or regulatory actions, filings or registrations, approvals, authorizations or consents of any trustee or holder of any indebtedness or obligation of any Borrower are required for the due execution, delivery and performance by each Borrower of the Loan Documents. The Lender represents to Borrower that it has all necessary approvals required to enter into the Loan.
(g) Litigation. There is no action, suit, investigation, proceeding or arbitration at law or in equity or before or by any foreign or domestic court or other governmental entity, pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its assets which could reasonably be expected to result in any material adverse change in the business, operations, assets (including the Land) or condition (financial or otherwise) of Borrower or would materially and adversely affect Borrower’s ability to perform its obligations under the Loan Documents.
(h) No Material Defaults. There exists no material violation of or material default by any Borrower and/or Guarantor and, to the best knowledge of Borrower, no event has occurred which, upon the giving of notice or the passage of time, or both, would constitute a material default by any Borrower and/or Guarantor with respect to (a) any material lease or other agreement affecting the Land to which any Borrower is a party, (b) any material license, permit, statute, ordinance, law, judgment, order, writ, injunction, decree, rule or regulation of any Governmental Authority except as set forth in the Schedule, or any determination or award of any arbitrator to which Borrower, Guarantor or the Land may be bound, or (c) any mortgage, instrument, agreement or document by which any Borrower or any of its properties is bound.
(i) No Defaults on Outstanding Judgments or Orders. Borrower has received no notice that Borrower is in default with respect to any judgment, writ, injunction, decree, rule, or regulation of any court, arbitrator, or federal, state, municipal, or other governmental authority, commission, board, bureau, agency, or instrumentality, domestic or foreign, which default may materially and adversely affect the ability of Borrower to operate its businesses as presently contemplated or to perform its obligations under any of the Loan Documents. (j) Borrower Compliance with Laws. Borrower has duly
complied in all material respects with, and its businesses, operations, assets, equipment, property, leaseholds or other facilities are in compliance with, the provisions of all applicable federal, state and local Laws, including, without limitation, environmental, health and safety laws, codes and ordinances and all rules and regulations promulgated thereunder.
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(k) Brokers or Finders. The parties agree that no broker or finder has any claim for commissions or fees in connection with this Loan.
Borrower hereby agrees to indemnify Lender and each of its Affiliates against any brokers' or finders' fees or commissions claimed through Borrower or any of its Affiliates in connection with any transactions contemplated hereby. (l) Payment of Taxes. All tax returns and reports of Borrower required to be filed by it have been timely filed, and all taxes, assessments, fees and other governmental charges upon Borrower and upon its properties, assets, income and franchises which are due and payable have been paid when due and payable.
Borrower knows of no proposed tax assessment against it that would be material to the condition (financial or otherwise) of Borrower, and Borrower has not contracted with any government entity in connection with such taxes. (m) Securities Activities. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any margin stock (as defined within Regulations G, T and U of the Board of Governors of the Federal Reserve System), and not more than twenty-five percent (25%) of the value of Borrower’s assets consists of such margin stock. No part of the Loan will be used to purchase or carry any margin stock or to extend credit to others for that purpose or for any other purpose that violates the provisions of Regulations U or X of said Board of Governors.
(n) Compliance with Laws. The Land, and the uses to which the Land is and will be put, comply in all material respects with all applicable laws and restrictive covenants except code remediations and the repair of the improvements as listed on and in accordance with the attached Schedule. (o) Event of Default. No event or condition which, with the passage of time or the giving of notice or both, would constitute either an Event of Default under Section 6 of this Agreement or the other Loan Documents shall have occurred and be continuing.
(p) No Material Adverse Condition. No law or regulation shall have been adopted, no order, judgment or decree of any Governmental Authority shall have been issued, and no litigation shall be pending or threatened, which in the good faith judgment of Lender would enjoin, prohibit or restrain, or impose or result in the imposition of any material adverse condition upon, the making or repayment of the Loan or the consummation of the transaction.
5. Covenants. As an inducement to Lender to execute this Agreement and to make each disbursement of the Loan, Borrower hereby covenants as follows:
(a) Financial Information. Borrower will furnish Lender with:
(i) Annual Financial Statements. Within ninety (90) days after the close of each fiscal year of Borrower, Borrower shall deliver to Lender financial statements, prepared by an independent certified public accountant reasonably acceptable to Lender and reflecting its 12 55852.01006\44591738.3
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operations during such fiscal year, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules; all in reasonable detail, prepared in conformity with generally accepted accounting principles, applied on a basis consistent with that of the preceding year (the “Annual Financial Statements”); and (iii) Other Financial Information of Borrower. Borrower shall promptly deliver to Lender such other information regarding the operations, business affairs, and financial condition of Borrower as Lender may from time to time reasonably request (the “Other Financial Information”, and together with the Annual Financial Statements, the “Financial Statements”). (b) Compliance with Laws. Borrower will preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business.
(c) Compliance with Loan Documents. Borrower will comply with all conditions of this Agreement, and to the extent it is able, will use its commercially reasonable efforts to cause compliance by parties thereto (other than Lender), with all other Loan Documents. (d) Further Assurances. Borrower will execute and deliver from time to time, promptly after any reasonable request therefor by Lender, any and all instruments, agreements and documents and shall take such other action as may be necessary or desirable in the reasonable opinion of Lender to carry out the intention of this Agreement. (e) Accounting Records. Borrower shall maintain adequate books and records in accordance with sound accounting principles consistently applied, and permit any representative of Lender, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower. (f) Insurance Requirements. Borrower shall maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to that of Borrower, and as Lender may reasonably require with respect to Borrower’s properties and operations, with all such insurance carried with companies and in amounts reasonably satisfactory to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form reasonably satisfactory to Lender. (g) Partial Release. In the event Borrower requests to refinance one of the properties encumbered by the Deed of Trust (a “Released Property”), Lender may, but shall not be obligated to, release the Released Property from the lien of the Deed of Trust and deliver a partial reconveyance or other appropriate release instrument (a “Partial Release”), provided that each of the following conditions has been satisfied to Lender’s reasonable satisfaction: Borrower shall have delivered to Lender not less than thirty (30) days’ prior written notice of its request for a Partial Release; no Default or Event of Default shall exist under this Agreement or any other Loan Document at the time of the Partial Release, and no Default or Event of Default shall result therefrom; Borrower shall have paid to Lender, in immediately available funds and from the proceeds of such refinancing, the portion of the Loan allocable to the Released Property in full, 13 55852.01006\44591738.3
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together with all accrued and unpaid interest thereon and all other amounts then due and payable under the Loan Documents with respect to such Released Property; after giving effect to the Partial Release, the remaining property encumbered by the Deed of Trust shall continue to provide collateral for the Loan on terms reasonably acceptable to Lender; and Borrower shall have paid all reasonable out-of-pocket costs and expenses incurred by Lender in connection with the Partial Release, including reasonable attorneys’ fees and recording costs. Any Partial Release granted pursuant to this Section shall not alter, expand, or impair the non-recourse nature of the Loan as expressly set forth in the Loan Documents, and Lender’s remedies with respect to the Released Property shall be deemed satisfied solely by the receipt of the amounts required herein without creating or implying any personal liability of Borrower beyond the collateral securing the Loan.
Lender shall have no obligation to subordinate the Deed of Trust or any other Loan Document in connection with a Partial Release, and any request by Borrower for a subordination shall be subject to Lender’s prior written consent, which may be granted or withheld in Lender’s reasonable discretion pursuant to a separate written agreement.
(h) Affordability Covenant. Borrower covenants and agrees that promptly following the Closing, and no later than the earlier of one year thereafter or any early repayment, Borrower shall prepare, execute, and record against the Land, in a form reasonably acceptable to Lender and approved by the City Council, a covenant running with the Land and binding upon Borrower and all successors and assigns, which covenant shall require that the Land be used, operated, and maintained for affordable (including moderate, low, and very-low income levels) artist live-work housing and artist studio purposes in a manner consistent with Borrower’s bylaws and charitable mission, shall limit occupancy of the live-work residential units to qualifying artists and households meeting affordability criteria approved by Lender and consistent with Borrower’s bylaws, shall grant Lender the right, but not the obligation, to enforce such covenant by any remedy available at law or in equity, shall provide that such covenant shall run with the Land and shall not merge with title, and shall survive repayment of the Loan unless otherwise expressly released or modified by Lender in a written instrument recorded against the Land; Borrower shall deliver to Lender a recorded copy of such covenant, and any failure to timely record or comply with the foregoing shall constitute an Event of Default under this Agreement. (i) Option to Purchase Easements. Borrower covenants and agrees that promptly following the Closing, and in any event no later than thirty (30) days thereafter, Borrower shall grant to the City of Laguna Beach (“City”), pursuant to an option agreement in form and substance reasonably acceptable to City, an irrevocable option to purchase one or more easements over, upon, and across the Property (including, without limitation, access, utility, conservation, or other easements as City may determine), upon such terms and conditions as may be set forth in such option agreement, and Borrower shall cause a memorandum of such option to be duly executed and recorded against the Property in the Official Records of the county in which the Property is located; Borrower shall deliver to Lender evidence of such recordation reasonably satisfactory to Lender, and Borrower shall not amend, terminate, release, or subordinate such option or memorandum without the prior written consent of City, and any failure to timely grant such option or record such memorandum shall constitute an Event of Default under this Agreement.
6. Default and Remedies.
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(a) The occurrence of any of the following events shall constitute an event of default hereunder (an "Event of Default"):
(i) Borrower shall fail to make any payment due under the Note and/or any other Loan Document within ten (10) business days following written notice from Lender; or
(ii) Any representation or warranty made by Borrower in the Loan Documents or in any certificate, agreement, instrument or statement contemplated by or made or delivered pursuant to or in connection with the Loan Documents is false, incorrect or misleading in any material respect as of the date made; or (iii) . A breach by Borrower other than a monetary default shall be deemed to have occurred only after the following: (a) should Lender claim a material breach by Borrower, it shall give Borrower written notice of such claimed breach, which notice shall set forth with reasonable specificity the nature of said breach; and (b) Borrower shall not be deemed in breach of any Loan Documents unless said breach is not cured within sixty (60) days from receipt of said notice, or if said breach cannot be cured within said sixty (60) day period, the time for Borrower to cure said breach shall be extended, so long as Borrower is pursuing the cure thereof with all reasonable diligence; or (iv) If, for any reason (other than full satisfaction or written release by Lender) any of the Loan Documents shall cease to be valid and binding and in full force and effect or Borrower shall assert that it is not liable under any of the Loan Documents; or
(v) Borrower shall (A) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of its property, (B) admit in writing its inability to pay its debts generally as they become due, (C) make a general assignment for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent, or (E) commence a voluntary case under the federal bankruptcy laws of the United States of America or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding; or corporate or other action shall be taken by it for the purpose of effecting any of the foregoing; or
(vi) Commencement of any case under the Bankruptcy Code, Title 11 of the United State Code, or commencement of any other bankruptcy arrangement, reorganization, receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or against Borrower and with respect to any such case or proceeding that is involuntary, and such case or proceeding is not dismissed within sixty (60) days of the filing thereof; or
(vii) A judgment or order for the payment of money shall be rendered against Borrower, which would have a material adverse effect on Borrower , or any of 15 55852.01006\44591738.3
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their business or operations and such judgment or order shall continue unsatisfied and unstayed for a period of thirty (30) days; or
(viii) The occurrence of any event (including, without limitation, a change in the financial condition, business, or operations of Borrower for any reason whatsoever) that materially and adversely affects the ability of Borrower to perform any of its respective obligations under the Loan Documents; or
(ix) Commencement of any action or proceeding which seeks as one of its remedies the dissolution of Borrower which is not being defended diligently and in good faith by Borrower , but in any event such action or proceeding must be terminated within ninety (90) days following its commencement; or
(x) A material portion of the property of Borrower is attached, levied upon, or otherwise seized by legal process, and such attachment, levy, or seizure is not quashed, stayed, or released within thirty (30) days of the date thereof; or (xi) The occurrence of any Event of Default, as such term is defined in any other Loan Document; or
(xii) Any transfer or other change occurs in the beneficial ownership of any interest in Borrower without Lender's prior written consent. (b) Upon the occurrence of an Event of Default in addition to any other rights or remedies it may have under the Loan Documents, at law, in equity or otherwise, Lender may, at its option, declare all sums of interest and principal remaining outstanding on the Loan and all other sums outstanding under or in respect of this Agreement or any other Loan Document to be immediately due and payable, without notice of default, presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Borrower. Notwithstanding anything to the contrary in the preceding sentence, if an Event of Default described in Section 6(a)(v) or 6(a)(vi) above shall occur, all sums of interest and principal remaining outstanding on the Loan and all other sums outstanding under or in respect of any Loan Document shall be deemed automatically and immediately due and payable, without any declaration or other determination by Lender and without notice of default, presentment, demand, protest, or further notification of any kind, all of which are hereby expressly waived by Borrower. (c) The Loan is a nonrecourse loan with respect to the officers and board members of Borrower and all of Lender’s remedies shall be limited to the collateral and Project assets.
7. Notices. All notices and other communications provided for under this Agreement shall be in writing and shall be personally delivered or sent by first class United States mail, by nationally recognized overnight courier such as Federal Express or DHL, or by telecopy or by other means of telecommunication, to the following addresses:
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If to Borrower: THE LAGUNA BEACH COMMUNITY LAND TRUST
Attn: Kristine Thalman, President
380 3rd Street
Laguna Beach, CA 92651
Email: [email protected]
If to Lender: CITY OF LAGUNA BEACH
Attn: Jeremy Frimond
505 Forest Ave.
Laguna Beach, CA 92561
Email: [email protected]
or, as to each party, at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices and communications shall be deemed received (i) if personally delivered, upon delivery; (ii) if sent by first class United States mail, following deposit in the mail with first class postage prepaid, upon receipt; (iii) if sent by courier service with next Business Day delivery charges prepaid, upon receipt; and (iv) if sent by telex, telecopy or similar form of telecommunications, upon receipt.
For purposes hereof, “Business Day” means each day which is not a Saturday, Sunday, or other day on which commercial banks in the State of California are authorized or required to close under the laws of the State of California or federal law.
8. Legal Fees. Borrower agrees to pay all costs of enforcement and collection and preparation for any Event of Default or any action taken by Lender (including, without limitation, reasonable attorneys’ fees) whether or not any action or proceeding is brought (including, without limitation, all such costs incurred in connection with any bankruptcy, receivership, or other court proceedings (whether at the trial or appellate level)), together with interest thereon from the date of demand at the default interest rate.
9. No Waiver; Remedies. No failure on the part of Lender or Borrower to exercise, and no delay in exercising, any right, power, or remedy under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise thereof or the exercise of any other right. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.
10. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Borrower and Lender hereby consent to the personal jurisdiction over Borrower and Lender, respectively, of the Superior Court for Orange County, California, and waive all objections to the venue of such court, for the adjudication of any case or controversy arising under or relating to this Agreement, including, without limitation any action for judicial foreclosure shall be heard in Orange County, California Superior Court. Borrower and Lender further consent to service of process upon each of them in such manner as shall be permitted by the laws of the State of California if litigation or other legal process is commenced in the courts of the State of California. 17 55852.01006\44591738.3
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11. Severability. Any provision of any Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of such Loan Documents or affecting the validity or enforceability of such provision in any other jurisdiction.
12. Payment of Expenses. Borrower shall pay all charges, costs and fees provided for in this Agreement or relating to the Loan, including, without limitation, any fees incurred for recording or filing any of the Loan Documents, fees and expenses of Lender’s counsel (except with respect to the preparation and negotiation of the initial Loan Documents), documentation and processing fees, printing, photostating and duplicating expenses, air freight charges and premiums of insurance policies. All such expenses, charges, costs and fees shall be Borrower’s obligation regardless of whether or not Borrower has requested and met the conditions for a disbursement of the Loan. The obligations on the part of Borrower under this Section 12 shall survive the closing of the Loan and the repayment thereof. Borrower hereby authorizes Lender, in its discretion, to pay such expenses, charges, costs and fees at any time by a disbursement of the Loan.
13. Indemnification. To the fullest extent permitted by law, Borrower agrees to protect, indemnify, defend and save harmless Lender, its directors, officers, agents and employees for, from and against any and all liability, expense or damage of any kind or nature and for, from and against any suits, claims or demands, including reasonable legal fees and expenses on account of any matter or thing or action or failure to act by Lender, whether in suit or not, arising out of this Agreement or in connection herewith, including, without limitation, any suit, claim or demand arising out of any default which may occur1, provided, however, that the foregoing shall not apply to (i) Lender’s gross negligence or willful misconduct, or (ii) a material breach of Lender’s obligations contained within the Loan Documents. A breach by Lender shall be deemed to have occurred only after the following: (a) should Borrower claim a material breach by Lender, it shall give Lender written notice of such claimed breach, which notice shall set forth with reasonable specificity the nature of said breach; and (b) Lender shall not be deemed in breach of any Loan Documents unless said breach is not cured within sixty (60) days from receipt of said notice, or if said breach cannot be cured within said sixty (60) day period, the time for Lender to cure said breach shall be extended, so long as Lender is pursuing the cure thereof with all reasonable due diligence. Upon receiving knowledge of any suit, claim or demand asserted by a third party that Lender believes is covered by this indemnity, Lender shall give Borrower notice of the matter and an opportunity to defend it, at Borrower’s sole cost and expense, with legal counsel reasonably satisfactory to Lender. Lender may also require Borrower to defend the matter. The obligations on the part of Borrower under this Section 13 shall survive the closing of the Loan and the repayment thereof.
14. Miscellaneous. Amendments of this Agreement may be made only in writing by both Lender and Borrower. Compliance with any warranty, covenant, or condition herein set forth may be omitted or waived only in writing by Lender. This Agreement, together with the other Loan Documents, constitutes the entire agreement among the parties with respect to the subject matter contained herein and therein, and supersedes any prior agreements or understanding among 18 55852.01006\44591738.3
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the parties, whether written or oral. The Loan Documents do not create, and the parties do not intend to create a joint venture, partnership, trust or other business or fiduciary relationship between Borrower and Lender, other than that of debtor and creditor.Successor and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. Borrower shall not transfer or assign any of its rights or obligations hereunder without the prior written consent of Lender which may be withheld for any reason or no reason. Lender may assign, transfer, sell, or otherwise convey in whole or in part, at any time, in the form of participations or otherwise, its right, duties, title, and interest under, in, and to its Loan and the Loan Documents. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to constitute one and the same document. [Remainder of Page Intentionally Left Blank—Signature Page Follows] 19 55852.01006\44591738.3
Signature Page to Loan Agreement
IN WITNESS WHEREOF, Lender and Borrower have executed this Agreement as of the date first set forth above.
LENDER:
CITY OF LAGUNA BEACH,
A CALIFORNIA MUNICIPAL CORPORATION
BY:
NAME:
TITLE:
BORROWER:
THE LAGUNA BEACH COMMUNITY LAND
TRUST, a California nonprofit corporation
BY:
NAME:
TITLE:
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LEGAL DESCRIPTION OF THE LAND
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