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Home My WebLink AboutRA Resolution 2000-31SAN RAFAEL REDEVELOPMENT AGENCY RESOLUTION NO. 2000-31 MOVED BY: MEMBER MILLER SECONDED BY: MEMBER HELLER RESOLUTION AUTHORIZING THE ECONOMIC DEVELOPMENT DIRECTOR TO EXECUTE A $750,000 LOAN AGREEMENT WITH CANAL HOUSING ASSOCIATES (BRIDGE HOUSING) FOR THE ACQUSITION AND REHABILITATION OF 162/172 BELVEDERE STREET ("CAHIP") AND APPROVAL OF RELATED DOCUMENTS WHEREAS, the San Rafael Redevelopment Agency (the "Agency") has set objectives for affordable housing in accordance with the Amended and Restated Redevelopment Plan (the "Agency Plan") for the Central San Rafael Redevelopment Project Area ("Project Area"); and WHEREAS, in order to serve the objectives of the Agency Plan, the Agency desires to assist in the rehabilitation of existing multifamily housing and in maintaining affordable housing; and WHEREAS, the Agency has established a Low and Moderate Income Housing Fund (the "Fund") pursuant to Health and Safety Code Section 33334.3; and WHERAS, the Agency has adopted its Canal Area Housing Improvement Program ("CAHIP Program"), which seeks to improve the condition of the housing stock within the Canal neighborhood, located within the Project Area; and WHEREAS, the Agency's CAHIP Program will further the objectives of the Agency by rehabilitating existing housing to create decent, safe and sanitary affordable housing; and WHEREAS, the CAHIP Program is funded from the Agency's Low and Moderate Income Housing Fund (the "Housing Fund"); and WHEREAS, on July 6, 1998 the Agency entered into a Predevelopment Agreement with BRIDGE Housing Corporation ("BRIDGE"); and WHEREAS, pursuant to the Predevelopment Agreement, the Agency agreed to find predevelopment costs in excess of $50,000 up to a maximum of $250,000 annually for five years; and WHEREAS, Canal Housing Associates, a California limited partnership whose General Partner is BRIDGE Housing Corporation that is a California nonprofit benefit corporation, (the "Developer") desires to acquire and renovate certain real property located within the Project Area at 162-172 Belvedere Street (the "Property"). The Property is improved with a 26 unit apartment building which the Developer intends to rehabilitate and to rent the units at affordable housing cost to very low and low income persons; and 0RO0Jhil A L �QOo WHEREAS, the acquisition and rehabilitation of the property will benefit the Project Area and serve major Redevelopment Plan goals and objectives; and WHEREAS, The California Environmental Quality Act (Public Resources Code Sections 21000 et seg.) ("CEQA") imposes no conditions on the Agency's consideration and approval of this Agreement, because the project undertaken pursuant to this Agreement is the rehabilitation of existing improvements and such projects are exempt from CEQA requirements under the categorical exemption set forth in 14 CCR Section 15301; and WHEREAS, the Agency pursuant to the Predevelopment Agreement the Agency desires to provide a loan to the Developer (the "Agency Loan ") to finance the acquisition and rehabilitation of the Property by the Developer; and WHEREAS, the Agency has provided Forty Thousand Dollars ($40,000) to the Developer for the acquisition of 162-172 Belvedere Street (the "Property ") which are deemed a disbursement of the Agency Loan pursuant to the Loan Agreement, and WHEREAS, the Loan Agreement will require the Developer and its contractor comply with the prevailing wage provisions of Section 1770 et seq. of the California Labor Code; and WHEREAS, the Loan Agreement will require the Developer and its contractor to comply with the non-discrimination provisions of Section 33436 of the California Community Redevelopment Law; and WHEREAS, by staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"), the Agency has been provided with additional information upon which the findings and actions set forth in this Resolution are based. NOW, THEREFORE, BE IT RESOLVED that the Agency hereby finds and determines that the above recitals are true and correct and have served as the basis, in part, for the findings and actions of the Agency set forth below. BE IT FURTHER RESOLVED that, based on information and analysis set forth in the above Recitals and contained in the Staff Report accompanying this Resolution, the Agency hereby finds and determines pursuant to Health and Safety Code Section 33334.2(g) that the use of moneys from the Housing Fund to assist Canal Housing Associates in the acquisition and rehabilitation of the Property will be of benefit to the Project Area and the program of redevelopment pursuant to the Redevelopment Plan. BE IT FURTHER RESOLVED that the Agency hereby approves the Loan Agreement and allocates Seven Hundred and Fifty Thousand Dollars ($750,000) of Housing Fund monies to fund the Agency Loan. BE IT FURTHER RESOLVED that the Agency hereby authorizes the Economic Development Director to execute on behalf of the Agency the Loan Agreement and Related Documents, in a form to be approved by Agency Counsel, and to take all actions necessary to provide and implement the Agency Loan. BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon adoption. I, JEANNE M. LEONCINI, Agency Secretary of the San Rafael Redevelopment Agency, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the members of said Agency held on the 2nd day of October, 2000, by the following vote, to wit: AYES: MEMBERS: Cohen , Heller, Miller, Phillips and Chairman Boro NOES: MEMBERS: None ABSENT: MEMBERS: None ABSTAIN: MEMBERS: None JE . LEONCINI, Agency Secretary CITY OF SAN RAFAEL AGENDA ITEM NO.: 5 MEETING DATE: October 2, 2000 San Rafael Redevelopment Agency Agenda Report Department: Redevelopment Prepared by:_ Initials: Nanc y ackle, Econo c evelopment Director Rod Gould, Executive Director SUBJECT: RESOLUTION AUTHORIZING ECONOMIC DEVELOPMENT DIRECTOR TO EXECUTE A $ 750,000 LOAN AGREEMENT WITH CANAL HOUSING ASSOCIATES (BRIDGE HOUSING) FOR THE ACQUISITION AND REHABILITATION OF 162-172 BELVEDERE STREET ("CAHIP") AND APPROVAL OF RELATED DOCUMENTS. RECOMMENDATION: Staff recommends the Agency adopt the attached Resolution authorizing the Economic Development Director to execute a $ 750,000 loan agreement with Canal Housing Associates (BRIDGE Housing) for the acquisition and rehabilitation of 162-172 Belvedere Street ("CAHIP") and approval of related documents. BACKGROUND: The Agency approved the Canal Area Housing Improvement Program ("CAHIP") in 1998 and allocated $250,000 annually to the program. The $750,000 loan represents three years of allocations for the program. Agency funds will be utilized to assist BRIDGE Housing Corporation to acquire, rehabilitate and manage 162-172 Belvedere Street, a 26 -unit building located between Medway Road and Alto Street, across from the bowling alley. Non-profit ownership will assure that; rents will remain affordable for the life of the project, overcrowded conditions will be eliminated, and the buildings will be well maintained. The total project costs, including acquisition, rehabilitation and relocation costs are currently estimated at $6.5 Million. The estimated cost includes approximately $800,000 for temporary and permanent relocation that will be necessary to rehabilitate the units and reduce overcrowding within the units. FOR AGENCY SECRETARY ONLY File No.: Agency Meeting: Disposition: ANALYSIS: Financial Provisions of the Agency Loan Agreement The loan interest rate will be 1% and the term is fifty-five years. We have structured the Agency's contribution as a loart, rather than a grant, to meet the tax credit requirements. The principal amount of the loan will be paid from residual receipts on the project. BRIDGE will supply annual financial statements on the property operations including the residual receipt calculation. It is not anticipated that there will be any residual receipts. The Agency has the same arrangement on the Centertown Ground Lease. The loan will be subordinate to the following: Westamerica Construction Loan to be funded with tax exempt bond proceeds $3,591,000 Marin Community Foundation 1,500,000 Non -Financial Provisions of the Agency Loan Agreement The Agency has the right to approve the construction schedule and the plans and specifications. In addition, the Agency must approve any individual change order over $10,000 or any changes with a cumulative cost of $25,000. Prevailing wage will be required for all construction contracts. (Section 3.8). Pacific Relocation Consultants, through BRIDGE, will provide monthly reports on relocation activities. Agency staff must approve draws against Agency funds for relocation activities. FISCAL IMPACT: The Agency has allocated $250,000 annually since FY 1998-99 to this program and the majority of the funds remain unspent. The Agency made one $40,000 payment to BRIDGE in July to fund the second deposit on the building. The total payment to BRIDGE will be reduced by this $40,000. The Agency funds will be placed in escrow and only released when the property is transferred to BRIDGE. OPTIONS: • Adopt the attached Resolution. • Direct staff regarding changes to the Resolution. • Do not adopt the attached Resolution. ACTION REQUIRED: Adopt the attached Resolution. ATTACHMENTS: A: Agency Loan Agreement B: Deed of Trust and Security Agreement C: Agency Note AGENCY LOAN AGREEMENT by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN RAFAEL and CANAL HOUSING ASSOCIATES a California Limited Partnership Belvedere Place Apartments 141 \01 \136541.2 Attachment A W, 3114,41-01 TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND EXHIBITS............................................................................2 Section1.1 Definitions................................................................................................... 2 Section1.2 Exhibits....................................................................................................... 4 ARTICLE 2 LOAN PROVISIONS..............................................................................................4 Section2.1 Loan............................................................................................................ 4 Section2.2 Interest......................................................................................................... 4 Section 2.3 Use of Loan Funds...................................................................................... 4 Section2.4 Security....................................................................................................... 5 Section 2.5 Disbursement for Predevelopment.............................................................. 5 Section 2.6 Conditions Precedent to Additional Disbursements ................................... 5 Section2.7 Term............................................................................................................ 6 Section2.8 Repayment.................................................................................................. 6 Section 2.9 Reports and Accounting of Residual Receipts ............................................ 7 Section2.10 Prepayment................................................................................................. 8 Section2.11 Non-Recourse............................................................................................. 8 ARTICLE 3 CONSTRUCTION OF THE DEVELOPMENT.....................................................9 Section 3.1 Permits and Approvals................................................................................ 9 Section 3.2 Construction Schedule................................................................................ 9 Section 3.3 Plans and Specifications........................................................................... 10 Section 3.4 Construction Contract............................................................................... 10 Section 3.5 Construction Bonds................................................................................... 11 Section 3.6 Commencement of Construction.............................................................. 11 Section 3.7 Completion of Construction...................................................................... 11 Section 3.8 Construction Pursuant to Plans and Laws ................................................. 11 Section3.9 Marketing Plan .......................................................................................... 12 Section 3.10 Equal Opportunity..................................................................................... 12 Section3.11 Relocation................................................................................................. 12 Section 3.12 Certificate of Completion......................................................................... 13 Section 3.13 Progress Reports....................................................................................... 13 Section 3.14 Construction Responsibilities................................................................... 13 Section 3.15 Mechanics Liens, Stop Notices, and Notices of Completion .................... 14 Section3.16 Inspections................................................................................................ 14 Section 3.17 Approved Development Budget; Revisions to Budget ............................. 14 Section3.18 Developer Fee........................................................................................... 15 Section 3.19 Capital Contributions................................................................................ 15 ARTICLE 4 LO:tN REQUIREMENTS.....................................................................................15 Section4.1 Applicability............................................................................................. 15 Section 4.2 Compliance with Bond Regulatory Agreement ........................................ 15 141\01\136541.2 1 TABLE OF CONTENTS (continued) Page Section 4.3 Financial Accountings and Post -Completion Audits ................................ 15 Section4.4 Information................................................................................. Section4.5 Records..................................................................................................... 15 Section4.6 Audits........................................................................................................ 16 Section 4.7 Hazardous Materials................................................................................. 16 Section 4.8 Maintenance and Damage......................................................................... 18 Section 4.9 Fees and Taxes.......................................................................................... 18 Section 4.10 Notice of Litigation................................................................................... 19 Section 4.11 Operation of Development as Affordable Housing .................................. 19 Section 4.12 Nondiscrimination..................................................................................... 19 Section 4.13 Mandatory Language in all Subsequent Deeds, Leases and Contracts............................................................................................................... 19 Section4.14 Transfer..................................................................................................... 20 Section 4.15 Insurance Requirements............................................................................ 21 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER ........................22 Section 5.1 Representations and Warranties................................................................ 22 ARTICLE 6 DEFAULT AND REMEDIES...............................................................................24 Section 6.1 Events of Default...................................................................................... 24 Section6.2 Remedies................................................................................................... 25 Section6.3 Right of Contest........................................................................................ 26 Section 6.4 Remedies Cumulative............................................................................... 26 ARTICLE 7 GENERAL PROVISIONS....................................................................................26 Section 7.1 Relationship of Parties.............................................................................. 26 Section7.2 No Claims................................................................................................. 27 Section7.3 Amendments............................................................................................. 27 Section 7.4 Indemnification......................................................................................... 27 Section 7.5 Non -Liability of Agency and Agency Officials, Employees andAgents............................................................................................................ 27 Section 7.6 No Third Party Beneficiaries.................................................................... 28 Section 7.7 Discretion Retained By Agency................................................................ 28 Section 7.8 Notices, Demands and Communications.................................................. 28 Section7.9 Applicable Law......................................................................................... 28 Section7.10 Parties Bound............................................................................................ 29 Section7.11 Attorneys' Fees.......................................................................................... 29 Section7.12 Severability............................................................................................... 29 Section7.13 Force Majeure........................................................................................... 29 Section7.14 Agency Approval...................................................................................... 29 Section7.15 Waivers..................................................................................................... 30 Section 7.16 Title of Parts and Sections........................................................................ 30 Section 7.17 Entire Understanding of the Parties.......................................................... 30 141 \01\1 36541.2 11 TABLE OF CONTENTS (continued) Page Section 7.18 Multiple Originals; Counterpart ................................................................ 30 EXHIBIT A: Legal Description of the Property EXHIBIT B: Approved Development Budget EXHIBIT C: Form of Certificate of Completion 141\01\136541.2 111 AGENCY LOAN AGREEMENT (Belvedere Place Apartments) This Agency Loan Agreement (the "Agreement") is entered into as of September , 2000, by and between the Redevelopment Agency of the City of San Rafael, a public body, corporate and politic (the "Agency") and Canal Housing Associates, a California limited partnership (the "Borrower"). RECITALS A. The Agency adopted the Redevelopment Plan for the Central San Rafael Redevelopment Project (the "Redevelopment Plan") by Ordinance No. 1079 dated November 20; 1972, as amended on October 16, 1989 by Ordinance No. 1572. The Redevelopment Plan established the Central San Rafael Redevelopment Project Area ("Redevelopment Area") and set forth goals, objectives, and proposed activities for redevelopment of the Redevelopment Area. B. Borrower desires to acquire and rehabilitate improved real property located at 162-172 Belvedere Street in the City of San Rafael (the "City"), more particularly described in the attached Exhibit A (the "Property") to provide affordable housing to very low income individuals and families. The improvements on the Property (the "Improvements") include twenty-six (26) residential units and ancillary landscaping, parking, and other improvements. The Property and the Improvements will be referred to collectively as the Development. C. The Agency desires to provide financial assistance to Borrower for acquisition and development costs in the form of a loan for a total amount not to exceed Seven Hundred Fifty Thousand Dollars ($750,000) (the "Agency Loan"). The funds utilized to fund the Agency Loan are Redevelopment Low and Moderate Income Housing Fund monies and are not federal funds or the proceeds of a tax-exempt bond issue. D. The California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) ("CEQA") imposes no conditions on the Agency's consideration and approval of this agreement, because the project undertaken pursuant to this Agreement is the rehabilitation of existing improvements, and such projects are exempt from CEQA requirements under class 2 categorical exemption. 141 \01 \136541.2 NOW, THEREFORE, the Parties agree as follows: ARTICLE 1 DEFINITIONS AND EXHIBITS Section 1.1 Definitions The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided: (a) "Agency" shall mean the Redevelopment Agency of the City of San Rafael. (b) "Agreement" shall mean this Agency Loan Agreement. (c) "Approved Development Budget" shall mean the proforma development budget, including sources and uses of funds, as approved by the Agency, and attached hereto and incorporated herein as Exhibit B, but which may be amended with the approval of the Agency as set forth in this Agreement. (d) "Approved Financing" shall mean all of the following loans acquired by the Borrower and approved by the Agency for the purpose of financing the Development, in addition to the Agency Loan. (i) Agency Multifamily Housing Revenue Bonds (Belvedere Place Apartments) Series 2000A in the amount of Three Million Five Hundred Ninety Thousand Five Hundred Ninety Two Dollars ($3,590,592) (the 'Bond Loan"); (ii) County HOME and CBDG loan in the approximate amount of Six Hundred Seventy Five Thousand Dollars ($675,000) consisting of Five Hundred Fifteen Thousand ($515,000) in HOME funds and One Hundred Sixty Thousand Dollars ($160,000) in CDBG funds (the "County Loan"); (iii) Capital Contribution from the general partner of the Borrower in the minimum amount of Dollars ($ ); (iv) Capital contribution from the limited partner of the Borrower in the approximate amount of Dollars ($ ), as such amount may be adjusted pursuant to the commitment letter from the investor limited partner to the Borrower; and (v) A loan from the Marin Community Foundation in the amount of One Million Five Hundred Thousand Dollars ($1,500,000)(the "Foundation Loan"). (e) 'Bond Loan Regulatory Agreement" shall mean the Regulatory Agreement and Declaration of Restrictive Covenants between the Agency, and Borrower associated with the Bond Loan. 141%1\1 36541.2 2 (f) "Borrower" shall mean Canal Housing Associates, a California limited partnership. BRIDGE Housing Corporation is the initial general partner of the Borrower. (g) "Certificate of Completion" shall mean the certificate to be issued by the Agency pursuant to Section 3.12 of this Agreement. The form of the Certificate of Completion is attached to this Agreement as Exhibit C. (h) "City" shall mean the City of San Rafael, a municipal corporation. (i) "County" shall mean the County of Marin, a political subdivision of the State of California. 0) "Deed of Trust" shall mean the deed of trust that will encumber the Development to secure repayment of the Loan. The form of the Deed of Trust shall be provided by the Agency. (k) "Default" shall have the meaning set forth in Section 5.1 below. (1) "Development" shall mean the Property and the twenty-six (26) multifamily apartment units and attendant site improvements. (m) "Hazardous Materials" shall have the meaning set forth in Section 4.7 below. (n) "Hazardous Materials Claim" shall have the meaning set forth in Section 4.7 below. (o) "Hazardous Materials Law" shall have the meaning set forth in Section 4.7 below. (p) "Loan" shall mean the Agency loan to Borrower in the total principal amount of Seven Hundred Fifty Thousand Dollars ($750,000). (q) "Loan Documents" shall mean this Agreement, the Note, and the Deed of Trust. (r) "Note" shall mean the promissory note that will evidence Borrower's obligation to repay the Loan. The form of the Note shall be provided by the Agency. (s) "Parties" shall mean the Agency and Borrower. (t) "Predevelopment Agreement" shall mean that certain Predevelopment Agreement between the Borrower and the Agency dated July 6, 1998, pursuant to which the Agency advanced certain predevelopment funds to the Borrower. (u) "Property" shall mean the real property located in the City of San Rafael, County of Marin, California, more particularly described in the attached Exhibit A. 141\01\136541.2 (v) "Term" shall mean shall mean the term of the Loan, commencing on the date of this Agreement and continuing for fifty-five (55) years. (w) "Transfer" shall have the meaning set forth in Section 4.13 below. (x) "Unit" means one of the twenty-six (26) apartment units to be rehabilitated on the Property. Section 1.2 Exhibits. The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference: EXHIBIT A: Legal Description of the Property EXHIBIT B: Approved Development Budget EXHIBIT C: Form of Certificate of Completion ARTICLE 2 LOAN PROVISIONS Section 2.1 Loan. The Agency shall loan to the Borrower the Loan in the principal amount of Seven Hundred Fifty Thousand Dollars ($750,000) for the purposes set forth in Section 2.3 of this Agreement. The obligation to repay the Loan shall be evidenced by the Note in the form provided by the Agency. Section 2.2 Interest. (a) Subject to the provisions of Section 2.2(b) below, the outstanding principal balance of the Loan shall accrue simple interest at the rate of one percent (1%) per annum, commencing on the date of disbursement. (b) In the event of a Default, interest on the Loan shall begin to accrue, as of the date of Default and continuing until such time as the Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law. Section 2.3 Use of Loan Funds. (a) The Borrower shall use the Agency Loan funds to pay a portion of the purchase price of the Property and a portion of the development costs of the Development including relocation costs, consistent with the Approved Development Budget. 1411011136541.2 4 (b) The Borrower shall not use the Agency Loan funds for any other purpose without the prior written consent of the Agency. Section 2.4 Security. (a) Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by executing the Deed of Trust, and recording it as a lien against the Property, junior in lien priority to the deed of trust securing the Bond Loan. The Agency agrees to subordinate the Deed of Trust to the liens of the deed of trust securing the Bond Loan and to the Bond Loan Regulatory Agreement, provided the Agency receives adequate notice and cure rights and pursuant to a subordination agreement in a form approved by the Agency. Section 2.5 Disbursement for Predevelopment. As of the date of this Agreement, and pursuant to the Predevelopment Agreement, the Agency has disbursed to Borrower Forty Thousand Dollars ($40,000) in Loan funds to fund certain predevelopment costs of the Development. The principal funds disbursed pursuant to the Predevelopment Agreement shall be deemed a disbursement of the Loan. Section 2.6 Conditions Precedent to Additional Disbursements. The Agency shall not be obligated to make any additional disbursements of Loan proceeds or take any other action under the Loan Documents unless the following conditions precedent are satisfied prior to each such disbursement of the Loan: (a) There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under this Agreement; (b) Borrower has executed and delivered to Agency all documents, instruments, and policies required under the Loan Documents; (c) A title insurer reasonably acceptable to the Agency is unconditionally and irrevocably committed to issuing an ALTA Lender's Policy of insurance insuring the priority of the Deed of Trust in the amount of the Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the Agency, and containing such endorsements as the Agency may reasonably require. (d) The Deed of Trust has been recorded against the Property in the Office of the Recorder of the County of Marin. (e) Borrower has furnished the Agency with evidence of the insurance coverage meeting the requirements of Section 4.14 below. 141\01\136541.2 5 (f) Borrower has obtained a commitment letter from a tax credit equity investor, in form, substance, and amount consistent with the Approved Development Budget, and acceptable to and approved by the Agency in its reasonable exercise of discretion. (g) The undisbursed proceeds of the Loan, together with other funds or fine commitments for funds that the Borrower has obtained in connection with the Development, are not less than the amount that the Agency determines is necessary to pay for development of the Development and to satisfy all of the covenants contained in this Agreement. (h) Borrower has closed all Approved Financing described in Section 1.1(d)(i), (ii) and (v) above. Section 2.7 Term. The Loan and this Agreement shall have a term (the "Term") that expires on the date fifty-five (55) years after the date of this Agreement. Section 2.8 Repayment. (a) Annual Payments. The Borrower shall make payments of the outstanding principal on the Agency Loan to the Agency in the amount of one hundred percent (100%) of Residual Receipts. Such annual payments shall be due and payable in arrears no later than May I" of each year with respect to the previous calendar year, commencing on May 1, 2003, and shall be accompanied by the Borrower's report of Residual Receipts (including an independent auditor's report regarding the auditor's review of Annual Operating Expenses). The Borrower shall provide the Agency with any documentation reasonably requested by the Agency to substantiate the Borrower's determination of Residual Receipts. (b) Payment in Full. All principal on the Agency Loan shall be due upon the earliest of: (i) a Transfer of the Development not authorized by the Agency; (ii) the occurrence of an Event of Default; or (iii) the expiration of the Term. (c) Special Definitions. The following special definitions shall apply for purposes of this Section 2.8: (i)"Residual Receipts" means, in a particular calendar year, the amount by which Gross Revenue (as defined below) exceeds Annual Operating Expenses (as defined below). (ii)"Annual Operating Expenses" with respect to a particular calendar year shall mean the following costs reasonably and actually incurred for operation and maintenance of the Development to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles: property and other taxes and assessments imposed on the Development; premiums for property damage and 141\01\136541.2 liability insurance; 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 limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and others; any annual license or certificate of occupancy fees required for operation of the Development; 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 Agency; cash deposited into a reserve for capital replacements of Development improvements and an operating reserve in such reasonable amounts as are required by Development lenders, and approved by the Agency. "Annual Operating Expenses" shall not include the following: depreciation, amortization, depletion or other non-cash expenses or any amount expended from a reserve account. (iii)"Gross Revenue" with respect to a particular calendar year, shall mean all revenue, income, receipts, and other consideration actually received from operation and leasing of the Development. "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 to the extent not utilized to repair or rebuild the Development; and condemnation awards for a taking of part or all of the Development for a temporary period. "Gross Revenue" shall also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Development. "Gross Revenue" shall not include tenants' security deposits, loan proceeds, capital contributions or similar advances. Section 2.9 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual repayment of the Agency Loan, the Borrower shall furnish to the Agency an audited statement duly certified by an independent firm of certified public accountants approved by the Agency, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year. (b) Books and Records. The Borrower shall keep and maintain on the Property, or elsewhere with the Agency's written consent, full, complete and appropriate books, record and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail Borrower's calculation of Residual Receipts. Books, records and accounts relating to Borrower's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of 141\01\136541.2 7 this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the Agency, its auditors or other authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that Borrower may be required to furnish any governmental agency shall at all reasonable times be open for inspection by the Agency at the place that the books, records and accounts of the Borrower are kept. The Borrower shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending. (c) Agency Audits. The receipt by the Agency of any statement pursuant to subsection (a) above or any payment by Borrower or acceptance by the Agency of any loan repayment for any period shall not bind the Agency as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the Agency or any designated agent or employee of the Agency at any time shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of Borrower and other places where records are kept. Immediately after the completion of an audit, the Agency shall deliver a copy of the results of such audit to Borrower. If it shall be determined as a result of such audit that there has been a deficiency in a loan repayment to the Agency, then such deficiency shall become immediately due and payable with interest at the default rate set forth in the Agency Loan Agreement, determined as of and accruing from the date that said payment should have been made. In addition, if Borrower's auditor's statement for any calendar year shall be found to have understated Residual Receipts by more than five percent (5%) and the Agency is entitled to any additional Agency Loan repayment as a result of said understatement, then Borrower shall pay, in addition to the interest charges referenced hereinabove, all of the Agency's reasonable costs and expenses connected with any audit or review of Borrower's accounts and records. (d) Maximization of Residual Receipts. Borrower agrees at all times during the term of the Agency Loan to continue its operations of the Development and to use its skills and diligence to produce the maximum Residual Receipts. Section 2.10 Prepayment. (a) The Borrower may repay the Agency Loan in advance of the time for payment thereof as provided in this Agreement, without penalty; provided, however, that the Borrower acknowledges that the provisions of this Agreement will be applicable to the Development for the entire Term even though the Borrower may have prepaid the Agency Loan. Section 2.11 Non -Recourse. Except as provided below, neither the Borrower nor any partner of the Borrower shall have any direct or indirect personal liability for payment of the principal of, or interest on, the 141\01\136541.2 8 Loan or the performance of the covenants of the Borrower under the Deed of Trust. The sole recourse of the Agency with respect to the principal of, or interest on, the Note and defaults by Borrower in the performance of its covenants under the Deed of Trust shall be to the property described in the Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall (a) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the Agency thereunder, or (b) be deemed in any way to impair the right of the Agency to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note and the performance of the Borrower's obligations under the Deed of Trust, except as hereafter set forth; nothing contained herein is intended to relieve the Borrower of its obligation to indemnify the Agency under Sections 3.11(c), 4.7 and 7.4 of this Agreement, or liability for (i) fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by Borrower other than in accordance with the Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance policies or awards 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. ARTICLE 3 CONSTRUCTION OF THE DEVELOPMENT Section 3.1 Permits and Approvals. All permits and approvals necessary for the rehabilitation of all Units on the Property must be received no later than October 1, 2001, or the Agency, at its option, and with thirty (30) days written notice and opportunity to cure, may declare Borrower in default hereunder. Section 3.2 Construction Schedule. (a) No later than thirty (30) days prior to commencement of rehabilitation of the Units, the Borrower shall submit to the Agency a copy of the construction schedule for the Development. In preparing the construction schedule, Borrower shall use best efforts to ensure that the schedule minimizes displacement of existing tenants in the Development. (b) Upon receipt by the Agency of the proposed construction schedule, the Agency shall promptly review same and approve or disapprove it within ten working (10) days. If the construction schedule is not approved by the Agency, the Agency shall set forth in writing and notify the Borrower of the Agency's reasons for withholding such approval. The Borrower shall thereafter submit a revised constriction schedule for Agency approval, which approval shall be granted or denied in five (5) working days in accordance with the procedures set forth above. 141\01\136541.2 Section 3.3 Plans and Specifications. (a) Simultaneously with submission to the City Building Department, Borrower shall submit to the Agency a copy of the Construction Plans for the Development. As used in this Agreement, "Construction Plans" shall mean all construction documentation upon which Borrower and Borrower's Contractor shall rely in constructing all the improvements on the Property (including the Units, landscaping, parking, and common areas) and shall include, but not necessarily be limited to, final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings"). (b) The Agency shall, if the Construction Plans submitted conform to the provisions of this Agreement, approve in writing such Construction Plans. Unless rejected by the Agency for their failure to comply with the foregoing requirements within thirty (30) days of submission by Borrower, said Construction Plans shall be deemed accepted. Such approval of the Construction Plans by the Agency shall not relieve Borrower's obligation to obtain any and all approvals required by the City Building Department. If rejected by the Agency in whole or in part, Borrower shall submit new or corrected Construction Plans within thirty (30) days of notification of the County's rejection and the reasons therefor. The Agency shall then have fifteen (15) days to review and approve Borrower's new or corrected Construction Plans. The provisions of this Section relating to time periods for approval, rejection, or resubmission of new or corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Agency. Nothing in this section shall affect Borrower's obligation to obtain any and all approvals of the Construction Plans required by the City Building Department. Section 3.4 Construction Contract. (a) Not later than fifteen (15) days prior to the proposed commencement of rehabilitation of the Units, the Borrower shall submit to the Agency for its approval the proposed construction contract for the Units. All construction work and professional services shall be performed by persons or entities licensed or otherwise authorized to perform the applicable construction work or service in the State of California. Each contract that the Borrower enters for construction of the Development shall provide that at least ten percent (10%) of the costs incurred shall be payable only upon completion of construction, subject to early release of retention for specified subcontractors upon approval by the Agency. The Agency's approval of the construction contract shall in no way be deemed to constitute approval of or concurrence with any term or condition of the construction contract except as such term or condition may be required by this Agreement. (b) Upon receipt by the Agency of the proposed construction contract, the Agency shall promptly review same and approve or disapprove it within ten working (10) days. If the construction contract is not approved by the Agency, the Agency shall set forth in writing and notify the Borrower of the Agency's reasons for withholding such approval. The Borrower shall thereafter submit a revised construction contract for Agency approval, which approval shall be granted or denied in five (5) working days in accordance with the procedures set forth above. 141\01\136541.2 10 Any construction contract executed by the Borrower for the Development shall be in the form approved by the Agency. Section 3.5 Construction Bonds. Prior to commencement of rehabilitation of the Development, the Borrower shall deliver to the Agency copies of labor and material bonds and performance bonds for the construction of the Development in an amount equal to one hundred percent (100%) of the scheduled cost of the Development. Such bonds shall name the Agency as a co -obligee. Section 3.6 Commencement of Construction. Borrower shall cause the commencement of rehabilitation of the Development no later than January 1, 2002. Section 3.7 Completion of Construction. Borrower shall diligently prosecute rehabilitation of the Development to completion, and shall cause the completion of the rehabilitation of the Development no later than January, 2003. Section 3.8 Construction Pursuant to Plans and Laws. (a) Borrower shall construct the Development in conformance with the plans and specifications approved by the Agency. Borrower shall notify the Agency in a timely manner of any changes in the work required to be performed under this Agreement, including any additions, changes, or deletions to the plans and specifications approved by the Agency. A written change order authorized by the Agency must be obtained before any of the following changes, additions, or deletions in work for the Development may be performed: (1) any change in the work the cost of which exceeds Ten Thousand Dollars ($10,000); or (2) any set of changes in the work the cost of which cumulatively exceeds Twenty -Five Thousand Dollars ($25,000); or (3) any material change in building materials or equipment, specifications, or the structural or architectural design or appearance of the Development as provided for in the plans and specifications approved by the Agency. Consent to any additions, changes, or deletions to the work shall not relieve or release Borrower from any other obligations under this Agreement, or relieve or release Borrower or its surety from any surety bond. Agency shall utilize best efforts to approve or disapprove change orders within five (5) working days of receipt of a request for approval. (b) Borrower shall cause all work performed in connection with the Development to be performed in compliance with (i) all applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter, including (without limitation and where applicable) the prevailing wage provisions of Sections 1770 et seg of the California Labor Code and implementing rules and regulations, and (ii) all directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and Borrower shall be 141\01\136541,2 11 responsible to the Agency for the procurement and maintenance thereof, as may be required of Borrower and all entities engaged in work on the Development. Section 3.9 Marketing Plan. (a) No later than six (6) months prior to the projected date of the completion of the Development, Borrower shall submit to the Agency for approval its plan for marketing the Development to income -eligible households in compliance with the Bond Loan Regulatory Agreement, including information on affinnative marketing efforts and compliance with fair housing laws. (b) Upon receipt of the Marketing Plan, the Agency shall promptly review the Marketing Plan and shall approve or disapprove it within thirty (30) days after submission. If the Marketing Plan is not approved, Borrower shall submit a revised Marketing Plan within thirty (30) days. If the Agency does not approve the revised Marketing Plan, Borrower shall be in default hereunder. Section 3.10 Equal Opportunity. During the construction of the Development there shall be no discrimination on the basis of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin, ancestry, or disability in the hiring, firing, promoting, or demoting of any person engaged in the construction work. Section 3.11 Relocation. (a) To the extent that acquisition and rehabilitation of the Development results in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then Borrower shall comply with all applicable local, state, and federal statutes and regulations, (including without limitation California Government Code Section 7260 et sec . and accompanying regulations) with respect to relocation planning, advisory assistance, and payment of monetary benefits. Borrower shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. (b) The Borrower has delivered to the Agency a draft relocation plan. An updated relocation plan shall be delivered to the Agency no later than ninety (90) days after the date of this Agreement. The draft relocation plan shall include all information required by state relocation law. During construction of the Development, the Borrower shall provide the Agency with monthly progress reports regarding the status of relocation activities. (c) The Borrower shall indemnify, defend (with counsel reasonably chosen by the Agency), and hold harmless the Agency against all claims which arise out of relocation law obligations to tenants. 141\01\1 36541.2 12 Section 3.12 Certificate of Completion. When the Agency has determined that the obligations of the Borrower under this Article Three have been met, the Borrower may request that the Agency issue a Certificate of Completion in substantially the form shown in Exhibit C, which the Agency shall do within thirty (30) days of such a request. The Agency shall have no obligation to consider whether the obligations of the Borrower under this Article Three have been met unless the Agency has received certification from the architect for the Development stating that the improvements to the Property have been made in accordance with the plans and specifications approved by the Agency pursuant to Section 3.3 above (and such changes as have been approved by the Agency pursuant to Section 3.8(a) above) and with this Agreement. If the Borrower requests issuance of a Certificate of Completion but the Agency refuses, then the Agency shall provide the Borrower with a written explanation of its refusal within thirty (30) days of the Borrower's request. If and when the Borrower has taken the specified measures or met the specified standards, and is not otherwise in violation under this Agreement, the Agency shall issue a Certificate of Completion. The Certificate of Completion shall not be deemed a notice of completion under the California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of any obligation of the Borrower to any holder of deed of trust securing money loaned to finance the Development. Section 3.13 Progress Reports. Until such time as Borrower has received a Certificate of Completion from the Agency, Borrower shall provide the Agency with quarterly progress reports regarding the status of the construction of the Development, including a certification that the actual construction costs to date conform to the Approved Development Budget, as it may be amended from time to time pursuant to Section 3.17 below. Section 3.14 Construction Responsibilities. (a) It shall be the responsibility of Borrower to coordinate and schedule the work to be performed so that commencement and completion of construction will take place in accordance with this Agreement. (b) Borrower shall be solely responsible for all aspects of Borrower's conduct in connection with the Development, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the Agency with reference to the Development is solely for the purpose of determining whether Borrower is properly discharging its obligations to the Agency, and should not be relied upon by Borrower or by any third parties as a warranty or representation by the Agency as to the quality of the design or construction of the Development. 141\01\136541.2 13 Section 3.15 Mechanics Liens, Stop Notices and Notices of Completion. (a) If any claim of lien is filed against the Property or a stop notice affecting the Loan is served on the Agency or any other lender or other third party in connection with the Development, then Borrower shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the Agency a surety bond in sufficient form and amount, or provide the Agency with other assurance satisfactory to the Agency that the claim of lien or stop notice will be paid or discharged. (b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section, then in addition to any other right or remedy, the Agency may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at Borrower's expense. Alternately, the Agency may require Borrower to immediately deposit with the Agency the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The Agency may use such deposit to satisfy any claim or lien that is adversely determined against Borrower. (c) Borrower shall file a valid notice of cessation or notice of completion upon cessation of construction on the Development for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Property. Borrower authorizes the Agency, but without any obligation, to record any notices of completion or cessation of labor, or any other notice that the Agency deems necessary or desirable to protect its interest in the Development and Property. Section 3.16 Inspections. Borrower shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the Agency and by public authorities during reasonable business hours for the purposes of determining compliance with this Agreement. Section 3.17 Approved Development Budget; Revisions to Budget. As of the date of this Agreement, the Agency has approved the Approved Development Budget set forth in Exhibit B. Borrower shall submit any required amendments to the Approved Development Budget to the Agency for approval within five (5) days of the date Borrower receives information indicating that actual costs of the Development vary or will vary from the costs shown on the Approved Development Budget. Written consent of the Agency shall be required to amend the Approved Development Budget. Agency shall utilize best efforts to approve or disapprove requested amendments to the Development Budget within five (5) working days of receipt of a request for approval. 141\01\136541.2 14 Section 3.18 Developer Fee. The maximum cumulative developer fee that may be paid to any entity or entities providing development services to the Development, whether paid up -front or on a deferred basis, shall not exceed Dollars ($ ). Section 3.19 Capital Contributions. The Borrower shall cause its general and limited partners to make the capital contributions described in subsections 1.1(d)(iii) and (iv) above and shall utilize such funds to pay costs of the Development, consistent with the Approved Development Budget. ARTICLE 4 LOAN REQUIREMENTS Section 4.1 Applicability. The Borrower shall comply with this Article Four throughout the Term. Section 4.2 Compliance with Bond Regulatory Agreement. The Borrower shall comply with all terms and provisions of the Bond Loan Regulatory Agreement. Section 4.3 Financial Accountings and Post -Completion Audits. No later than sixty (60) days following completion of construction of the Development, Borrower shall provide to Agency an initial estimated unaudited financial accounting of all sources and uses of funds for the Development. No later than one hundred fifty (150) days following completion of construction of the Development, Borrower shall submit an audited financial report showing the sources and uses of all funds utilized for the Development. Section 4.4 Information. Borrower shall provide any information reasonably requested by the Agency in connection with the Development. Section 4.5 Records. (a) Borrower shall maintain complete, accurate, and current records pertaining to the Development for a period of five (5) years after the creation of such records, and shall permit any duly authorized representative of the Agency to inspect and copy records. Such records shall include all invoices, receipts, and other documents related to expenditures from the Loan funds. Records must be kept accurate and current. (b) The Agency shall notify Borrower of any records it deems insufficient. Borrower shall have twenty-one (21) calendar days after the receipt of such a notice to correct any 141\01 \136541.2 15 deficiency in the records specified by the Agency in such notice, or if a period longer than twenty-one (2 1 ) days is reasonably necessary to correct the deficiency, then Borrower shall begin to correct the deficiency within twenty-one (21) days and correct the deficiency as soon as reasonably possible. Section 4.6 Audits. Borrower shall make available for examination at reasonable intervals and during normal business hours to Agency all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit Agency to audit, examine, and make excerpts or transcripts from such records. Agency may make audits of any conditions relating to this Agreement. Section 4.7 Hazardous Materials. (a) Borrower shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Borrower shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily used in construction of projects like the Development or kept and used in and about residential property of this type. (b) Borrower shall immediately advise the Agency in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Borrower or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party against Borrower or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) Borrower's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border -zone property" under the provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. (c) The Agency shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Borrower. Borrower shall indemnify and hold harmless the Agency and the City and their councilmembers, 141\01\136541.2 16 boardmembers, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the Agency in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. This obligation to indemnify shall survive termination of this Agreement. (d) Without the Agency's prior written consent, which shall not be unreasonably withheld, Borrower shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in the Agency's reasonable judgement, impair the value of the Agency's security hereunder; provided, however, that the Agency's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the Agency's consent before taking such action, provided that in such event Borrower shall notify the Agency as soon as practicable of any action so taken. The Agency agrees not to withhold its consent, where such consent is required hereunder, if either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Borrower establishes to the reasonable satisfaction of the Agency that there is no reasonable alternative to such remedial action which would result in less impairment of the Agency's security hereunder; or (iv) the action has been agreed to by the Agency. (e) Borrower hereby acknowledges and agrees that (i) this Section is intended as the Agency's written request for information (and Borrower's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by the Parties to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. (f) In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the Agency's or the trustee's rights and remedies under the Deed of Trust, the Agency may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the borrower to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the Agency's right to proceed as an unsecured creditor under California Code of Civil Procedure 141\01\1 36541.2 17 Section 726.5(a), the Borrower shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Borrower knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the Agency in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) or the maximum rate permitted by law, until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be due and payable to the Agency upon its demand made at any time following the conclusion of such action. Section 4.8 Maintenance and Damage. (a) During the course of both construction and operation of the Development, Borrower shall maintain the Development and the Property in good repair and in a neat, clean and orderly condition. If there arises a condition in contravention of this requirement, and if Borrower has not cured such condition within thirty (30) days after receiving a Agency notice of such a condition, then in addition to any other rights available to the Agency, the Agency shall have the right to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property. (b) Subject to the requirements of senior lenders, and if economically feasible in the Agency's reasonable judgement, if any improvement now or in the future on the Property is damaged or destroyed, then Borrower shall, at its cost and expense, diligently undertake to repair or restore such improvement consistent with the plans and specifications approved by the Agency with such changes as have been approved by the Agency. Such work or repair shall be commenced no later than the later of one hundred twenty (120) days after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and shall be complete within one (1) year thereafter (or such longer period for the commencement and completion as may be extended by the Agency in its reasonable discretion. Any insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, then Borrower shall make up the deficiency. Section 4.9 Fees and Taxes. Borrower shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Property or the Development to the extent owned by Borrower, and shall pay such charges prior to delinquency. However, Borrower shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by the Agency, Borrower deposits with the Agency any funds or other forms 141101\136541.2 18 of assurance that the Agency in good faith from time to time determines appropriate to protect the Agency from the consequences of the contest being unsuccessful. Section 4.10 Notice of Litigation. Borrower shall promptly notify the Agency in writing of any litigation materially affecting Borrower or the Property and of any claims or disputes that involve a material risk of such litigation. Section 4.11 Operation of Development as Affordable Housing. Promptly following the completion of rehabilitation of the Improvements, Borrower shall continuously operate and maintain the Development as multifamily housing rented to occupants and at rent levels in conformity with the Bond Loan Regulatory Agreement. Section 4.12 Nondiscrimination. The 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 race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Borrower or any person claiming under or through the 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 Property. The foregoing covenant shall nin with the land. Section 4.13 Mandatory Language in all Subsequent Deeds Leases and Contracts. All deeds, leases, or contracts entered into by the Borrower as to any portion of the Property shall contain the following language: (a) In Deeds: "Grantee herein covenants by and for itself, 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 race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed nor shall the grantee or any person claiming under or through the grantee 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 property herein conveyed. The foregoing covenant shall run with the land." (b) In Leases: "The lessee herein covenants by and for the lessee and lessee's heirs, personal representatives and assigns and all persons claiming under the lessee or through 141\01\136541.2 19 the lessee that his lease is made subject to the condition that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee or any person claiming under or through the lessee 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, sublessees, subtenants, or vendees in the land herein leased." (c) In Contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee establish or pen -nit 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 of the land." Section 4.14 Transfer. (a) For purposes of this Agreement, "Transfer" shall mean any sale, assignment, or transfer, whether voluntary or involuntary, of (i) any rights and/or duties under this Agreement, and/or (ii) any interest in the Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Development is transferred and Borrower retains title. The term "Transfer" shall exclude the leasing of any single unit in the Development to an occupant in compliance with the Bond Loan Regulatory Agreement. (b) No Transfer shall be permitted without the prior written consent of the Agency, which the Agency may withhold in its sole discretion. The Loan shall automatically accelerate and be due in full upon any unauthorized Transfer. (c) Borrower anticipates syndicating the low income housing tax credits that will be generated by the Development, which syndication will require transfer of limited partnership interests in the Borrower. The Agency hereby approves the sale of limited partnership interests in the Borrower, provided that: (i) the amended partnership agreement of the Borrower provides for capital contributions of the general and limited partners of the Borrower consistent with Subsections 1.1(d)(iii) and (iv) above and is first approved by the Agency; (ii) all documents associated with the low income housing tax credit syndication of the Project are submitted to the Agency for approval prior to execution, which approval shall not be unreasonably withheld. The Agency also hereby approves the transfer of the general partner interest in Borrower to a nonprofit affiliate of BRIDGE Housing Corporation. In the event the general partner of Borrower is removed by the limited partner of Borrower for cause following default under the 141\01\136541.2 20 Borrower's partnership agreement, the Agency hereby approves the transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit corporation selected by the limited partner and approved by the Agency, which approval shall not be withheld unreasonably. The Agency also hereby approves a Transfer of the Property from the Borrower to BRIDGE Housing Corporation or a non-profit affiliate of BRIDGE Housing Corporation, and an assumption of the Loan by such transferee provided that the transferee expressly assumes the obligations of the Borrower under this Agreement, the Note, and the Deed of Trust, utilizing a form of assignment and assumption agreement to be provided by the Agency. (d) The Agency approves the grant of the security interests in the Property described in Section 1.1(d) above. Section 4.15 Insurance Requirements. The Borrower shall maintain the following insurance coverage throughout the Term of the Loan: (a) Worker's Compensation insurance to the extent required by law, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident. (b) Comprehensive General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations. (c) Comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non -owned and hired vehicles, as applicable; provided, however, that if the Borrower does not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required. (d) Property insurance covering the Development, in form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for 100% of the replacement value, with deductible, if any, acceptable to the Agency, naming the Agency as a Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable federal regulations. The Borrower shall cause any general contractor or agent working on the Development under direct contract with the Borrower to maintain insurance of the types and in at least the minimum amounts described in subsections (a), (b), and (c) above, except that the limit of liability for comprehensive general liability insurance for subcontractors shall be One Million Dollars ($1,000,000), and shall require that such insurance shall meet all of the general requirements of subsections (e), (f), and (g) below, including, without limitation, the requirement of subsection (f). Subcontractors working on the Development under indirect contract with the Borrower shall be required to maintain the insurance described in subsections (a), (b), and (c) above. Liability and Comprehensive Automobile Liability insurance to be maintained by such 141\01\136541.2 21 contractors and agents pursuant to this subsection shall name as additional insureds the Agency, their officers, agents, employees and members of the City Council and Agency Board. (e) The required insurance shall be provided under an occurrence form, and Borrower shall maintain such coverage continuously so long as the Note is outstanding. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence limits specified above. (f) Comprehensive General Liability, Comprehensive Automobile Liability and Property insurance policies shall be endorsed to name as an additional insured the Agency, the Agency, and their officers, agents, employees and members of the City Council and Agency Board. (g) All policies and bonds shall be endorsed to provide thirty (30) days prior written notice of cancellation, reduction in coverage, or intent not to renew to the address established for notices to the Agency. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER Section 5.1 Representations and Warranties. Borrower hereby represents and warrants to the Agency as follows: (a) Organization. Borrower is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (b) Authority of Borrower. Borrower has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Agency Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (c) Authority of Persons Executing Documents. This Agreement and the Agency Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all actions required under Borrower's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Agency Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken (to the extent such actions are required as of the date of execution and delivery of the above-named documents). (d) Valid Binding Agreements. This Agreement and the Agency Loan Documents and all other documents or instruments which have been executed and delivered pursuant to or in 141\01\136541.2 22 connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable against it in accordance with their respective terms, subject to laws affecting creditors rights and principles of equity. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Agency Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on Borrower, or any provision of the organizational documents of Borrower, or will conflict with or constitute a breach of or a default under any agreement to which Borrower is a party, or will result in the creation or imposition of any lien upon any assets or property of Borrower, other than liens established pursuant hereto. (f) Compliance With Laws; Consents and Approvals. The rehabilitation of the Development will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency. (g) Pending Proceedings. Borrower is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the Development, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially affect Borrower's ability to repay the Agency Loan or impair the security to be given to the Agency pursuant hereto. (h) Title to Land. At the time of recordation of the Agency Deed of Trust, Borrower will have good and marketable fee title to the Development and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than those liens approved by the Agency and described in Section 1.1(d) of this Agreement, liens for current real property taxes and assessments not yet due and payable, and liens in favor of the Agency or approved in writing by the Agency. (i) Financial Statements. The financial statements of Borrower and other financial data and infonnation furnished by Borrower to the Agency fairly present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of Borrower from that shown by such financial statements and other data and information. 0) Sufficient Funds. Borrower holds sufficient funds and/or binding commitments for sufficient funds to complete the acquisition of the Development and the rehabilitation of Development in accordance with the plans and specifications approved by the Agency. 141\01\136541.2 23 ARTICLE 6 DEFAULT AND REMEDIES Section 6.1 Events of Default. Each of the following shall constitute a "Default" by Borrower under this Agreement: (a) Failure to Construct. Subject to Section 7.13, failure of Borrower to commence and complete construction of the Development within the times set forth in Article 3 above; (b) Failure to Make Payment. Failure to repay the principal and any interest on the Loan within ten (10) days of receipt of written notice for the Agency that such payment is due pursuant to the Loan Documents. (c) Breach of Covenants. Failure by Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the Agency to the Borrower and to any limited partner of Borrower who has requested written notice from the Agency of such failure ("Permitted Limited Partner") or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be in breach so long as Borrower is diligently undertaking to cure such breach and such breach is cured within ninety (90) days; provided, however, that if a different period or notice requirement is specified under any other section of this Article 4, the specific provisions shall control. The Permitted Limited Partner shall have thirty (30) additional days to cure a breach beyond the cure periods for the Borrower described in this subsection. (d) Default Under Other Loans. Failure to make any payment or perform any of Borrower's covenants, agreements, or obligations under the documents evidencing and securing the Approved Financing following expiration of all applicable notice and cure periods. (e) Insolvency. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Borrower or Borrower's general partner to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Borrower or Borrower's general partner or seeking any arrangement for Borrower or Borrower's general partner under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower or Borrower's general partner in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of Borrower or Borrower's general partner, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or Borrower or Borrower's general partner shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note. 141%01\136541.2 24 (0 Assignment; Attachment. Borrower or Borrower's general partner shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note. (g) Suspension; Termination. Borrower or Borrower's general partner shall have voluntarily suspended its business or, if Borrower is a partnership, the partnership shall have been dissolved or terminated, other than a technical termination of the partnership for tax purposes. (h) _Liens on Property and the Project. There shall be filed any claim of lien (other than liens approved in writing by the Agency) against the Development or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Loan and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days without discharge or satisfaction thereof or provision therefor (including, without limitation, the posting of bonds) satisfactory to the Agency. (i) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Property and the Development, except that condemnation by the City or Agency shall cause the Loan to accelerate but shall not be a Default. 0) Unauthorized Transfer. Any Transfer other than as permitted by Section 4.13; provided, however, that a Permitted Limited Partner shall have the right to cure an unauthorized Transfer of the general partnership interest in Borrower by removing the unauthorized general partner and replacing it with a general partner approved by the Agency which approval shall not be withheld unreasonably. (k) Representation or Warranty Incorrect. Any Borrower representation or warranty contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the Agency in connection with any of the Loan Documents, proving to have been incorrect in any material and adverse respect when made. Section 6.2 Remedies. The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the Agency or automatically where so specified, relieve the Agency of any obligation to make or continue the Loan and shall give the Agency the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents, including but not limited to the following: (a) Acceleration of Note. The Agency shall have the right to cause all indebtedness of the Borrower to the Agency under this Agreement and the Note, together with any accrued interest thereon, to become immediately due and payable. The Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The Agency may proceed to 141\01\136541.2 25 enforce payment of the indebtedness and to exercise any or all rights afforded to the Agency as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Agency Deed of Trust. The Borrower shall be liable to pay the Agency on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the Agency in connection with the collection of the Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan. (b) Specific Performance. The Agency shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Loan Documents. (c) Right to Cure at Borrower's Expense. The Agency shall have the right (but not the obligation) to cure any monetary default by Borrower under a loan other than the Loan. The Borrower agrees to reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Borrower upon demand therefor, together with interest thereon at the lesser of the maximum rate permitted by law or ten percent (10%) per annum from the date of expenditure until the date of reimbursement. Section 6.3 Right of Contest. Borrower shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute a Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the Agency or the rights of the Agency hereunder. Section 6.4 Remedies Cumulative. Subject to the non-recourse provisions contained in the Note and this Agreement, no right, power, or remedy given to the Agency by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the teens of any such instrument, or by any statute or otherwise against Borrower and any other person. Neither the failure nor any delay on the part of the Agency to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the Agency of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. ARTICLE 7 GENERAL PROVISIONS Section 7.1 Relationship of Parties. Nothing contained in this Agreement shall be interpreted or understood by any of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the Agency and Borrower or 141\01\136541.2 26 its agents, employees or contractors, and Borrower shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. Borrower has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. In regards to the purchase of the Property, construction of the Improvements, and operation of the Development, Borrower shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding, and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. Borrower shall be solely responsible for its own acts and those of its agents and employees. Section 7.2 No Claims. Nothing contained in this Agreement shall create or justify any claim against the Agency by any person that Borrower may have employed or with whom Borrower may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the purchase of the Property, the construction of the Improvements, or the operation of the Development, and Borrower shall include similar requirements in any contracts entered into for the purchase of the Property, the construction of the Improvements, or the operation of the Development. Section 7.3 Amendments. No alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties. Section 7.4 Indemnification. The Borrower shall indemnify, defend and hold the Agency and the City, their councilmembers, boardmembers, officers, employees, agents, successors and assigns harmless against all claims made against it and expenses (including reasonable attorneys' fees) which arise out of or in connection with the purchase of the Property, or the development, construction, marketing and operation of the Development, except to the extent such claim arises from the grossly negligent or willful misconduct of the Agency and the City, their councilmembers, boardmembers, officers, employees, agents, successors and assigns. The provisions of this Section 7.4 shall survive the expiration of the Term and the reconveyance of the Deed of Trust. Section 7.5 Non -Liability of Agency and Agency Officials Employees and Agents. No member, official, employee or agent of the Agency shall be personally liable to Borrower in the event of any default or breach by the Agency or for any amount which may become due to Borrower or its successor or on any obligation under the terms of this Agreement. 141\01\136541.2 27 Section 7.6 No Third Party Beneficiaries. There shall be no third party beneficiaries to this Agreement, except that the investor limited partner of the Borrower shall be a third party beneficiary with respect to notice and cure rights granted the limited partner in this Agreement. Section 7.7 Discretion Retained By A ency. The Agency's execution of this Agreement in no way limits the discretion of the Agency in the permit and approval process in connection with development of the Development. Section 7.8 Notices, Demands and Communications. Formal notices, demands, and communications between the Parties shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the Parties as follows: Agency: San Rafael Redevelopment Agency 1313 Fifth Avenue San Rafael, California 94915-1560 Attention: Director of Economic Development Borrower: Canal Housing Associates, a California Limited Partnership c/o BRIDGE Housing Corporation One Hawthorne Street, Suite 400 San Francisco, California 94105 Attention: Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate by mail as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable). Copies of notice, sent to Borrower shall also be sent to any limited partner of Borrower who requests such notice in writing and provides its address. Section 7.9 Applicable Law. This Agreement shall be governed by California law. 141\01\136541.2 28 Section 7.10 Parties Bound. Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal representatives, successors, and assigns. This Agreement is intended to run with the land and shall bind Borrower and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the Agency and its successors and assigns. Section 7.11 Attorneys' Fees. If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other Party. Section 7.12 Severability. If any tern 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 have been materially altered or abridged by such invalidation, voiding or unenforceability. Section 7.13 Force Majeure. In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of transportation; or court order; or any other similar causes (other than lack of funds of Borrower or Borrower's inability to finance the construction of the Development) beyond the control or without the fault of the Party claiming an extension of time to perform. An extension of time for any cause will be deemed granted if notice by the Party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and such extension of time is not rejected in writing by the other Party within ten (10) days of receipt of the notice. In no event shall the Agency be required to agree to cumulative delays in excess of one hundred eighty (180) days. Section 7.14 Agency Approval. Whenever this Agreement calls for Agency approval, consent, or waiver, the written approval, consent, or waiver of the Executive Director shall constitute the approval, consent, or waiver of the Agency, without further authorization required from the governing board of the Agency. The Agency hereby authorizes the Executive Director to deliver such approvals or consents as are required by this Agreement, or to waive requirements under this Agreement, on behalf of the Agency. Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies. The Executive Director is also hereby authorized to approve, on behalf of the 141\01\136541.2 29 Agency, requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement. The Agency shall not unreasonably delay in reviewing and approving or disapproving any proposal by Borrower made in connection with this Agreement. Section 7.15 Waivers. Any waiver by the Agency of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the Agency to take action on any breach or default of Borrower or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to Borrower to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the Agency to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the Agency's written consent to future waivers. Section 7.16 Title of Parts and Sections. Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions. Section 7.17 Entire Understanding of the Parties This Agreement constitutes the entire understanding and agreement of the Parties with respect to the Loan. Section 7.18 Multiple Originals; Counterpart. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. 141\01\136541.2 30 WHEREAS, this Agreement has been entered into by the undersigned as of the date first above written. AGENCY: REDVELOPMENT AGENCY OF THE CITY OF SAN RAFAEL, a public body, corporate and politic Un Its: :•••• .• CANAL HOUSING ASSOCIATES, a California Limited Partnership by BRIDGE Housing Corporation a California nonprofit public benefit corporation, its general partner Its: 141\01\136541.2 S-1 EXHIBIT A Legal Description of the Property The land is situated in the State of California, County of Marin, City of San Rafael, and is described as follows: 141\01\136541.2 A-1 EXHIBIT B Approved Development Budget 141 \01 \136541.2 B-1 162-172 BELVEDERE ST. Total Project Construction Uses Costs Period Uses Acquisition Land 780,000 780,000 Building 1,793,750 1,793,750 Sales Commissions - _ Off-site Improvements - _ General Development Costs _ Unit Construction 1,215,000 1,215,000 Construction Contingency 243,000 243,000 Local Permits/Fees 25,000 25,000 Phase 1/Asbestos/Toxics 6,000 6,000 Site Improvements/Landscaping 50,000 50,000 Architecture 126,500 126,500 Appraisal 10,000 10,000 Market Study _ _ Relocation 800,000 800,000 Inspection Reports 50,000 50,000 Acquisition/Construction Loan Fees 35,905 35,905 Acquisition/Construction Loan Interest 225,126 225,126 Title/Recording Construction - _ Title/Recording Permanent 15,000 - Title/Recording Acquisition 5,000 5,000 TCAC Application Fees 15,000 15,000 Legal: Acquisition 14,150 14,150 Construction Closing 2,000 2,000 Permanent Closing 10,000 - Organization of Partnership 3,000 3,000 Syndication 30,000 30,000 Bridge Loan Interest 335,140 - Bridge Loan Fees 43,565 - Syndication Consulting 30,000 30,000 Audit/Cost Certification 20,000 - Furnishings _ _ Deposit to Replacement Reserves 50,000 - Deposit to Operating Reserve 50,000 - Marketing 5,000 5,000 Acquisition Period Holding costs - - Development Fee 417,474 - Costs of Issuance/Financing Fees _ CHFA Financing Fee 30,367 30,367 Lender Expenses 20,000 20,000 CDLAC Fees 831 831 TOTAL DEVELOPMENT COSTS 6,456,808 5,515,629 Financing Sources Permanent Construction CHFA Tax Exempt Permanent Loan 1,518,337 Westamerica Tax Exempt Loan 3,590,529 County Funds 675,000 675,000 Redevelopment Agency Funds 750,000 750,000 Marin Community Foundation 1,500,000 500,000 Investor Equity 1,727,874 Other Funding Sources 285,497 General Partner Equity 100 100 Total Sources 6,456,808 5,515,629 EXHIBIT C Form of Certificate of Completion Recording Requested By And When Recorded Mail To: San Rafael Redevelopment Agency 1313 Fifth Avenue San Rafael, California 94915-1560 Attention: Director of Economic Development No fee for recording pursuant to Government Code Section 27383 CERTIFICATE OF COMPLETION Pursuant to Section 3.12 of the Agency Loan Agreement (the "Loan Agreement") by and between the Redevelopment Agency of the City of San Rafael, a public body corporate and politic and Canal Housing Associates, a California Limited Partnership (the 'Borrower"), the Agency certifies that the Borrower has met its obligations under Article 3 of the Loan Agreement. This Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Borrower to any holder of a deed of trust securing money loaned to finance the Development (as defined in the Loan Agreement) or any part thereof and shall not be deemed either a notice of completion under the California Civil Code or a certificate of occupancy. Redevelopment Agency of the City of San Rafael Its: (Notarize signature and attach legal description] 141\01\136541.2 C-1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Rafael Redevelopment Agency 1313 Fifth Avenue San Rafael, California 94915-1560 Attention: Director of Economic Development No fee for recording pursuant to Govenunent Code Section 27383 DEED OF TRUST AND SECURITY AGREEMENT (Acquisition and Rehabilitation) (Belvedere Place Apartments) THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is made as of this day of September, 2000, by and among Canal Housing Associates, a California limited partnership ("Trustor"), North American Title Company, a California corporation ("Trustee"), and the Redevelopment Agency of the City of San Rafael, a public body, corporate and politic ("Beneficiary"). FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's fee interest in the property located in the County of Marin, State of California, that is described in the attached Exhibit A, incorporated herein by this reference (the "Property"). TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property; TOGETHER WITH all building materials and equipment now or hereafter delivered to said property and intended to be installed therein; TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, 141 \01\1 36546.1 1 Attachment B adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property; TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner. TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing. All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever. FOR THE PURPOSE OF SECURING: (a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note (defined in Article 1 below) until paid or cancelled. Said principal and other payments shall be due and payable as provided in the Note. Said Note and all its terms are incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; and 141\01\136546.1 2 (b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; and (c) Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents (defined in Section 1.3 below). AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: ARTICLE 1 DEFINITIONS In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall have the following meanings in this Deed of Trust: Section 1.1 The term "Loan Agreement" means that certain Agency Loan Agreement between Trustor and Beneficiary, of even date herewith, providing for the Beneficiary to loan to the Trustor Seven Hundred Fifty Thousand Dollars ($750,000) for the acquisition and rehabilitation of the Property. Section 1.2 The term "Loan Documents" means this Deed of Trust, the Note, and the Loan Agreement, and any other debt, loan or security instruments between Trustor and the Beneficiary relating to the Property. Section 1.3 The term "Note" means the promissory note in the principal amount of Seven Hundred Fifty Thousand Dollars ($750,000) of even date herewith executed by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are incorporated herein by reference.) Section 1.4 The term "Principal" means the amount required to be paid under the Note. 141 \01\1 36546.1 3 ARTICLE 2 MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY Section 2.1 Maintenance and Modification of the Property by Trustor. The Trustor agrees that at all times prior to full payment of the sum owed under the Note, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security. Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those actions as hereinbefore provided. Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of Marin County, a surety bond in an amount 1 and 1/2 times the amount of such claim item to protect against a claim of lien. Section 2.2 Granting of Easements. Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements. 141\01\136546.1 4 ARTICLE 3 TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges and Utility Charges. Trustor shall pay, or cause to be paid, at least fifteen (15) days prior to the date of delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security or any part thereof, provided, however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of the Security, provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments. Except as provided in clause (b) of the first sentence of this paragraph, the provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies. In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within seven (7) business days after receipt of such notice. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become an additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts. Section 3.2 Provisions Respecting Insurance. Trustor agrees to provide insurance conforming in all respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured by this Deed of Trust have been paid and all other obligations secured hereunder fulfilled, and this Deed of Trust reconveyed. All such insurance policies and coverages shall be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of Trust. Section 3.3 Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become an additional obligation of the 141%11136546.1 Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the lesser of ten percent (10%) per annum or the maximum rate pennitted by law. ARTICLE 4 DAMAGE, DESTRUCTION OR CONDEMNATION Section 4.1 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property ("Funds") are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any funds 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 sole 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 Funds collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior mortgage lender. ARTICLE 5 AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST Section 5.1 Other Agreements Affecting Property. The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof. Section 5.2 Agreement to Pay Attorneys' Fees and Expenses. In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such 141\01\136546.1 6 expenses are incurred at the lesser of ten percent (10%) per annum or the maximum rate permitted by law. Section 5.3 Payment of the Principal. The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein. Section 5.4 Personal Property. To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code. Section 5.5 Financing Statement. The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of the Note in accordance with their terms. The Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument. Section 5.6 Operation of the Security. The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Loan Documents. Section 5.7 Inspection of the Security. At any and all reasonable times upon seventy-two (72) hours' notice, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect the Security. Section 5.8 Nondiscrimination. The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or 141\01\136546.1 occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall nin with the land. ARTICLE 6 HAZARDOUS WASTE Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept and used in and about multifamily residential property. Trustor shall immediately advise Beneficiary in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above hereinafter referred to a "Hazardous Materials Claims"); and (iii) Trustor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border -zone property" under the provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. Beneficiary shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall indemnify and hold harmless Beneficiary and its councilmembers, supervisors, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. Without Beneficiary's prior written consent, which shall not be unreasonably withheld, Trustor shall not take any remedial action in response to the presence of any Hazardous 141\01\136546.1 Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement, impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if either (1) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary. The Trustor hereby acknowledges and agrees that (i) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is enviromnentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed of Trust and shall be 141\01\136546.1 9 due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action. ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default. The following shall constitute Events of Default following the expiration of any applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Loan Documents, including, without limitation, the provisions concerning discrimination; or (3) failure to make any payment or perform any of Trustor's other covenants, agreements, or obligations under any other debt instruments or regulatory agreement secured by the Property, which default shall not be cured within the times and in the manner provided therein. Section 7.2 Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default and the unpaid Principal of the Note shall immediately become due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right. Section 7.3 The Beneficiary's Right to Enter and Take Possession. If an Event of Default shall have occurred and be continuing, the Beneficiary may: (a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or invalidate any act done in response to such Default or pursuant to such Notice of Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise 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 hereof, (c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold 141\01\136546.1 10 ("Notice of Default and Election to Sell"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of Marin County; or (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Section 7.4 Foreclosure By Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. (a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and Election to Sell and after Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale. (b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor. (c) 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, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. Section 7.5 Receiver. If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, shall have the right to 141 \01\1 36546.1 11 apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or apart thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated. Section 7.6 Remedies Cumulative. No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. Section 7.7 No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary. No consent or waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in the performance of the obligations hereunder shall be deemed or construed to be a consent to or waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor. (b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easement or other right affecting the Security, or (iv) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co- signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby. 141\01\136546.1 12 Section 7.8 Suits to Protect the Security. The Beneficiary shall have power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary. Section 7.9 Trustee May File Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. Section 7.10 Waiver. The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any sums owing under the Note or in proceedings against the Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust. ARTICLE 8 MISCELLANEOUS Section 8.1 Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. Section 8.2 Reconveyance by Trustee. Upon written request of Beneficiary stating that all sums secured hereby have been paid or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto. Section 8.3 Notices. If at any time after the execution of this Deed of Trust it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication shall be in writing and shall be served 141\01\136546.1 13 personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to: San Rafael Redevelopment Agency 1313 Fifth Avenue San Rafael, California 94915-1560 Attention: Director of Economic Development and (2) if intended for Trustor shall be addressed to: Canal Housing Associates, a California Limited Partnership c/o BRIDGE Housing Corporation One Hawthorne Street, Suite 400 San Francisco, California 94105 Attention: Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective. Section 8.4 Successors and Joint Trustors. Where an obligation is created herein binding upon Trustor, the obligation shall also apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all obligations of Trustor shall be deemed to be a joint and several obligation of each and every entity and person comprising Trustor. Section 8.5 Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust. Section 8.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been 1411011136546.1 14 first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. Section 8.7 Governing Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Section 8.8 Gender and Number. In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires. Section 8.9 Deed of Trust, Mortgage. Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage. Section 8.10 Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. Section 8.11 Substitution of Trustee. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee. Section 8.12 Statute of Limitations. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law. Section 8.13 Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 141\01\136546.1 15 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR: CANAL HOUSING ASSOCIATES, a California Limited Partnership by BRIDGE Housing Corporation a California nonprofit public benefit corporation, its general partner IM Its: 141\01\136546.1 16 STATE OF CALIFORNIA ) ss. COUNTY OF ) On _ , before me, , personally appeared , personally known to me (or 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. WITNESS my hand and official seal. 141\01\1 36546.1 17 EXHIBIT A (Legal Description) The land is situated in the State of California, County of Marin, and is described as follows: 141\01\1 36546.1 A-1 AGENCY NOTE $750,000 San Rafael, California September , 2000 FOR VALUE RECEIVED, Canal Housing Associates, a California limited partnership ("Borrower"), promises to pay to the Redevelopment Agency of the City of San Rafael, a public Body Corporate and politic (the "Agency"), or order, the principal sum of Seven Hundred Fifty Thousand Dollars ($750,000), plus interest thereon pursuant to Section 2 below. 1. Borrower's Obligation. This promissory note (the "Note") evidences the Borrower's obligation to pay the Agency the principal amount of Seven Hundred Fifty Thousand Dollars ($750,000) for the funds loaned to the Borrower by Agency to finance the acquisition and development of the Property pursuant to the Agency Loan Agreement between the Borrower and the Agency of even date herewith (the "Loan Agreement"). All capitalized terms not otherwise defined in this Note shall have the meanings set forth in the Loan Agreement. 2. Interest. The outstanding principal balance of this Note shall bear simple interest at the rate of one percent (1%) per annum from the date of disbursement until paid; provided, however, if a Default occurs, interest on the principal balance shall begin to accrue, as of the date of Default (following expiration of applicable notice and cure periods), and continuing until such time as the Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of ten percent (10%), compounded annually, or the highest rate pennitted by law. 3. Term and Repayment Requirements. The term of this Note (the "Term"), shall commence with the date of this Note and shall expire fifty-five (55) years from the date of this Note. This Note shall be due and payable as set forth in Section 2.8 of the Loan Agreement. Repayment of this Note shall be nonrecourse to the Borrower pursuant to Section 2.11 of the Loan Agreement, and subject to the exceptions set forth therein. 4. No Assumption. This Note shall not be assumable by the successors and assigns of Borrower without the prior written consent of the Agency, or as set forth in Section 4.14 of the Loan Agreement. 5. Security. This Note is secured by a Deed of Trust and Security Agreement (the "Deed of Trust"), of even date herewith, wherein the Borrower is the Trustor and the Agency is the Beneficiary, covering the Property. 141\01\136544.3 Attachment C 6. Terms of Payment. (a) All payments due under this Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. (b) All payments on this Note shall be paid to Agency at the office of the Agency, 1313 Fifth Avenue, San Rafael, California 94915-1560, Attention: Director of Economic Development, or to such other place as the Agency may from time to time designate in writing. (c) All payments on this Note shall be without expense to the Agency, and the Borrower agrees to pay all costs and expenses, including re -conveyance fees and reasonable attorney's fees of the Agency, incurred in connection with the payment of this Note and the release of any security hereof. (d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of the Borrower under this Note, if, for any reason whatsoever, the payment of any sums by the Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that the Agency may legally charge under the laws of the State of California, then the amount by which payments exceeds the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall the Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate. 7. Default. (a) Any of the following shall constitute an Event of Default under this Note: (i) Any failure to pay, in full, any payment required under this Note when due following written notice by Agency of such failure and ten (10) days opportunity to cure; (ii) Any failure in the performance by the Borrower of any term, condition, provision or covenant set forth in this Note subject to the notice and cure period set forth in Section 6.1 of the Loan Agreement; and (iii) The occurrence of any Event of Default under the Loan Agreement, the Deed of Trust, or the Bond Regulatory Agreement (as defined in the Loan Agreement), or other instrument securing the obligations of the Borrower under this Note or under any other promissory notes hereafter issued by the Borrower to the Agency pursuant to the Loan Agreement or the Deed of Trust, subject to notice and cure periods, if any, set forth therein. (b) Upon the occurrence of such an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then 141\01\136544.3 2 payable under this Note and the Deed of Trust shall at the option of the Agency become immediately due and payable upon written notice by the Agency to the Borrower without further demand. (c) The failure to exercise the remedy set forth in Subsection 7(b) above or any other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by Agency hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of the Agency, except as and to the extent otherwise provided by law. 8. Waivers. (a) The Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, and notice of dishonor of this Note. The Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that the Agency may accept further security or release any security for this Note, all without in any way affecting the liability of the Borrower. (b) No extension of time for payment of this Note or any installment hereof made by agreement by the Agency with any person now or hereafter liable for payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note, either in whole or in part. (c) The obligations of the Borrower under this Note shall be absolute and the Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever. Miscellaneous Provisions. (a) All notices to the Agency or the Borrower shall be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as the Agency and the Borrower may hereinafter designate. (b) The Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by the Agency in the enforcement of the provision of this Note, regardless of whether suit is filed to seek enforcement. (c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. 141\01\136544.3 (d) This Note shall be governed by and construed in accordance with the laws of the State of California. (e) The times for the performance of any obligations hereunder shall be strictly construed, time being of the essence. (f) This document, together with the Loan Documents, contains the entire agreement between the parties as to the Loan. It may not be modified except upon written consent of the parties. CANAL HOUSING ASSOCIATES, a California limited partnership By: BRIDGE HOUSING CORPORATION, a California nonprofit public corporation, its general partner Its: 141\011136544.3 4