1 LOAN AGREEMENT
This Loan Agreement (this “Agreement”) is entered into effective as of ________________ (“Effective Date”) by and between the City of South San Francisco, a municipal corporation (the "City") and ____________(INSERT ROTARY ENTITY) ("Borrower"). The City and Borrower are hereinafter collectively referred to as the “Parties.”
RECITALS
A. Borrower is the owner of certain parcel at 500 Linden Avenue (APN: 012-175-260) located in the City of South San Francisco and as more particularly described in Exhibit A (“the Property”). Borrower desires to develop an eighty (80) unit senior affordable housing development consisting of five (5) studio Units and seventy-four (74) one-bedroom units with rents affordable to households with incomes between 15% of Area Median Income and 60% of Area Median Income and one (1) unrestricted two-bedroom manager’s unit, for qualifying residents 55 years of age or older as defined in Civil Code section 51.3, and including ground floor commercial/retail component (“Senior Project” or “Project”) on the Property.
B. The City has identified a critical need for development of affordable housing as evidenced by data gathered and conclusions drawn in the City’s Housing Element and wishes to assist in the development of the Senior Project through various forms of financial assistance.
C. At its June 25, 2025 Regular Meeting, the South San Francisco City Council adopted Resolution No. 83-2025, conditionally committing a City loan out of its Commercial Linkage Fee Fund (“Fund 823”) to Borrower in the amount of Two Million, Three Hundred and SixtySix Thousand, Eight Hundred and Twenty-Eight Dollars ($2,366,828) for construction of the Senior Project.
D. At its January 14, 2026 Regular Meeting, City Council adopted Resolution No. 01-2026, conditionally committing an additional City loan out of Fund 823 to Borrower in the amount of Five Million, Five Hundred Thousand, Five Hundred and Eighty-One Dollars ($5,500,581) for construction of the Senior Project.
E. As contemplated by Resolutions No. 83-202 and 01-2026, and in accordance with the terms and conditions of this Agreement and accompanying Exhibits, the City agrees to loan to Borrower an amount not to exceed Seven Million, Eight Hundred and Sixty-Seven Thousand, Four Hundred and Nine Dollars ($7,867,409) (the “Loan”) to defray the construction costs associated with development of the Senior Project which Loan shall be evidenced by an accompanying Promissory Note dated as of the Effective Date and executed by Borrower substantially in the form attached hereto as Exhibit B (“Note”) secured by an Assignment of Collateral as set forth herein in Section 1.8 and, concurrent with Borrower’s execution of this Agreement, a Deed of Trust in the form attached hereto as Exhibit C (“Deed of Trust”) and subject to that Regulatory Agreement dated March 17, 2025 and recorded as Document No. 2025-015516 in the San Mateo County Recorder’s Office on April 3, 2025, entered into between the City and Rotary Plaza, Inc., a California nonprofit public benefit corporation ("RPI"), which encumbers the Property (“Regulatory Agreement”). The Borrower assumed the obligations imposed by the Regulatory Agreement upon the Borrower's acquisition of the 2 Property from RPI. this language to be inserted as appropriate with the Rotary entity above The Deed of Trust will be recorded against the Property.
NOW THEREFORE, in consideration of their mutual undertakings and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. THE LOAN AND DISBURSEMENT OF LOAN PROCEEDS.
1.1. Loan. The City agrees to make the Loan, and Borrower agrees to accept the same, upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by the Note. Provided that Borrower has complied with all conditions set forth in Section 1.6, the Loan shall be disbursed in accordance with Section 1.5 hereof.
1.2. Interest; Maturity Date. Interest shall accrue on the Loan at a rate of three percent (3%) simple interest per annum for so long as Borrower is not in default under (a) this Agreement, (b) the Note, (c) the Deed of Trust, or (d) the Regulatory Agreement (collectively, the “Loan Obligations”). Otherwise, the Loan shall accrue interest at the Default Rate, as set forth in the Note, until such default is cured. The outstanding balance of the Loan and any other sums due under the Note shall be payable in full on the fifty-fifth (55th) anniversary of the date of issuance of the last certificate of occupancy or equivalent certification provided for the Senior Project by the City’s Building Official (the “Maturity Date”); provided, however, that if such date cannot be established, the Maturity Date shall be the fifty-seventh (57th) anniversary of the Effective Date.
If the California Department of Housing and Community Development (“HCD") is a lender to the Senior Project, at conversion to permanent financing, the Parties will extend to the Maturity Date to match the maturity date of the HCD financing.
1.3. Repayment. Annual payments shall be due and payable on a residual receipts basis in accordance with the formula set forth below.
a. Annual Payment from Residual Receipts. Commencing on April 1 following the first (1st) anniversary of the City’s issuance of a final certificate of occupancy for the Project, and on each April 1 thereafter, Borrower shall pay to City a share of fifty percent (50%) of all Residual Receipts (defined below) generated by the Project during the previous calendar year to reduce the indebtedness owed under this Note. The City’s pro-rata share shall be based on the ratio that the original principal amount of the City’s Loan bears to the sum of the original principal amounts of all loans made to the Borrower that are payable from Residual Receipts, including any other loan from the City and any loan from the County of San Mateo. Payments shall be accompanied by Borrower’s calculation of Residual Receipts for the previous calendar year and such supporting documentation as City may reasonably request, including without limitation, an independent audit prepared for the Project by a certified public accountant in accordance with generally accepted accounting principles. Payments shall be credited first to any unpaid late charges and other costs and fees then due, then to any accrued interest, and then to principal. No later than November 1 of each year during the term hereof beginning after the first (1st) anniversary of the City’s 3 issuance of a final certificate of occupancy for the Project, if requested by City, Borrower shall provide to City a projected budget for the following calendar year which shall include an estimation of Residual Receipts. b. “Residual Receipts” means for each calendar year during the Term hereof, the amount by which Gross Revenue (defined below) exceeds Annual Operating Expenses (defined below) for the Project. Residual Receipts shall also include (a) condemnation awards for a permanent taking of part or all of the Property or the Project; and (b) net cash proceeds realized from any refinancing of the Project, less fees and closing costs reasonably incurred in connection with such refinancing and any City-approved uses of the net cash proceeds of the refinancing.
c. “Gross Revenue” means for each calendar year during the Term, all revenue, income, receipts and other consideration actually received by Borrower from the operation and leasing of the Project. Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants; Section 8 payments or other rental subsidy payments received for the dwelling units; deposits forfeited by tenants; all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance (provided however, expenditure of such proceeds for repair or restoration of the Project shall be included within Annual Operating Expenses in the year of the expenditure); condemnation awards for a taking of part or all of the Property or the Project for a temporary period; the fair market value of any goods or services provided to Borrower in consideration for the leasing or other use of any part of the Project; and any release of funds from replacement and other reserve accounts to Borrower other than for costs associated with the Project. Gross Revenue shall not include tenant security deposits, loan proceeds, capital contributions or similar advances. d. “Annual Operating Expenses” means for each calendar year during the Term, the following costs reasonably and actually incurred for the operation and maintenance of the Project to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles; all state and local property and other taxes and annual assessments imposed on the Project; premiums for property damage and liability insurance; debt service currently due and payable on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on loans that have been approved by the City and which are secured by deeds of trust (each, an “Approved Loan”); utility services not paid for directly by tenants, including but not limited to water,sewer, trash collection, gas and electricity; maintenance and repair, including but not limed to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial and supplies; any annual license or certificate of occupancy fees required for operation of the Project; general administrative expensesincluding but not limited to advertising and marketing,security services and systems, and professional fees for legal, audit and accounting; property management fees and reimbursements including on-site manager expenses, not to 4 exceed fees and reimbursements which are standard in the industry and pursuant to a management contract approved by the City; deposits into a reserve for capital replacements of Project improvementsin an amount no more than Five Hundred Dollars ($500) per unit per year or such greater amount as reasonably required by the holder of an Approved Loan or Borrower's organizational documents; deposits into an operating reserve in such reasonable amounts as are approved by the City, or in such amounts reasonably required by the holder of an Approved Loan or Borrower's organizational documents. Annual Operating Expenses shall not include the following: debt service payments on any loan which is not an Approved Loan, including without limitation, unsecured loans; depreciation, amortization, depletion or other non-cash expenses; capital expenditures; expenses paid for with disbursements from any reserve account; any amount paid to Borrower, or any entity controlled by the persons or entities in control of Borrower (unless such payment consists of fees paid to a property management agent or resident services agent, to the Project developer, to the Borrower’s general partners, or the asset management fee, or as otherwise set forth in the Borrower's organizational documents).
1.4. Use of Loan Proceeds. The Loan shall be used solely and exclusively to defray the construction costs for the Senior Project, consistent with the construction budget attached as Exhibit E (the “Construction Budget”).
1.5. Disbursement of Proceeds. Upon satisfaction of the conditions set forth in Section 1.6, and provided that Borrower has provided the City copies of third-party invoices and evidence of Borrower’s payment in accordance with the Construction Budget, and such other documentation as the City may reasonably require, the City shall promptly disburse Loan proceeds to Borrower.
1.6. Conditions Precedent to Disbursement of Funds. The City's obligation to disburse Loan proceeds is conditioned upon satisfaction of all the following conditions (“Loan Proceeds):
a. There exists no Default nor any act, failure, omission, or condition that would constitute a default under this Agreement;
b. Borrower’s execution and delivery to the City of this Agreement, the Note, and the Deed of Trust; and
c. Borrower's recordation of the Deed of Trust in the Official Records of San Mateo County; and
d. Borrower’s delivery to the City of both of the following: (i) a certified resolution indicating that Borrower has authorized this transaction and that the persons executing this Agreement on Borrower’s behalf have been duly authorized to do so, and (ii) a certified copies of Borrower’s certificate of limited partnership and the Borrower's amended and restated partnership agreement (the "Partnership Agreement").
e. Borrower’s presentation of an updated Construction Budget, as reasonably approved by the City, accompanied by the request disbursement amount to provide 5 for costs incurred to date. Requests for reimbursement payments can be made quarterly.
f. Borrower’s submittal to the City certificate(s) of insurance, in form and with insurers admitted in California and acceptable to the City, evidencing compliance with the insurance requirements attached hereto as Exhibit F, and upon demand by City at any time subsequent. If requested by the City, Borrower shall also provide complete copies of the required insurance policies and bonds.
1.7. No Obligation to Disburse Proceeds Upon Default or Termination. Notwithstanding any other provision of this Agreement, the City shall have no obligation to disburse any portion of the Loan to Borrower:
a. Upon the failure of any of Borrower’s representations and warranties set forth in this Agreement to be true and correct in all material respects; b. Following the termination of this Agreement; or
c. During the pendency of any uncured Event of Default.
1.8. Security.
a. As security for the Loan, and as part of the consideration for entering into this Agreement, Borrower hereby assigns its rights under the Collateral, as defined below (the "Assignment"). The Assignment shall become effective upon the occurrence of an Event of Default or Termination for Infeasibility. The City shall have no obligation under the Collateral unless it expressly agrees in writing to be bound thereby. If the Assignment shall become effective, the City may use the Collateral for any purposes for which Borrower could have made use of the same in the development of the Senior Project. Borrower shall cooperate with the City in the implementation of its rights under the Assignment and shall immediately deposit the Collateral with the City if the Assignment becomes effective. As used herein, the term "Collateral" includes the following: all architectural designs, construction, engineering, surveying, and consulting contracts, and any and all amendments, modifications, supplements, addenda and general conditions thereto heretofore or hereafter entered into by Borrower and any contractor or consultant pertaining to development of the Senior Project; all plans and specifications, surveys, shop drawings, working drawings, reports, studies, amendments, modifications, changes, supplements, general conditions, addenda and work product thereto heretofore or hereafter prepared by Borrower or any contractor or consultant pertaining to development of the Senior Project; all land use approvals, conditional use permits, building permits and other governmental entitlements and approvals of any nature obtained for the Senior Project; and all financing applications or other applications and all other tangible documents, except those of a proprietary or confidential nature, pertaining to development of the Senior Project.
6 b. Deed of Trust. In addition to the Assignment, concurrent with the Borrower’s execution of this Agreement, the Borrower shall record the Deed of Trust against the Property in a form provided by the City and reasonably acceptable to the Borrower in the Official Records of San Mateo County and comply with it. Such Deed of Trust shall be subordinate to Borrower’s private financing for acquisition of the Property and construction of the Senior Project and any HCD documents if required by HCD’s regulations and Guidelines.
1.9. Subordination. The Deed of Trust may be subordinated only to such loans and liens as the City may approve in writing. The City acknowledges that Borrower’s construction and permanent lender(s) may require the subordination of the Deed of Trust. Borrower acknowledges that the Deed of Trust secures performance of Borrower’s obligations pursuant to this Agreement and the Regulatory Agreement which may survive repayment of the Note, and that the Deed of Trust shall not be reconveyed prior to Borrower’s satisfaction of such obligations. City agrees to subordinate the Deed of Trust to the following lenders: Citybank N.A (“Senior Lenders”). The Senior Lenders are providing financing for the acquisition of the Property and construction of the Project (“Senior Loans”) and the City agrees to execute subordination agreements with the Senior Lenders, subject to the following conditions to be incorporated into the subordination agreements:
a. Provided that Borrower agrees to use its best efforts to ensure that the instruments effecting such subordination for the benefit Senior Lender shall contain each of the following provisions: (i) Senior Lender shall use its best efforts to provide to the City copy of any notice of default issued to Borrower concurrently with provision ofsuch notice to Borrower; and, (ii) City shall have the reasonable right, but not the obligation, to cure any default by Borrower within the same period of time provided to Borrower for such cure extended by an additional 90 days, (iii) provided that City has cured any default under Senior Lender’s deed of trust and other loan documents, City shall have the right to foreclose the City Deed of Trust and take title to the Property without acceleration of Senior Lender’s debt; and (iv) City shall have the right to transfer the Property without acceleration of Senior Lender’s debt to another entity which shall own and operate the Property and Project in accordance with this Agreement, subject to the prior written consent of the Senior Lender. Borrower agrees to provide to City a copy of any notice of default Borrower receives from any Senior Lender within thirty (30) days following Borrower’s receipt thereof.
b. The subordination(s) described in this section may be effective only during the original term of the Senior Loan and any extension of its term approved in writing by the City.
1.10. Impact Fee Reductions. The City agrees that the Senior Project shall receive the following reductions to certain development fees applicable to the Project at the time of building permit application as set forth below:
7 a. A fifty percent (50%) reduction to the Library Facilities Impact Fee, Parks & Recreation Impact Fee, Public Safety Impact Fee, and Transportation Impact Fee. b. One hundred percent (100%) reduction to the Child Care Impact Fee.
After application of the foregoing reductions, the remaining balance of City impact fees shall be paid by the Borrower in accordance with the then current Master Fee Schedule in effect at the time of building permit application for the Project. Borrower shall continue to be subject to all other applicable fees in addition to the above. .
1.11. Additional Covenants
a. City Use of Commercial Space. Borrower agrees that the City shall have the right to lease the ground floor commercial/retail space located within the Senior Project (the "Commercial Space") for a rent of One Dollar ($1) per year from the Borrower, or pursuant to a sublease between the Borrower's general partner, as landlord, and the City, as subtenant. The City shall have the right to control and approve any sublease or other third-party use of the Commercial Space. b. No Reduction in Parking. Borrower agrees that the number of parking spaces provided for the Senior Project shall not be reduced from the number of parking spaces approved by the City through site plan approvals.
2. NON-DISCRIMINATION; PREFERENCES.
2.1. Non-Discrimination. Borrower covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Senior Project or the Property, nor shall Borrower or any person claiming under or through Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Senior Project. Deeds, leases, and contracts entered into by Borrower with respect to the Senior Project shall contain any mandatory non-discrimination language required under the Regulatory Agreement.
2.2. Preferences. Borrower shall for not less than fifty-one percent (51%) of the residential units within the Senior Project give first preference to eligible households in renting units in accordance with the local preference requirements of Chapter 8.100, Local Preferences and Requirements, or its successor provision, of the South San Francisco Municipal Code. Borrower will implement any preferences in the rental of units in the Senior Project pursuant to a preference plan approved by its Senior Lenders and the City Manager. Notwithstanding the foregoing, in the event of a conflict between this provision and the provisions of Section 42 of the Internal Revenue Code of 1986, as amended, or any fair housing law, the provisions of such Section 42 of fair 8 housing law shall control, and in no event shall Borrower be obligated to implement such preference if such implementation would result in any violation of applicable law.
3. ADDITIONAL COVENANTS, REPRESENTATIONS AND WARRANTIES OF BORROWER.
3.1. Representations. Borrower represents and warrants to the City as follows:
a. Organization of the Borrower. Borrower is a duly organized __________ [INSERT INFORMATION REGARDING ENTITY], validly existing and in good standing under the laws of the State of California. Borrower has all requisite power and authority to develop the Senior Project, to carry on its business as now conducted, and to execute, deliver and perform its obligations under this Agreement and the Note. The Borrower has received a determination from the Internal Revenue Service that it is exempt from federal tax under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended.
b. Authorization of the Loan; No Violation. The execution, delivery and performance of this Agreement and the Note have been duly authorized by Borrower, and this Agreement and the Note, when duly executed and delivered will constitute the valid and binding obligations of Borrower enforceable in accordance with their respective terms. Borrower’s execution of this Agreement and the Note and performance thereunder will not result in a breach of or constitute a default under any agreement, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.
c. Litigation. There are no pending or to Borrower’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect the financial condition or operation of Borrower or its ability to carry out the obligations of Borrower under this Agreement and the Note. Borrower is not the subject of an action under federal or state Bankruptcy Law (as defined below).
3.2. Indemnification. Borrower shall indemnify, defend (with counsel approved by the City), and hold the City and its elected and appointed officers, officials, employees, contractors, agents, and representatives (all of the foregoing, collectively the “Indemnitees”) harmless from and against any and all liabilities, losses, damages, fines, deficiencies, penalties, claims, demands, suits, actions, causes of action, legal or administrative proceedings, judgments, costs and expenses (including without limitation reasonable attorneys’ fees and court costs) (all of the foregoing, collectively “Claims”) arising directly or indirectly in any manner in connection with or resulting from, (a) any and all of Borrower’s construction activities in connection with the Senior Project, including without limitation, all predevelopment activities and site investigations conducted by or for Borrower; (b) any failure of any of Borrower’s representations or warranties set forth in this Agreement, or made by Borrower in connection with the execution and delivery of this Agreement or in any certificate furnished pursuant hereto, or in connection with any request for disbursement of Loan proceeds to be correct in all material respects; (c) any contract for services entered into between Borrower and a third party, or services provided to Borrower by a third party, related to the 9 Senior Project; and (d) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises in connection with the Loan or any transaction contemplated thereby. Borrower’s obligations under this Section shall survive the making and repayment of the Loan and the expiration or termination of this Agreement. Borrower’s indemnity obligations shall not apply to Claims arising solely as a result of the willful misconduct or gross negligence of any of the Indemnitees or arising solely from the City’s breach of a material term of a lease governing the Commercial Space..
3.3. Books and Records. The City shall have the right, during business hours and after reasonable notice to Borrower, to request copies of, inspect, and copy Borrower's books and records pertaining to the Property, the Senior Project and the Loan. Borrower shall comply with any request for such records within thirty (30) days. The City shall maintain the copies of Borrower’s books and records in strict confidence except to the extent required to be disclosed by applicable law.
4. DEFAULT AND REMEDIES.
4.1. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default hereunder (“Event of Default”):
a. Borrower fails to pay any amount due under the Note, and such failure continues for thirty (30) days after the City notifies Borrower thereof in writing. b. Any of Borrower’s representations or warranties contained in this Agreement, or made by Borrower in connection with the execution and delivery of this Agreement or in any certificate furnished pursuant hereto, or in connection with any request for disbursement of Loan Proceeds, shall prove to have been incorrect when made in any material respect.
c. Borrower fails to use Loan Proceeds in accordance with this Agreement or fails to use Loan Proceeds in accordance with Borrower's request for disbursement. d. Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Borrower, (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. e. A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that, (i) is for relief against Borrower in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or substantially all of such entity’s assets, (iii) orders the liquidation of Borrower, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Senior Project , and in each case the order or decree is 10 not released, vacated, dismissed or fully bonded within sixty (60) days after its issuance.
f. Borrower fails to maintain insurance as required pursuant to any of the Loan Obligations, and Borrower fails to cure such default within thirty (30) days. g. Borrower defaults in the performance of any term, provision, covenant or agreement contained in the Loan Obligations, and unless a shorter cure period is specified for such default, the default continues for thirty (30) days after the date upon which the City shall have given written notice of the default to Borrower; provided, however, that in the case of a nonmonetary default that is not susceptible of cure within thirty (30) days, an Event of Default shall not arise hereunder if Borrower commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default to completion with due diligence and in good faith, but in no event longer than one hundred twenty (120) days from the receipt of notice of default.
4.2. Remedies. Upon the occurrence of an Event of Default, the City shall have the following rights:
a. To exercise the remedies under the Deed of Trust and the Assignment pursuant to and as described in Section 1.8;
b. To seek a judicial declaration or order of specific performance; c. In the case of an Event of Default arising under any Loan Obligation other than this Agreement, to exercise the rights under that Loan Obligation; or d. To terminate this Agreement.
The City shall accept any cure made by the Senior Lenders, on the same terms and conditions if made by Borrower. Notwithstanding the foregoing, the Loan is non-recourse to Borrower. Each of the remedies provided herein is cumulative and not exclusive of, and shall not prejudice, any other remedy provided herein or in the Note. The City may exercise any rights and remedies available at law or in equity, in addition to, and not in lieu of, any rights and remedies expressly granted in this Agreement; provided, however, that Borrower's obligation to repay the Loan shall be secured by the Assignment and the Deed of Trust without recourse to Borrower; provided, however, nothing contained in the foregoing limitation of liability shall:
a. Impair the enforcement against all such security for the Loan of all the rights and remedies of the City under the Deed of Trust and any financing statements City files in connection with the Loan, as each of the foregoing may be amended, modified, or restated from time to time;
b. Impair the right of City to bring a foreclosure action, action for specific performance or other appropriate action or proceeding to enable City to enforce and realize upon the Deed of Trust, the interest in the Property and the Project created 11 thereby and any other collateral given to City in connection with the indebtedness evidenced by the Note, and to name the Borrower as party defendant in any such action;
c. Be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Loan as a demand for money within the meaning of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; d. Constitute a waiver of any right which City may have under any bankruptcy law to file a claim for the full amount of the indebtedness owed to City under the Note or to require that the Property shall continue to secure all of the indebtedness owed to City in accordance with the Note and the Deed of Trust; or e. Limit or restrict the ability of City to seek or obtain a judgment against Borrower to enforce against Borrower to:
i. recover under Borrower’s indemnification obligations, or ii. recover from Borrower compensatory damages as well as other costs and expenses incurred by City (including without limitation attorney’s fees and expenses) arising as a result of the occurrence of any of the following:
(1) any fraud or material misrepresentation on the part of the Borrower, or any officer, director or authorized representative of Borrower in connection with the request for or creation of the Loan, or in this Agreement, the Regulatory Agreement or any City Document, or in connection with any request for any action or consent by City in connection with the Loan;
(2) any failure to maintain insurance on the Property or Project as required pursuant to this Agreement, the Regulatory Agreement and the City Documents;
(3) failure to pay taxes, assessments or other charges which may become liens on the Property or Project;
(4) the presence of hazardous or toxic material or waste on the Property arising from construction of the Senior Project; (5) the occurrence of any act or omission of Borrower that results in waste to or of the Property or Project and which has a material adverse effect on the value of the Property or the Project; (6) the removal or disposal of any personal property or fixtures or the retention of rents, insurance proceeds, or condemnation awards in violation of the Deed of Trust;
(7) the material misapplication of Loan Proceeds; and
12 (8) the material misapplication of the proceeds of any insurance policy or award resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Property or the Project.
5. MISCELLANEOUS.
5.1. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. Notwithstanding the foregoing, the City's obligation to make the Loan is personal to Borrower, and shall not be assignable by operation of law or otherwise absent the express written consent of the City, and any such prohibited assignment by operation of law or otherwise shall be void.
5.2. Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Party in accordance with this Section. All such notices shall be sent by:
a. Personal delivery, in which case notice is effective upon delivery; b. Certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; c. Nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
d. Electronic mail, in which case notice shall be deemed delivered upon transmittal, provided that, (i) a duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery (in which case notice shall be deemed given two business days after the duplicate is deposited in the mail), or (ii) receipt is voluntarily acknowledged by the Party to be noticed (in which case notice shall be deemed given when acknowledged.
CITY:
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: Economic & Community Development Department
BORROWER:
____________
and:
13 Goldfarb & Lipman LLP
1300 Clay Stret, 11th Floor
Oakland, CA 94612
Attn: William DiCamillo
Email: [email protected]
5.3. Waiver, Modification and Amendment. No failure or delay on the part of the City in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy hereunder. No modification or waiver of any provision of this Agreement, nor any consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances unless expressly provided herein or by law. No amendment to or modification of this Agreement shall be effective unless and until such amendment or modification is in writing, properly approved in accordance with applicable procedures, and executed by the Parties.
5.4. Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement, including, but not limited to subordination agreements authorized by the City in accordance with Section 1.9.
5.5. Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.
5.6. Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council unless the City Manager determines in his or her discretion that such action requires such approval.
5.7. Non-Liability of City and City Officials, Employees and Agents. No member, official, employee or agent of the City shall be personally liable to Borrower, or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Borrower or its successor or for any obligation of the City under this Agreement.
5.8. No Third Party Beneficiaries. There shall be no third party beneficiaries to this Agreement.
14 5.9. Captions; Construction. The headings of the sections and paragraphs of this Agreement have been inserted for convenience only and shall not be used to construe this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and consistent with the purposes for which the Parties entered into this Agreement, and not strictly for or against any Party. Time is of the essence in the performance of this Agreement.
5.10. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to principles of conflicts of law. The Parties consent to the jurisdiction of any federal or state court in the jurisdiction in which the Property is located (the “Property Jurisdiction”). Borrower agrees that any controversy arising under or in relation to this Agreement shall be litigated exclusively in courts having jurisdiction in the Property Jurisdiction. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
5.11. No Pledging of City’s Credit. Under no circumstances shall the Borrower have the authority or power to pledge the credit of City or incur any obligation in the name of City.
Borrower shall save and hold harmless City and the Indemnitees for expenses arising out of this Agreement.
5.12. Attorneys' Fees. In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the Party prevailing in any such action shall be entitled to recover against the other Party all reasonable attorneys’ fees and costs incurred in such action.
5.13. Severability. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the Parties are materially altered or abridged by such invalidation, voiding or unenforceability.
5.14. Entire Agreement; Exhibits. The Loan Obligations, contain the entire agreement between the Parties with respect to the subject matter hereof. This Agreement supersedes all prior oral or written agreements between the Parties with respect thereto. Exhibits attached hereto are incorporated herein by this reference.
5.15. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.
5.16. Electronic Signature. The Parties may deliver executed copies of this Agreement to each other by electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any such signature delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. No party may raise the use of any image transmission device or method or the fact that any signature was transmitted as an image as a defense to the enforcement of this Agreement.
15 SIGNATURES ON FOLLOWING PAGE.
16 IN WITNESS WHEREOF, the Parties have executed this Loan Agreement as of the date first written above.
CITY OF SOUTH SAN FRANCISCO,
a municipal corporation
By: ________________________________
Name: _______________________________
City Manager
ATTEST:
By: ___________________________
City Clerk
APPROVED AS TO FORM:
By: ___________________________
City Attorney
17 BORROWER:
[INSERT ROTARY ENTITY INFORMATION]
A–1
EXHIBIT A
Legal Description of Senior Parcel
• LOTS 9, 10 AND THE NORTHWESTERLY 48 FEET, FRONT AND REAR MEASUREMENTS, OF LOT 8 IN BLOCK 137, AS SHOWN ON THAT CERTAIN MAP ENTITLED, ''SOUTH SAN FRANCISCO, SAN MATEO CO. CAL.'', FILED IN THE OFFICE
OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA ON MARCH 1, 1892 IN BOOK ''B'' OF MAPS AT PAGE 6 AND COPIED INTO BOOK 2 OF MAPS AT PAGE 52.
• APN: 012-175-260; JPN 012-17-175-26A (Affects Lots 8, 9 and 10) B-1
EXHIBIT B
Form of Promissory Note
1 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
PROMISSORY NOTE SECURED BY DEED OF TRUST
CITY OF SOUTH SAN FRANCISCO
AFFORDABLE HOUSING PROGRAM
$7,867,409.00
South San Francisco, California
__________________________
FOR VALUE RECEIVED, the undersigned, ______________ [INSERT ROTARY ENTITY] ( “Borrower”) promises to pay to the City of South San Francisco, a municipal corporation, (“City”), at 400 Grand Avenue, South San Francisco, California 94080, or any other place designated in writing by City to Borrower, in lawful money of the United States a principal sum
SEVEN MILLION, EIGHT HUNDRED AND SIXTY-SEVEN THOUSAND, FOUR HUNDRED AND NINE DOLLARS ($7,867,409), together with interest on the outstanding principal balance pursuant to the loan agreement described in paragraph 1 below and in accordance with the terms and conditions described herein (“Loan”). Capitalized terms used but not defined herein shall have the same meaning as set forth in the Loan Agreement (defined below).
1. Loan. The Promissory Note (“Note”) has been executed and delivered pursuant to the terms of a Loan Agreement dated evenly herewith (“Loan Agreement”) between Borrower and City, which details the terms and conditions under which City agrees to lend to Borrower and Borrower agrees to borrow up to $7,867,409 to fund certain construction costs associated with the Project. The rights and obligations of Borrower under this Note shall be governed by the Loan Agreement and by the terms set forth in this Note.
2. Payment Terms.
(A) The term of the Note shall be from execution and shall mature fifty-five (55) years of the date of issuance of the last certificate of occupancy or equivalent certification provided for the Senior Project by the City’s Building Official (the “Maturity Date”); provided, however, that if such date cannot be established, the Maturity Date shall be the fifty-seventh (57th) anniversary of the execution of this Note. If the California Department of Housing and Community Development (“HCD") is a lender to the Project, at conversion to permanent financing, the Parties will extend to the Maturity Date to match the maturity date of the HCD financing.
(B) Interest Rate. Except as provided under Section 6, the outstanding principal 2 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
balance of the Loan shall accrue interest at three percent (3%) per annum for so long as Borrower is not in default under the Loan Agreement, this Note, the Deed of Trust, or the Regulatory Agreement (collectively, the “Loan Obligations”). If payment is due, payment will first be applied to outstanding interest and then to any outstanding principal until the Note is paid as set forth herein. In the event this payment is less than accumulated interest owed plus current interest, any unpaid interest shall carry over to the following year. Interest shall not compound on this interest carry-over.
(C) Repayment. Borrower shall make an annual payment on a residual receipts basis in accordance with the formula set forth below.
i. Annual Payment from Residual Receipts. Commencing on April 1 following the first (1st) anniversary of the City’s issuance of a final certificate of occupancy for the Project, and on each April 1 thereafter, Borrower shall pay to City a share of fifty percent (50%) of all Residual Receipts (defined below) generated by the Project during the previous calendar year to reduce the indebtedness owed under this Note. The City’s pro-rata share shall be based on the ratio that the original principal amount of the City’s Loan bears to the sum of the original principal amounts of all loans made to the Borrower that are payable from Residual Receipts, including any other loan from the City and any loan from the County of San Mateo. Payments shall be accompanied by Borrower’s calculation of Residual Receipts for the previous calendar year and such supporting documentation as City may reasonably request, including without limitation, an independent audit prepared for the Project by a certified public accountant in accordance with generally accepted accounting principles. Payments shall be credited first to any unpaid late charges and other costs and fees then due, then to any accrued interest, and then to principal. No later than November 1 of each year during the term hereof beginning after the first (1st) anniversary of the City’s issuance of a final certificate of occupancy for the Project, if requested by City, Borrower shall provide to City a projected budget for the following calendar year which shall include an estimation of Residual Receipts. ii. “Residual Receipts” means for each calendar year during the Term hereof, the amount by which Gross Revenue (defined below) exceeds Annual Operating Expenses (defined below) for the Project. Residual Receipts shall also include (a) condemnation awards for a permanent taking of part or all of the Property or the Project; and (b) net cash proceeds realized from any refinancing of the Project, less fees and closing costs reasonably incurred in connection with such refinancing and any City-approved uses of the net cash proceeds of the refinancing.
iii. “Gross Revenue” means for each calendar year during the Term, all 3 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
revenue, income, receipts and other consideration actually received by Borrower from the operation and leasing of the Project. Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants; Section 8 payments or other rental subsidy payments received for the dwelling units; deposits forfeited by tenants; all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance (provided however, expenditure of such proceeds for repair or restoration of the Project shall be included within Annual Operating Expenses in the year of the expenditure); condemnation awards for a taking of part or all of the Property or the Project for a temporary period; the fair market value of any goods or services provided to Borrower in consideration for the leasing or other use of any part of the Project; and any release of funds from replacement and other reserve accounts to Borrower other than for costs associated with the Project.
Gross Revenue shall not include tenant security deposits, loan proceeds, capital contributions or similar advances.
iv. “Annual Operating Expenses” means for each calendar year during the Term, the following costs reasonably and actually incurred for the operation and maintenance of the Project to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles; all state and local property and other taxes and annual assessments imposed on the Project; premiums for property damage and liability insurance; debt service currently due and payable on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on loans that have been approved by the City and which are secured by deeds of trust (each, an “Approved Loan”); utility services not paid for directly by tenants, including but not limited to water, sewer, trash collection, gas and electricity; maintenance and repair, including but not limed to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial and supplies; any annual license or certificate of occupancy fees required for operation of the Project; general administrative expenses including but not limited to advertising and marketing, security services and systems, and professional fees for legal, audit and accounting; property management fees and reimbursements including on-site manager expenses, not to exceed fees and reimbursements which are standard in the industry and pursuant to a management contract approved by the City; depositsinto a reserve for capital replacements of Project improvementsin an amount no more than Five Hundred Dollars ($500) per unit per year or such greater amount as reasonably required by the holder of an Approved Loan or Borrower's organizational documents; deposits into an operating 4 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
reserve in such reasonable amounts as are approved by the City, or in such amounts reasonably required by the holder of an Approved Loan or Borrower's organizational documents. Annual Operating Expenses shall not include the following: debtservice payments on any loan which is not an Approved Loan, including without limitation, unsecured loans; depreciation, amortization, depletion or other non-cash expenses; capital expenditures; expenses paid for with disbursements from any reserve account; any amount paid to Borrower, or any entity controlled by the persons or entities in control of Borrower (unless such payment consists of fees paid to a property management agent or resident services agent, to the Project developer, to the Borrower’s general partners, or the asset management fee, or as otherwise set forth in the Borrower's organizational documents).
3. Security. This Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing ("Deed of Trust") dated as of the date hereof, executed by Borrower for the benefit of City and encumbering Borrower's fee simple estate in the property described therein. City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein, in the Deed of Trust, and the Loan Agreement. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Loan, and the sole recourse of the City with respect to the principal of, or interest on, this Note shall be to the property described in the Deed of Trust.
4. Event of Default. In the event Borrower commits an Event of Default pursuant to the Loan Obligations, Borrower shall be in default under of the terms and conditions of this Note and the Deed of Trust, and City may demand immediate and full payment of the total outstanding principal amount of the Note and any accrued interest under the Loan Obligations, and/or may initiate foreclosure proceedings under the Deed of Trust.
5. No Waiver or Consent. The failure by City to assert its right upon the occurrence of an Event of Default, or the waiver by City of its rights upon any Event of Default, shall not constitute a consent to or waiver of City’s rights with respect to any other Event of Default.
6. Default Interest. Upon the occurrence of any Event of Default, the interest rate on the sums as to which Borrower is in Default (including principal, if City has elected to declare it immediately due and payable) shall be the lower of (i) Three Precent (3%) per annum, or (ii) the highest rate then allowed by law, commencing as of the date of the Default until paid in full, or until the Default has been cured, whichever is applicable.
7. Borrower’s Waivers.
(A)Additional Security. Borrower expressly agrees that City may accept further security for this Note, all without in any way affecting the obligations of Borrower under this Note.
5 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
(B) Original Liability. No extension of time for payment of this Note or any installment hereof made by agreement by City with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part. (C) Obligations Absolute. The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. (D)Waivers. Borrower hereby waives (i) any notice of default or delinquency in addition to any notice expressly required by this Note; (ii) notice of acceleration; (iii) any notice of nonpayment in addition to any notice required by this Note; (iv) notice of costs, expenses, losses and interest thereon; (v) notice of interest on interest and late fees; (vi) diligence in taking any action to collect any sums owing under the Note or in proceeding against any of the rights and interest in and to properties securing payment of the Note; and (vii) presentment for payment, demand, protest, and notices of dishonor and/ or protest.
8. City Forbearance. No waiver of any breach, default or failure of condition under the terms of this Note, the Loan Agreement, Deed of Trust, Regulatory Agreement, or the obligations secured thereby, shall be implied from any failure of City to take, or any delay by City in taking, action with respect to such breach, default or failure or from any previous waiver of any similar or unrelated breach, default or failure; and a waiver of any term of this Note or the Loan Agreement must be made in writing and shall be limited to the express written terms of such waiver.
9. Notice. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Party in accordance with this Section. All such notices shall be sent by:
(A) Personal delivery, in which case notice is effective upon delivery; (B) Certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (C) Nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
(D) Electronic mail, in which case notice shall be deemed delivered upon transmittal, provided that, (i) a duplicate copy of the notice is promptly delivered by firstclass or certified mail or by overnight delivery (in which case notice shall be deemed given two business days after the duplicate is deposited in the mail), or (ii) receipt is voluntarily acknowledged by the Party to be noticed (in which case notice shall be deemed given when acknowledged.
CITY:
6 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: Economic & Community Development Department
BORROWER:
____________
and:
Goldfarb & Lipman LLP
1300 Clay Stret, 11th Floor
Oakland, CA 94612
Attn: William DiCamillo
Email: [email protected]
with a copy to Tax Credit Investor:
10. Miscellaneous Provisions.
(A) Successors and Assigns. This Note (i) may not be assigned by Borrower without City's written consent except as otherwise permitted by the Loan Agreement, , ( ii) can be assigned by City, at its sole option, and (iii) shall be binding on all successors and assigns of City and Borrower.
(B) Attorneys' Fees. If City elects to employ any of the remedies available to it in connection with any Event of Default, Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys' fees, incurred in connection with the City's enforcement of this Note and the exercise of any or all of its rights and remedies. (C) Severability. If a court of competent jurisdiction finds any provisions of this Note invalid or unenforceable, the remaining provisions shall not in any way be affected or impaired thereby, and all other provisions of this Note shall remain in full force and effect.
(D) Time. Time is of the essence in the performance of the terms and conditions of this Note.
(E) Governing Law. The laws of the State of California shall govern this Note. (F) Amendment. This Note may not be changed orally, but only by an amendment in 7 CITY OF SOUTH SAN FRANCISCO
SECURED PROMISSORY NOTE
writing signed by Borrower and approved by City.
(G) Headings. The headings within this Note are for the purpose of reference only and shall not limit or otherwise affect any of the terms of the Note. (H) Assumptions. Except as otherwise set forth in the Loan Agreement, the Loan, including this Note, may not be assumed in whole or in part without the prior written consent of City, which consent shall be given or withheld at the sole discretion of City. City may condition its consent to an assumption of the Loan on the satisfaction of conditions reasonably required by City at the time of the assumption. Conditions may include, but not be limited to, City’s satisfaction, in its sole discretion, with the proposed assuming party’s ability to meet the Loan obligations, the payment of an assumption fee and reimbursement of City’s fees and costs incurred by reason of the assumption.
(I) Electronic Signature. Borrower may deliver the executed version of this Note by electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. www.docusign.com) or other transmission method and any such signature delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. No party may raise the use of any image transmission device or method of the fact that any signature was transmitted as an image as a defense to the enforcement of this Note.
Executed this Note on ____________
BORROWER:
[INSERT ROTARY ENTITY INFORMATION]
C-1
EXHIBIT C
Form of Deed of Trust
1 CITY OF SOUTH SAN FRANCISCO
DEED OF TRUST
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of South San Francisco
400 Grand Avenue
San Francisco, CA 94080
Attn: Community Development Department
EXCEPTION FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
(Space Above This Line for Recorder’s Use)
DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY
AGREEMENT
(Fund 823 Loan - $7,867,409)
_____________
CITY OF SOUTH SAN FRANCISCO
AFFORDABLE HOUSING PROGRAM
THERE ARE RESTRICTIONS ON THE USE OF THE PROPERTY ENCUMBERED BY THIS DEED OF TRUST. THE RENTAL OF UNITS AT THIS PROPERTY IS LIMITED
TO INCOME-ELIGIBLE HOUSEHOLDS PURSUANT TO THE CITY OF SOUTH SAN FRANCISCO’S AFFORDABLE HOUSING PROGRAM.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY AGREEMENT (“Deed of Trust”) is made as of ____________(“Effective Date”) by ____________, (“Trustor”) to First American Title Insurance Company (the “Trustee”) whose business address is 920 Fifth Avenue, Suite 1200, Seattle, WA 98104 for the benefit of THE CITY OF SOUTH SAN FRANCISCO, a municipal corporation (“Beneficiary”).
WHEREAS, Trustor is the owner of the real property located at 500 Linden Avenue in the City of South San Francisco, San Mateo County, California, and more particularly described in Exhibit A attached hereto and incorporated herein; WHEREAS, this Deed of Trust is made for the purpose of securing:
(a) Payment of the indebtedness secured by that certain Promissory Note dated ____________ secured by this Deed of Trust in the face amount of Seven Million, Eight Hundred and Sixty-Seven Thousand, Four Hundred and Nine Dollars ($7,867,409) executed by Trustor as Borrower for the benefit of Beneficiary (hereafter, the “Promissory Note”);
2 CITY OF SOUTH SAN FRANCISCO
DEED OF TRUST
(b) Payment of any additional sums and interest thereon which may be advanced on behalf of Trustor pursuant to this Deed of Trust, or which Beneficiary may hereafter loan to Trustor, or its successors or assigns pursuant to a promissory note or notes or other documents reciting that they are secured by this Deed of Trust; and (c) Performance of every obligation, covenant or agreement of Trustor contained herein and in that certain Loan Agreement and Regulatory Agreement (collectively “Loan Obligations”) governing the Property, notice of which has been given to and received by Trustor; and
(d) any amendments to any of the foregoing.
WHEREAS, the rental restrictions of the Affordable Units set forth in this Deed of Trust and in the Loan Obligations are intended to effectuate the requirements of the City’s Affordable Housing Program;
WHEREAS, among other provisions, the Regulatory Agreement provides that (i) the Affordable Units may be rented only to a Qualifying Household at an Affordable Rent (as such terms are defined in the Agreement), (ii) there are restrictions on the ability of Trustor and subsequent Property owners to encumber the Property; and (iii) Beneficiary has remedies against the Trustor upon the occurrence of specified events, including without limitation, the occurrence of an Event of Default under the Regulatory Agreement.
NOW THEREFORE, to secure the full and timely performance of Trustor’s obligations under the Loan Obligations, it is agreed as follows.
1. Grant in Trust. Trustor, in consideration of the indebtedness herein recited and the trust herein created, hereby irrevocably and unconditionally grants, transfers, conveys and assigns to Trustee in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all of Trustor’s right, title and interest now held or hereafter acquired in and to the following: (a) all of that certain real property located at 500 Linden Avenue in South San Francisco, California in the County of San Mateo, State of California, which is more particularly described in Exhibit A, attached hereto and incorporated herein by this reference (the “Land”); (b) all buildings, improvements and fixtures now or hereafter erected on the Property and all replacements and additions thereto (“Improvements”); (c) all easements, rights of way, appurtenances and other rights used in connection with the Property or as a means of access thereto (“Appurtenances”); (d) all fixtures now or hereafter attached to or used in and about the Property or the Improvements or hereafter located or constructed on the Property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the Improvements in any manner (“Fixtures and Equipment”); and (e) all leases, subleases, licenses and other agreements relating to use or occupancy of the Property (“Leases”) and all rents or other payments which may now or hereafter accrue or otherwise become payable to or for the benefit of 3 CITY OF SOUTH SAN FRANCISCO
DEED OF TRUST
Trustor (“Rents”) (whether or not such Leases and Rents are permitted pursuant to the Agreement).
All of the above-referenced Property, Improvements, Appurtenances, Fixtures and Equipment, Leases and Rents are herein referred to collectively as the “Property.”
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of all of the following (the “Secured Obligations”): (i) all present and future indebtedness evidenced by the Note (including all principal, shared appreciation and all other amounts payable pursuant to the Note) and all amendments, modifications, extensions and renewals of the Note; (ii) all present and future obligations of Trustor set forth in this Deed of Trust or in the Regulatory Agreement; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all modifications, supplements, amendments, renewals, and extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this Deed of Trust.
3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Beneficiary hereby confers upon Trustor a license to collect and retain such rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder.
Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land and Improvements, Beneficiary shall not be deemed to be a 4 CITY OF SOUTH SAN FRANCISCO
DEED OF TRUST
“mortgagee in possession,” shall not be responsible for performing any obligation of the lessor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it , and unless due solely to the willful misconduct or gross negligence of Beneficiary, shall not be responsible for any dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property.
4. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code (“UCC”) with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of San Mateo County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the UCC. The full name of Trustor and the mailing address of Trustor are set forth in Section 8.7 of this Deed of Trust.
5. Trustor Representations, Warranties And Covenants
5.1. Trustor’s Estate. Trustor represents and warrants that Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property. Trustor agrees to warrant and defend generally the title to the Property against all claims and demands subject to any declarations, easements, or restrictions listed in the schedule of exceptions to coverage in any title insurance policy insuring Beneficiary’s interest in the Property.
5.2 Repayment of Sums Owed under Note and Agreement. Trustor will promptly pay to Beneficiary when due all sums payable under the Loan Obligations.
5.3 Performance of Covenants. Trustor will observe and perform all of Trustor’s covenants and agreements set forth in the Loan Obligations and all other instruments secured by the Property.
5.4 Maintenance of the Property. Trustor agrees: (a) to keep the Property in good repair and in decent, safe, sanitary, habitable condition and permit no waste thereof (excepting reasonable wear and tear); (b) to repair, restore or rebuild promptly any Improvements that may be damaged or destroyed while subject to the lien of this Deed of Trust; (d) to comply with all applicable laws, ordinances and governmental regulations affecting the Property or requiring any alteration or improvement thereof, and not to suffer or permit any violations of any such law, ordinance or governmental regulation, nor of any covenant, condition or restriction affecting the Property; and (e) not to initiate or acquiesce in any change in any zoning or other land use or legal 5 CITY OF SOUTH SAN FRANCISCO
DEED OF TRUST
classification which affects any of the Property without the Beneficiary’s written consent.
If there arises a condition in contravention of this Section, and if the Trustor has not cured such condition within thirty (30) days after receiving a notice from Beneficiary of such a condition, then in addition to any other rights available to Beneficiary, Beneficiary shall have the right (but not the obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property to recover its cost of cure.
5.5 Appear and Defend. Trustor shall appear in and defend any action or proceeding purporting to affect the Property or the rights or powers of the Beneficiary or Trustee, and shall pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or proceeding in which the Beneficiary or Trustee may appear, and in any suit brought by the Beneficiary to foreclose this Deed of Trust.
5.6 Charges; Liens. Trustor shall pay prior to delinquency all taxes, assessments, and other charges, fines, and impositions affecting the Property directly to the payee thereof. Upon request of Beneficiary, Trustor shall promptly furnish to Beneficiary copies of all notices of such amounts due and shall promptly furnish to Beneficiary receipts evidencing all such payments made. Trustor shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance which now does or later may encumber or appear to encumber all or part of the Property or any interest therein, whether or not such lien, charge or encumbrance is or would be senior or subordinate to this Deed of Trust. Trustor shall not be required to pay any tax, charge or assessment so long as Trustor is actively contesting its validity in good faith and by appropriate legal proceedings which will operate to prevent the enforcement of the lien or forfeiture of the Property or any part thereof. Trustor shall post security for the payment of such contested claims as may be requested by the Beneficiary.
5.7 Insurance. Trustor shall keep the Land and the Improvements insured by a standard all-risk property insurance policy in an amount equal to the replacement value of the Property with loss payable to the Beneficiary. The insurance carrier providing such insurance shall be licensed to do business in the State of California and may be chosen by Trustor, subject to approval by Beneficiary. All insurance policies and renewals thereof will be in a form acceptable to the Beneficiary, and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lien and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive thirty (30) days advance written notice of the cancellation, expiration or termination or any material 6 CITY OF SOUTH SAN FRANCISCO
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change in the coverage afforded by any of the insurance policies required under this Section.
Unless otherwise permitted by the Beneficiary in writing, insurance proceeds, subject to the rights of the holder of any senior lien, will be applied to restoration or repair of the Property damaged. If the Property is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Property or to pay amounts due under the Agreement and the Note.
If the Property is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Property prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition, subject to the rights of the holder of any senior lien.
Renewal policies and any replacement policies, together with premium receipts satisfactory to the Beneficiary, shall be delivered to the Beneficiary at least thirty (30) days prior to the expiration of existing policies. Neither Trustee nor the Beneficiary shall by reason of accepting, rejecting, approving or obtaining insurance incur any liability for the existence, nonexistence, form or legal sufficiency of such insurance, or solvency of any insurer for payment of losses.
6. IT IS MUTUALLY AGREED THAT:
6.1. Protection of Beneficiary’s Security. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Beneficiary’s interest in the Property, including, but not limited to, default under any senior lienholder document, eminent domain, insolvency, code enforcement, arrangements or proceedings involving a bankrupt or decedent, foreclosure of any mortgage secured by the Property or sale of the Property under a power of sale of any instrument secured by the Property, then Beneficiary, at Beneficiary’s option, without releasing Trustor from any obligation hereunder, may upon notice to Trustor, make such appearance, disburse such sums and take such action as is necessary to protect Beneficiary’s interest, including, but not limited to, the purchase of insurance, disbursement of reasonable attorneys’ fees and entry upon the Property to make repairs. Any amounts disbursed by Beneficiary pursuant to this Section, with interest thereon, shall become additional indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and Beneficiary agree to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof, and shall bear interest from the date of disbursement at the highest rate permissible under applicable law. Nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. 7 CITY OF SOUTH SAN FRANCISCO
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6.2 Inspection. Beneficiary or its agent may make or cause to be made reasonable entries upon and inspections of the Property. Beneficiary shall give Trustor reasonable notice prior to any such inspection.
6.3 Awards and Damages. Subject to the rights of senior lienholders, all judgments, awards of damages, settlements and compensation made in connection with or in lieu of (a) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (b) any damage to or destruction of the Property or any part thereof by insured casualty, and (c) any other injury or damage to all or any part of the Property, are hereby assigned to and shall be paid to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any such sums and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its option. The Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the amounts collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. If the Property is abandoned by Trustor, or if, after notice by Beneficiary to Trustor that the condemnor offers to make an award or settle a claim for damages, Trustor fails to respond to Beneficiary within thirty (30) days after the date such notice is mailed, Beneficiary is authorized to collect and apply the proceeds, at Beneficiary’s option, either to restoration or repair of the Property or to the sum secured by this Deed of Trust.
6.4 Prohibition on Transfers of Interest. If all or any part of the Property or an interest therein is sold or transferred by Trustor without Beneficiary’s prior written consent, Beneficiary may, at Beneficiary’s option, declare all sums secured by this Deed of Trust to be immediately due and payable. If Beneficiary exercises such option to accelerate, Beneficiary shall mail Trustor notice of acceleration in accordance with Sections 7.2 and 8.7 hereof. Such notices shall provide a period of not less than 30 days from the date the notice is mailed within which Trustor may pay the sums declared due. If Trustor fails to pay such sums prior to the expiration of such period, Beneficiary may, without further notice or demand on Trustor, invoke any remedies permitted by Section 7.2(a) hereof.
6.5 Sale or Forbearance. No sale of the Property, forbearance on the part of Beneficiary or extension of the time for payment of the indebtedness hereby secured shall operate to release, discharge, waive, modify, change or affect the liability of Trustor either in whole or in part.
6.6 Beneficiary’s Rights to Release. Without affecting the liability of any person for payment of any indebtedness hereby secured (other than any person 8 CITY OF SOUTH SAN FRANCISCO
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released pursuant hereto), including without limitation any one or more endorsers or guarantors, and without affecting the lien hereof upon any of the Property not released pursuant hereto, at any time and from time to time without notice: (a) Beneficiary may in its sole discretion: (i) release any person now or hereafter liable for payment of any or all such indebtedness, (iii) extend the time for or agree to alter the terms of payment of any or all of such indebtedness, and (iii) release or accept additional security for such indebtedness, or subordinate the lien or charge hereof; and (b) Trustee, acting pursuant to the written request of the Beneficiary, may reconvey all or any part of the Property, consent to the making of any map or plot of the Land, join in granting any assessment thereon, or join in any such agreement of extension or subordination.
6.7 Reconveyance. Upon payment of all sums and satisfaction of all obligations secured by this Deed of Trust (including without limitation, the satisfaction of all obligations set forth in the Regulatory Agreement), Beneficiary shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. The recitals in the reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof.
7. EVENTS OF DEFAULT
7.1 Events of Default. Any one or more of the following events shall constitute a default under this Deed of Trust:
(a) An event of default arises under the Loan Obligations or any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period. (b) Trustor encumbers or refinances the Property in violation of the Agreement.
(c) Trustor fails to pay real estate taxes, assessments or homeowner’s association dues, when due, or Owner fails to maintain insurance in such amounts as required under this Agreement, and such event or condition shall not have been cured within thirty (30) days following the date of written notice of default from Beneficiary. (d) Trustor fails to observe or perform any other covenant, condition, or agreement to be observed or performed by Trustor pursuant to this Deed of Trust, and Trustor fails to cure such default within 30 days following the date of written notice of default from Beneficiary. 9 CITY OF SOUTH SAN FRANCISCO
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(f) Trustor declares bankruptcy or makes an assignment of assets for the benefit of creditors.
7.2 Acceleration and Sale.
(a) Default; Remedies. Upon Trustor’s breach of any covenant or agreement of Trustor under the Loan Obligations (including without limitation, Trustor’s encumbrance or refinancing of the Property in violation of the foregoing) Beneficiary shall mail notice to Trustor as provided in Section 8.7 hereof specifying: (i) the nature of the breach; (ii) the action required to cure such breach; (iii) a date no less than thirty (30) days from the date the notice is mailed to Trustor by which such breach must be cured; and (iv) that failure to cure such breach on or before the date specified in the notice may result in acceleration of any indebtedness due to Beneficiary pursuant to the Agreement or Note and the sale of the Property. The notice shall further inform Trustor of Trustor’s right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Trustor to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Beneficiary at Beneficiary’s option may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and invoke the power of sale; (b) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants set forth herein; (d) deliver to the Trustee a written declaration of default and demand for sale pursuant to the provisions for notice of sale found at California Civil Code Sections 2924 et seq., and (c) pursue any other remedy permitted under California law. Beneficiary shall be entitled to collect from the Trustor, or from the proceeds of the sale of the Property, all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys’ fees.
(b) Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of the judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums which would be then due under this Deed of Trust and the Note had no acceleration occurred; (b) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, including, but not limited to, reasonable attorneys’ fees; (c) Trustor cures all breaches of any other covenants or agreements of Trustor set forth in the Agreement, and (d) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums and perform the obligations secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 10 CITY OF SOUTH SAN FRANCISCO
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(c) Sale. After delivery to Trustee of a Notice of Default and Demand for Sale and after the expiration of such time and the giving of such notice of default and sale as may then be required by law, and without demand on Trustor, Trustee shall sell the Property at the time and place of sale fixed by it in said notice of sale, at public auction to the highest bidder for cash in lawful money of the United States of America, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Any person, including Trustor, Trustee or the Beneficiary, may purchase at such sale. Upon such sale by Trustee it shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty expressed or implied. The recitals in such deed of any matters or facts shall be conclusive proof of their truthfulness. Upon sale by Trustee and after deducting all costs, expenses and fees of Trustee, Trustee shall apply the proceeds of sale to the payment of the indebtedness hereby secured, including without limitation the indebtedness evidenced by the Note, any advances made or costs or expenses paid or incurred by Beneficiary under this Deed of Trust, any indebtedness evidenced by any other instrument hereby secured, and all other sums then secured hereby, including without limitation, payment of interest, Excess Sale Proceeds, Rental Proceeds, the Fee and an equity share as provided in the Agreement and the Note, in such order as the Beneficiary shall direct; and then the remainder, if any, shall be paid to the person or persons legally entitled thereto.
(d) Assignment of Rents; Appointment of Receiver; Beneficiary in Possession.
Upon acceleration under Section 7.2(a) or abandonment of the Property, Beneficiary (in person, by agent or by judicially appointed receiver) shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property (if any) including those past due. All rents collected by Beneficiary or the Receiver shall be applied first to payment of the costs of management of the Property and collection of rents including, but not limited to, receiver’s fees, premiums on receiver’s bonds and reasonable attorney’s fees, and then to the sums secured by this Deed of Trust.
Beneficiary and the receiver shall be liable to account only for those rents actually received. The provisions of this paragraph and Section 7.2(a) shall operate subject to the claims of prior lien holders.
7.3 Remedies Cumulative; No Waiver. No exercise of any right or remedy by the Beneficiary or Trustee hereunder shall constitute a waiver of any other right or remedy herein contained or provided by law, and no delay or forbearance by the Beneficiary or Trustee in exercising any such right or remedy hereunder shall operate as a waiver thereof or preclude the exercise thereof in any continued or subsequent default hereunder. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively.
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7.4 Trustee Substitution. The irrevocable power to appoint a substitute trustee or trustees hereunder is hereby expressly granted to the Beneficiary, to be exercised at any time hereafter, without specifying any reason therefore, by filing for record in the office where this Deed of Trust is recorded a deed of appointment, and said power of appointment of successor trustee or trustees may be exercised as often as and whenever the Beneficiary deems advisable. The exercise of said power of appointment, no matter how often, shall not be deemed an exhaustion thereof, and upon recording of such deed or deeds of appointment, the trustee or trustees so appointed shall thereupon, without further act or deed of conveyance, succeed to and become fully vested with identically the same title and estate in and to the Property hereby conveyed and with all the rights, powers, trusts and duties of the predecessor in the trust hereunder, with the like effect as if originally named as trustee or as one of the trustees.
8. MISCELLANEOUS PROVISIONS
8.1 Successors and Assigns. The covenants and agreements contained in this Deed of Trust shall bind, and the benefit and advantages hereunder shall inure to, the respective heirs, executors, administrators, successors and assigns of the parties; provided however, nothing in this Section is intended to or shall modify any restrictions on assignment set forth herein or in the Note or Agreement. As used herein, the words “the Beneficiary” means the present Beneficiary or any future owner or holder, including a pledgee of the indebtedness secured hereby.
8.2 Headings; Gender, Number. The captions and headings used in this Deed of Trust are inserted only for convenience of reference and in no way define, limit, or describe the scope or intent of this Deed of Trust, or of any particular provision thereof, or the proper construction thereof. Wherever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall be applicable to all genders.
8.3 Approvals in Writing. Except as otherwise specifically provided herein, whenever any approval, notice, direction, consent, request or other action by the Beneficiary is required or permitted under this Deed of Trust, such action shall be in writing.
8.4 Joint and Several Obligations. If more than one person has executed this Deed of Trust as Trustor, the obligations of all such persons hereunder shall be joint and several.
8.5 Severability. If any provision of this Deed of Trust shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.
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8.6 Indemnification. Trustor agrees to indemnify, defend (with counsel approved by Beneficiary) and hold the Beneficiary, its elected and appointed officers, officials, agents and employees (“Indemnitees”) harmless from and against any and all losses, damages, claims, actions, demands, judgments, penalties, costs and expenses (including reasonable attorneys’ fees) and liabilities (all of the foregoing, collectively “Claims”) which the Indemnitees may sustain or suffer directly or indirectly as a result of or arising in connection with (i) Trustor’s failure to perform any obligations as and when required by the Note, the Agreement, or this Deed of Trust, (ii) the failure at any time of any of Trustor’s representations and warranties made in connection with the Loan to be true and correct, or (iii) any action or omission by Indemnitees in connection with this Deed of Trust, except to the extent any such Claim arises due to the gross negligence or willful misconduct of Indemnitees, or otherwise limited by the Loan Agreement.
8.7 Notices. Except for any notice required under applicable law to be given in another manner (a) any notice to Trustor provided for in this Deed of Trust shall be given by mailing such notice by certified mail directed to the Property address or any other address Trustor designates by notice to Beneficiary as provided herein; and, (b) any notice to Beneficiary shall be given by certified mail, return receipt requested, to Beneficiary’s mailing address stated herein or to such other address as Beneficiary may designate by notice to Trustor as provided herein. Any notice provided for in this Deed of Trust shall deem to have been given to Trustor or Beneficiary when given in the manner designated herein.
Beneficiary: City of South San Francisco
400 Grand Avenue
South San Francisco CA 94080
Attention: Economic & Community Development Department
Trustor: ____________
and:
Goldfarb & Lipman LLP
1300 Clay Stret, 11th Floor
Oakland, CA 94612
Attn: William DiCamillo
Email: [email protected]
with a copy to Tax Credit Investor:
8.8 Beneficiary Statement. Beneficiary may collect a fee for furnishing the beneficiary statement in an amount not to exceed the amount as provided by Section 2943 of the Civil Code of California.
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8.9 Governing Law. This Deed of Trust shall be governed by the laws of the State of California.
SIGNATURES ON FOLLOWING PAGE.
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IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.
TRUSTOR
____________ [INSERT ROTARY ENTITY INFORMATION]
SIGNATURES MUST BE NOTARIZED.
15 CITY OF SOUTH SAN FRANCISCO
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State of California )
)
County of San Mateo )
On , 20__, before me, ______________________, (here insert name and title of the officer), personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
A-1
Exhibit A
Legal Description of Property
• LOTS 9, 10 AND THE NORTHWESTERLY 48 FEET, FRONT AND REAR MEASUREMENTS, OF LOT 8 IN BLOCK 137, AS SHOWN ON THAT CERTAIN MAP ENTITLED, ''SOUTH SAN FRANCISCO, SAN MATEO CO. CAL.'', FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA ON MARCH 1, 1892 IN BOOK ''B'' OF MAPS AT PAGE 6 AND COPIED INTO BOOK 2 OF MAPS AT PAGE 52.
• APN: 012-175-260; JPN 012-17-175-26A (Affects Lots 8, 9 and 10) D-1
INTENTIONALLY DELETED
E-1
EXHIBIT E
Construction Budget
F-2
Exhibit F
INSURANCE REQUIREMENTS
Insurance coverage. Throughout the term of this Agreement, Borrower shall comply with the insurance requirements set forth in the City Documents, and shall, at Borrower's expense, maintain in full force and effect insurance coverage as specified in the City Documents.
1. Workers' Compensation. Throughout the term of this Agreement, Borrower shall comply with, and shall ensure that Borrower's contractors comply with, the laws of the State of California concerning workers' compensation. Without limiting the generality of the foregoing, Borrower shall maintain in effect throughout the term of this Agreement, one or more policies of worker's compensation insurance as required by law. Borrower's policy shall also include employer's liability coverage in an amount not less than $1,000,000 per accident.
2. General Liability Insurance. Borrower and all contractors working on behalf of Borrower on the Project shall at their sole cost obtain and keep in full force and effect throughout the term of this Agreement commercial general liability insurance in the amount of $5,000,000 per occurrence for bodily injury, personal injury, and property damage, products, completed operations, and contractual liability coverage. Such insurance shall be written on an occurrence basis and shall provide that (i) the Indemnitees shall be named as additional insureds under the policy; (ii) the policy shall operate as primary insurance; and (iii) no other insurance maintained by other named or additional insureds will be called upon to cover a loss covered thereunder.
3. Automobile Liability Insurance. Borrower and all contractors working on behalf of Borrower on the Project shall at their sole cost obtain and keep in full force and effect throughout the term of this Agreement automobile liability insurance in the amount of $3,000,000 per occurrence for bodily injury and property damage. Such insurance shall be written on an occurrence basis, and shall provide that (i) the Indemnitees shall be named as additional insureds under the policy; (ii) the policy shall operate as primary insurance; and ( iii) no other insurance maintained by other named or additional insureds will be called upon to cover a loss covered thereunder.
4. Course of Construction Insurance. Borrower shall obtain at its sole cost and keep in full force and effect throughout the course of construction, Course of Construction insurance with policy limits no less than $ 5,000,000 with no coinsurance penalty provisions, and in the standard " Builders Risk" form of policy. The City shall be named as loss payee as their interests may appear, and the insurer shall waive all rights of subrogation against the City.
5. Certificates of Insurance. Borrower shall file with the City, prior to commencement of construction of the Project or any portion thereof, and prior to commencement of construction on the Property pursuant to this Agreement, certificates of insurance in form acceptable to the City, evidencing the insurance coverage required pursuant to this Section together with duly executed endorsements evidencing additional insured status as required pursuant to this Section. Such certificates shall include a statement of obligation on the part of the carrier to notify the City of any cancellation, major change in coverage, expiration, termination or nonrenewal of the coverage F-2
at least thirty (30) calendar days prior to the effective date of such cancellation or change in coverage (except that only ten (10) calendar days prior notice shall be required for cancellation due to non-payment of premiums).
6. Other Requirements. Borrower shall also furnish or cause to be furnished to the City evidence satisfactory to the City that any contractor with whom it has contracted for the performance of work on the Properties carries the same insurance required of Borrower hereinabove, and in the amounts of coverage specified, and each general contractor shall be required to obtain certification of insurance from all subcontractors. Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best' s rating of no less than A: VII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds. Builder' s Risk and property insurance shall name the City as loss payees as their interests may appear.
7. Reinstatement. If any insurance policy or coverage required hereunder is canceled or reduced, Borrower shall, within fifteen ( 15) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with the City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, the City may, without further notice and its option, procure such insurance coverage at Borrower's expense and Borrower shall promptly reimburse the City for such reasonable expense upon receipt of billing from the City.
8. Primary Coverage: Waiver of Subrogation. Coverage provided by Borrower and its contractors shall be primary insurance and shall not be contributing with an insurance, or self-insurance maintained by the City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City.
9. Self-Insured Retention. If Owner’s insurance policy includes a self-insured retention that must be paid by a named insured as a precondition of the insurer’s liability, or which has the effect of providing that payments of the self-insured retention by others, including additional insureds or insurers do not serve to satisfy the self-insured retention, such provisions must be modified by special endorsement so as to not apply to the additional insured coverage required by this Agreement so as to not prevent any of the parties to this Agreement from satisfying or paying the self-insured retention required to be paid as a precondition to the insurer’s liability. Additionally, the certificates of insurance must note whether the policy does or does not include any self-insured retention and also must disclose the deductible.