455127.2 1
EXHIBIT A
Housing Assistance
A. The Town grants to Town Manager the right to borrow up to Seven Hundred Fifty Thousand Dollars ($750,000.00) (the “Loan”) from the Town for the purpose of purchasing a home to be used as her primary residence throughout the term of this Agreement. Said Loan is subject to the following conditions and all other reasonable conditions that a residential lender would likely impose on Town Manager under similar circumstances:
1. The Town Manager must exercise the right to borrow the Loan no later than twelve (12) months after the Effective Date;
2. Town Manager shall have the right to borrow said Loan amount within said twelve-month period on only one occasion;
3. Town Manager must pay for an appraisal of the value of the property securing the Loan and that appraisal is subject to approval by the Town;
4. The deed of trust securing the Loan must be recorded such that, other than future real property taxes and assessments, the Loan’s deed of trust has the highest lien priority, unless the Town Manager receives the prior written consent of the Town. Town hereby consents to an equity line of credit, provided that: (1) the equity line of credit is subordinated to the Loan which Loan; and (2) the total value of the Loan and the equity line maximum borrowing cap combined shall not exceed eighty percent (80%) of the fair market value of the property as set forth in Section (A)(12) below;
5. The Loan must always enjoy first lien priority in the chain of title unless the Town Manager receives the prior written consent of the Town. Any existing or future encumbrance on said real property, including, but not limited to, any line of credit, shall be subordinate at all times to the Loan;
6. The Loan shall be evidenced by a promissory note and secured by a nonrecourse deed of trust in favor of the Town and recorded against the real property for which the Loan is made;
7. At Town Manager’s sole cost, lender’s title insurance in the name of the Town shall be issued insuring title showing only the lien associated with the Loan and the equity line set forth in Section (A)(4) above;
8. Said Loan shall bear interest during the life of the Loan at a rate equal to one percent (1%) above the average Local Agency Investment Fund (“LAIF”) rate reported in the four quarterly LAIF reports received by the Town immediately prior to the close of escrow for the Loan; provided, however, that said rate shall be adjusted annually with the adjusted rate being equal to one percent (1%) above the average LAIF rate reported in 455127.2 2
the four quarterly LAIF reports received by the Town immediately prior to each adjustment date. Notwithstanding the foregoing, in no event shall the interest rate exceed five percent (5%) per annum;
9. The Town Manager may establish a payroll deduction for said payments on the Loan;
10. The Loan may be repaid in whole or in part, at any time, without penalty;
11. The Loan, and all accrued but unpaid interest, shall be payable in its entirety within twelve (12) months after the termination (for any reason) of Town Manager’s employment or upon the sale of Town Manager’s residence for which the Loan proceeds were applied, whichever occurs first. Said twelve (12) month period shall be extended to fifteen (15) months in the event Town Manager dies prior to the termination date;
12. The principal, unpaid but owed interest, and the unpaid amount of all liens and encumbrances on the property securing the Loan (including the Loan) cannot exceed eighty percent (80%) of the fair market value of the property established by an appraisal prepared by a qualified professional approved by the Town and paid for by the Town Manager. Said appraisal shall be delivered to the Town and shall be subject to the approval of the Town, prior to closing or consummating any part of the borrowing of the Loan amount, as the case may be;
13. At Town Manager’s sole cost, she shall obtain and maintain fire and casualty loss insurance in at least the amount of the Loan, naming the Town as beneficiary and insuring against such covered losses based on 100% of replacement value;
14. Evidence of said insurances must be provided to the Town as a condition to closing the Loan and thereafter on an annual basis; and
15. Other than as mentioned above, all costs incurred in closing the Loan or consummating any part of the borrowing of the Loan amount, as the case may be, shall be paid for by the Town Manager.
B. The Town and Town Manager shall prepare and execute those agreements, notes, deeds of trust, escrow instructions and all other documents reasonably necessary to consummate the Loan, as long as those documents are consistent with the terms and conditions specified above.