07. Carol Korade housing assistanceOFFICE OF THE MAYOR
CUPERTINO
CITY HALL
10300 TORRE AVENUE- CUPERTINO, CA 95014
TELEPHONE: (408) 777 -3194 - FAX: (408) 777 -366
SIJMMARY
Agenda Item No. - 7
SUBJECT
MEETING DATE: April 20, 2010
Fulfill the City's obligations under the City Altorney's Employment Agreement by Authorizing the
Mayor to execute the "Agreement Between the City of Cupertino and Carol Korade regarding
Housing Assistance" and, when the housing assistance is provided, to complete and execute the
"Tenancy -in- Common Agreement ".
BACKGROUND
The City has adopted a "Housing Assistance Program for Department Heads" in order to recruit,
hire and retain department head positions and - :o encourage department heads to live within the
City. That program is set forth in City resolution No. 99 -070. The City has entered into an
Employment Contract for City Attorney, dated October 21, 2009, with Carol Korade, which
contract provides, at Section 4.08, that the City Housing Assistance for Department Heads Program
will be made available to Ms. Korade. City's Special Counsel, Colantuono & Levin, P.C., has
prepared and approved as to form an "Agreement between the City of Cupertino and Carol Korade
Regarding Housing Assistance" (the "Agreement ") included as Attachment A, which Agreement
has been executed by Ms. Korade. Attachment B to the Agreement is a form of "tenancy -in-
Common Agreement" which will be completed when Ms. Korade buys a home in the City and the
amount of City's equity contribution and loan have been determined. The Agreement conforms to
the terms of City Resolution No. 99 -070 and the Employment Contract for City Attorney. Because
this transaction is consistent with Ms. Korade's employment agreement and the Housing Assistance
Program it comes back to Council as a formality — Council action is generally required for the
acquisition of an interest in real property, such as a mortgage on the City Attorney's home to secure
the City's interest, and Special Counsel have therefore recommended this be presented for formal
Council approval via the consent calendar.
This Agreement and subsequent Tenancy -in- Common Agreement honors the Council's
commitment at the time of hire.
FISCAL IMPACT
By the terms of the City's Housing Assistance Program for Department Heads, Resolution No. 99-
070, and the Employment Contract for City Atorney, which terms have been incorporated into the
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Agreement Regarding Housing Assistance, at Ms. Korade's election, the City is obligated to make a
loan to Ms. Korade in an amount of up to five times her annual salary, and an equity contribution of
up to 30% of the bona fide purchase price of the residence. In addition, City agreed to pay 50% of
the closing, costs for the purchase of the residence. The loan will be secured by a first priority deed
of trust (i.e., a mortgage) and bear interest at the 11 th District Cost of funds (currently approximately
1.8 %), and City will become a tenant -in- common with Ms. Korade in the residence, with City's
percentage interest dependent upon City's equity contribution. These financial commitments are all
as provided in the City Attorney's employment agreement and funds will be transferred out of the
General Fund fund balance to reserve the long -term loan receivable. It is anticipated that the total
loan plus equity contribution will be approximately 1.4 million dollars.
RECOMMENDATION
Fulfill the City's obligations under the City Attorney's Employment Agreement by Authorizing the Mayor to
execute the "Agreement Between the City of Cupertino and Carol Korade regarding Housing
Assistance" and, when the housing assistance is provided, to complete and execute the "Tenancy-
in- Common Agreement ".
Prepared by:
Michael Allderdice
Colantuono & Levin, P.C.
Special Counsel
Approved for submission to the City Council:
ky�n.
David W. Knapp, City Manager
Attachment A: Agreement between the City of Cupertino and Carol Korade regarding Housing
Assistance with Tenancy -in- Common Agreement included.
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ATTACHMENT A
AGREEMENT BETWEEN THE CITY OF
CUPERTINO AND CAROL KORADE
REGARDING HOUSING ASSISTANCE
This Agreement is executed this day of April, 2010, by and between the CITY OF
CUPERTINO, a municipal corporation, hereinafter referred to as "City" and CAROL KORADE,
who has been employed as City Attorney by City, hereinafter referred to as " Korade."
Re citals
WHEREAS, City has hired Korade as its City Attorney under the "retired annuitant"
category of CalPERS on a part-time basis; and
WHEREAS, City, pursuant to City Council Resolution No. 99 -070, encourages
department heads to reside within Cupertino corporate limits to ensure their ready availability
and familiarity with the community; and
WHEREAS, the costs of housing within the city limits are substantially greater than
surrounding areas; and
WHEREAS, City and Korade have met and discussed compensation and realize that due
to extremely high costs of housing within Cupertino, City must assist Korade in obtaining
suitable housing in Cupertino; and
WHEREAS, Korade contemplates the purchase of a principal residence within Cupertino,
hereinafter referred to as "residence."
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1.
Purpos e
The purpose of this Agreement is to set forth those understandings reached by the City
and Korade regarding housing assistance. Korade acknowledges that the assistance
described in this Agreement cannot be provided to a "retired annuitant." City's grant of
the assistance described in this Agreement is conditioned upon Korade changing her
status with CalPERS from a "retired annuitant" to an active employee, at which time City
Will employ Korade as a full time employee. Accordingly, if Korade is unable to change
her CalPERS status from a "retired annuitant," the assistance described in this Agreement
will not be provided. Conversely, if and when Korade changes her CalPERS status from
a "retired annuitant" to an active employee, City will hire Korade on a full time basis and
the assistance described herein shall be available to Korade.
2. Terms of Employment
Nothing contained herein shall be construed to provide Korade a contract of employment
with the City. City Council, maintains its sole authority to retain or dismiss its City
Attorney from employment. The exercise of such authority by City shall not establish in
Korade a cause of action for money damages due to a loss of housing assistance provided
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herein. Nothing herein is intended to create any obligation to provide housing assistance
for any person or persons except Korade herself.
3. Terms of Housing Assistance
A. Loan
1) Korade may obtain, upon request, a loan by City to Korade not to exceed
five (5) times her gross salary to be used for the purchase of a residence of
Korade's choosing within the City of Cupertino; provided that said loan
not exceed ninety (90) percent of the purchase price.
2) Said loan shall be evidenced by a promissory note in favor of City secured
by a first deed of trust encumbering the residence. Said promissory note
shall be for a maximum term of forty (40) years and shall bear a fixed rate
of interest, where the interest rate shall be the 11th District cost of funds
prevailing immediately prior to making of the loan.
3) Said residence shall be occupied by Korade as her primary residence.
4) Korade may elect in her sole discretion a maximum two (2) percent (200
basis point) interest deferral from the 1 lth District cost of funds rate for a
period of five years from the date of the inception of the loan. The deferral
cannot bring the interest rate below zero percent. At the conclusion of the
five years, the interest rate will revert to that originally set forth in the
note, or the 11 District cost of funds interest rate then prevailing under
the program for fixed rate loans, whichever is lower. When the loan
becomes due, or is otherwise retired, the value of the deferral described
above, shall be paid off at that same time. The value of said deferral shall
earn no interest for either party.
5) Korade may prepay at any time all, or a portion, of this loan without
penalty.
6) Korade shall repay said loan in equal monthly installments of principal
and interest and shall authorize City to make automatic payroll deduction
to cover payments with respect to the City's loan. Such payroll deduction
shall have priority over all other deductions except those required by law.
City will provide Korade a year -end statement showing the amount
allocated to principal and the amount paid as interest.
7) Notwithstanding any provision to the contrary, the promissory note shall
become immediately due and payable upon sale or transfer (except for a
transfer into a living trust or other probate or tax mechanism for Korade's
beneficiaries).
B. Equity Sharing
1) In addition to said loan above described, City shall contribute a sum, not
to exceed thirty (30) percent, of the bona fide purchase price to be used to
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purchase the residence, Payment of this sum shall entitle City to a
proportionate share in the equity of the residence as provided in the
Tenancy -in- Common Agreement (defined below). Title to the residence
will be held by City and Korade, as tenants in common.
2) The terms and conditions of City's and Korade's tenancy -in- common are
set forth in a separate "Tenancy -in- Common Agreement," to be executed
concurrently with Korade's purchase of a residence. The form of
Tenancy -in- Common Agreement is attached hereto as Exhibit "A."
C. Closing Costs
City shall pay or reimburse Korade for fifty (50) percent of her closing costs as
the purchaser of the residence.
4. Sale or Transfer of the Residence
A. Korade, at her sole option, may sell the residence at any time based upon a market
price determined as provided in the Tenancy -in- Common Agreement.
B. Upon sale, the proceeds shall be distributed as provided in the Tenancy -in-
Common Agreement.
5. Termination of Agreement
A. Korade acknowledges and agrees that this Agreement is not assumable by any
subsequent buyer or transferee of the residence in that it was specifically
negotiated as part of the terms and conditions of Korade's employment with City,
that the payroll deductions provisions act as security to the benefit of the City, and
that the various aspects of the City's housing program indicate that the assistance
is fashioned for Korade alone.
B. It is further agreed that upon terinination of Korade's employment, for any reason,
or upon her no longer using the property as her principal residence, Korade may
purchase City's interest in the residence, or the residence shall be sold, as
provided in the Tenancy -in- Common Agreement.
6. Miscellaneous
A. Conflict It is understood that incorporated into this Agreement are the provisions
contained in City Council Resolution No. 99 -070. In the case of any conflict
between the provisions of that Resolution and the provisions of this Agreement,
the provisions of this Agreement shall control. In the case of any conflict
between the provisions of this Agreement and the provisions of the Tenancy -in-
Common Agreement, the provisions of the Tenancy -in- Common Agreement shall
control.
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B. Binding Effect
This Agreement binds the parties, their successors, and personal representatives,
and is not assignable by either party without the express written consent of the
other party.
C. Invalidity
In the event this Agreement or any part thereof should be held invalid, City and
Korade agree to discuss alternatives; however, Korade has no vested right to
alternative compensation.
D. Authori
The City Manager is hereby authorized and directed to execute all documents
necessary to carry out this Agreement.
E. City Approvals
Whenever a reference is made herein to an action or approval to be undertaken by
City, the City Manager of the City or his or her designee is authorized to act on
behalf of the City unless specifically provided otherwise or the context would
require otherwise. Except as otherwise provided in this Agreement, whenever the
City is required to provide an approval or disapproval, City's approval shall not be
unreasonably withheld or delayed, and in all events City shall give such approval
or disapproval within ten (10) business days of Korade's request. If City fails to
give such approval or disapproval with such 10- business day period, the request
shall be deemed approved.
0 •' • t
CITY OF CUPERTINO:
P 06.�-
Carol Korade Kris Wang, Mayor
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APPROVED AS TO FORM
Colantuono & Levin, PC
Attorneys for City
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EXHIBIT "A"
TENANCY- IN- COP✓IMON AGREEMENT
EXHIBIT "A"
1298461v9 80169/0001
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TENANCY -IN- COMMON AGREEMENT
This Tenancy -In- Common Agreement (this "Agreement ") dated as of
, 2010, is made and entered into by and between Carol Korade, an
individual ( "Korade ") and The City of Cupertino, a municipal corporation ( "City "). Korade and
City are sometimes referred to herein individually as an "Owner" and collectively as the
"Owners."
RECITALS
A. The Owners are parties to that certain Agreement between the City of Cupertino
and Carol Korade Regarding Housing Assistance dated April , 2010 (the "Housing
Agreement ").
B. The Housing Agreement provides, among other matters, that at Korade's request,
City may contribute equity toward the purchase of a home for Korade in return for a tenant -in-
common interest in such real property; this Agreement implements that portion of the Housing
Agreement.
C. Korade has made an offer to purchase that certain residential real property located
at , Cupertino, California, which real property is legally described on
Exhibit "A" hereto (the "Property "), and has requested that City contribute a portion of the
purchase price for the Property. City has agreed to contribute that portion of the purchase price,
and accept a grant of a tenant -in- common interest in the Property, all as set forth below.
D. In addition to City's equity contribution toward the purchase price for the
Property, City is making a loan (the "City Loan ") to Korade, the proceeds of which shall be used
to purchase the Property; repayment of the City Loan is secured by a first priority deed of trust
encumbering the Property.
E. This Agreement is the Owners' expression of their intention to establish and
impose on the Property mutually beneficial limitations, restrictions, covenants, and conditions,
all of which are imposed as equitable servitudes pursuant to a general plan to provide for the
proper and orderly ownership, operation and management of the Property and of their respective
ownership interests therein and all of which shall run with the land and shall be binding upon the
Owners and their permitted successors and assigns.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
below and for other good and valuable consideration, the receipt and sufficiency of which each
Owner acknowledges, the Owners, and each of them, hereby agree as follows:
1. Declaration Of Intention, Disclaimer Of Partnership
The Owners hereby declare that their relationship in and to the Property is that of tenants -
in- common and is expressly subject to the terms and conditions set forth in this Agreement.
Nothing contained in this Agreement shall be deemed to constitute the Owners as partners or
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joint venturers. The Owners further intend that all provisions of this Agreement shall be
construed and interpreted in accordance herewith. Any right, power, or interest of any Owner
under this Agreement which alone or in connection with any other right, power or interest would
result in the Owners' being treated as having formed a partnership for tax purposes with respect
to the Property shall be null and void ab initio. The Owners expressly agree that they will at no
time hold themselves out as partners, shareholders, or any other type of members of a business
entity, that they will not collectively file any partnership, corporate or other type of entity income
tax return with respect to the Property. No Owner shall do anything or take any action, or fail to
perform any act, which would result in the Owners being treated for tax purposes as having
formed a partnership with respect to their ownership of the Property.
2. Term
The effectiveness of this Agreement shall commence upon the acquisition of the Property
by the Owners and shall continue for so long as both Owners own the Property, unless sooner
terminated by the consolidation of the Property's ownership in a single Owner, the mutual
written agreement of both Owners, or by legal partition of the Property.
3. Undivided Interests
The Owners' fractional undivided tenant -in- common interests (each an "Interest ") in the
Property as of the date of this Agreement are as follows:
Owner Contribution Interest
(Loan & Equity)
[Note: City's equity interest not to exceed 30 "41
Korade $ %
City $ %
Each Owner's interest shall remain as set forth above except as provided below at
Section 5.5.
4. Property Rights
4.1. Pro . The Property consists of the underlying land, all improvements located
thereon, and all rights, benefits, privileges and appurtenances pertaining to the Property.
4.2. Property Allocation Korade shall have exclusive possession of alt portions of the
Property. Korade may use the Property in accordance with the purposes for which it is intended
without hindering the exercise of or encroaching upon the rights of City.
4.3. Residence The Property shall be used by Korade as her principal residence. At
any time that the Property is not used as Korade':, principal residence, or any time that Korade is
no longer an employee of the City, the City may require the Property to be sold (see Section 9
below).
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4.4. No Right of Entry City shall have no right to enter the Property on the basis of
its tenant -in- common interest.
5. Maintenance and Repairs
5.1. Maintenance and Repairs; Casualties Except as otherwise provided below with
respect to Major Uninsured Casualties (defined below), Korade shall keep and maintain the
Property and all 'improvements and equipment thereon in good condition and repair, shall
provide maintenance, and landscaping services as needed, and shall cause all other acts to be
done which may be reasonably necessary to maintain the Property in good condition and repair.
If the repair work is necessitated by a casualty covered by Korade's insurance policy, Korade
and City shall each pay a pro rata share of the deductible under such policy based on their
respective percentage Interests. Except as otherwise provided below, the maintenance, repair or
replacement of any items excluded from coverage under such policy shall be the responsibility of
Korade and City shall reimburse Korade a pro rata portion of the actual, reasonable and
documented cost thereof equal to City's Interest. Notwithstanding any other provision hereof to
the contrary, in the event of a Major Uninsured Casualty neither Owner shall have any obligation
to repair the damage to the Property and the Owners shall meet and confer in good faith to
explore available options, including the possibility of financing such repairs or selling the
Property with or without making some or all of the necessary repairs. Major Uninsured Casualty
means any damage to the Property in excess of $50,000, which is unfunded by available
insurance proceeds.
5.2. Costs and Expenses Except as otherwise specifically set forth herein, all costs
and expenses of acquisition, financing, ownership, and operation of the Property (including,
without limitation, repairs and maintenance, replacements, real and personal property and other
taxes, insurance, homeowner's association fees, capital expenses and utilities) shall be paid by
Korade.
5.3. Cily Contribution City shall pay for 50% of Korade's actual, reasonable and
documented costs incurred to complete the purchase of the Property including, without
limitation, escrow fees, recording fees, lender's policy of title insurance and other miscellaneous
costs incurred to close escrow. City shall not be responsible to reimburse Korade for time and
expenses incurred in shopping for a home.
5.4. Significant Repair Costs Typical maintenance and repair costs, such as painting,
roofing or fence repair, which are less than $2,500 shall be paid by Korade. If the cost of any
related maintenance and repair items exceeds $2,500, City shall reimburse Korade for that
portion of the actual, reasonable and documented cost equal to City's Interest. Korade shall be
responsible to pay for such maintenance or repair and invoice the City for its contribution. Such
invoice shall refer to City's obligation under this Agreement, include original documentation of
the cost of the work and evidence of payment. Prior to commencing any maintenance or repair
work in excess of $10,000, Korade shall confer with the City Manager and obtain City approval
of such work, which shall not be unreasonably withheld or delayed.
5.5. Capital Costs Korade may remodel or construct or install capital improvements
to the Property in her sole discretion. For any capital improvement (an "Improvement ") that
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Korade wants to make to the Property which cost is greater than $50,000, the City may elect, in
its sole discretion, to pay for a portion of such Improvement. Korade shall notify the City
Manager in writing of the desired Improvement and attach a copy of a proposed contract for
construction of the Improvement, and request City Manager's approval for City to contribute an
amount equal to the product of the anticipated cost of the Improvement times City's Interest.
The City Manager shall notify Korade in writing within the time provided in Section 14 below,
whether City will contribute to the cost of the Improvement.
(a) If the City Manager elects for City to contribute, then Korade shall have
the Improvement constructed at her initial cost. Upon completion, Korade shall present to the
City Manager a request for reimbursement with proof of payment and a statement by the
contractor that the Improvement has been completed. City shall then pay to Korade the City's
proportionate share of the Improvement cost based on City's Interest.
(b) If the City Manager elects not to contribute to the cost to construct the
Improvement, the City Manager shall so notify Korade in writing, and Korade may proceed to
construct the Improvement at her sole cost grid add the actual and documented cost of such
Improvement to Korade's investment in the Property. Such addition(s) shall not affect Korade's
Interest until the sale of the Property, nor shall it earn interest. Korade shall be responsible to
maintain all records related to the construction of such Improvement(s). At the closing of the
sale of the Property by the Owners to a third party, Korade shall present to City reasonable
documentation evidencing the cost to construct the Improvements, such cost shall be added to
Korade's investment in the Property, and her Tu terest in the Property shall be recalculated prior
to distribution of the proceeds. The proceeds of sale shall be distributed as provided below at
Section 9.
As an example: The purchase price for the Property, is $1,400,000, and is paid
with a contribution from City in the amount of $304,500, a loan for which Korade is
solely responsible for $1,015,000, and cash from Korade in the amount of $80,500.
Korade's Interest is $1,095,500 divided by $1,400,000 = 78.25, and City's Interest is
$304,500 divided by $1,400,000 = 21.75. Over the course of her ownership of the
Property Korade spends $100,000 for Improvements, for which she is not reimbursed by
City. At the closing of the sale by City and Korade to a third party, the $100,000 shall be
added to Korade's investment. The relative investment of the Owners is: $304,500 for
City and $1,195,500 for Korade. Korade's Interest is now $1,195,500 divided by
$1,500,000 = 79.7, and City's Interest is $304,500 divided by $1,500,000 = 20.3.
5.6. Propegy Taxes Korade shall pay all property taxes and assessments prior to their
due date, and invoice City for its portion (based on City's Interest) of such costs. If City obtains
an exemption from ad valorem property taxes, then it shall only be responsible to pay its share of
assessments.
5.7. Prompt Payment Each Owner agrees to promptly pay his or her respective share
of such costs and expenses when they become due.
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6. Insurance
Korade shall be responsible to take out and maintain, fire, casualty and liability insurance
on the Property with coverage, terms, and amounts that are reasonably satisfactory to the City
Manager and naming the City, as a mortgagee or as an additional insured as beneficiary in
proportion to the Owner's Interests. Korade shall bear the entire cost of the general liability
insurance. Korade shall pay the fire and casualty insurance premium prior to the due date, and
invoice City for its portion (based on City's Interest) of such premium costs. In the event that
the Owners agree that earthquake insurance is appropriate and available, the Owners shall bear
the cost of said insurance based upon their Interests.
7. Condemnation
In the event of a taking by eminent domain of the Property, the proceeds of condemnation
shall be applied first to the outstanding balance of the City Loan, and then allocated between the
Owners as provided below at Section 9.
8. Refinancing; Junior Financing
Korade may refinance the Property at any time in order to repay the City Loan. Korade
may not place any junior liens on the Property.
9. Sale Of Property
9.1. Korade's Election Korade, at her sole option, may sell the Property at any time
based upon a sale price that is mutually agreeable to the Owners.
9.2. RNuired Sale At any time that the Property is no longer Korade's principal
residence, or that Korade is no longer an employee of City, the City may require that Korade sell
the Property.
(a) If Korade is required to sell the Property, Korade (or her executor or
administrator) may elect to purchase City's Interest on or before the date which is the later of (i)
two years after the date that Korade (or her executor or administrator) is notified that the
Property must be sold or (ii) August 31, 2013. During the interim period, Korade is required to
continue to comply with the terms of this Agreement. The purchase price shall be the fair
market value of City's Interest, payable in cash at closing. In addition, if the City Loan is still
outstanding, Korade will be required to repay the City Loan from Korade's share of the net
proceeds of sale.
(1) Unless the Owners otherwise agree as to the fair market value of
the Property, each Owner shall appoint a real estate broker licensed in the State of
California having at least 10 consecutive years experience in the sale of residential
property in the City of Cupertino and their decisions as to the fair market value of the
residence shall be averaged and shall be final, unless they differ by five percent or more
of the lower valuation, in which case a third broker shall be selected by the other two
brokers. The third broker shall be a person who has not previously acted in any capacity
for or against either Owner. Such third broker shall, within 30 calendar days after
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1296460v9 80169/0001 7-12
appointment, make a determination of fair market value and said third broker shall select
the opinion of fair market value as dete=rmined by the one fair market value
determination, completed by the two brokers, which most closely matches the third
broker's opinion of fair market value. The fair market value of the Property shall be the
fair market value selected by said third ;broker. All fees and costs of the third broker in
connection with the determination of fair market value shall be paid one -half by Korade
and one -half by City. The purchase pric=e for City's Interest shall be equal to the product
of City's Interest (expressed as a percentage) times the fair market value of the Property.
(b) If Korade (or her executor or administrator) does not elect to purchase
City's Interest, Korade shall select and hire a sales agent who shall be reasonably acceptable to
the City Manager. The asking price, the selling price and terms of sale shall be determined by
Korade but shall be subject to City Manager's approval not to be unreasonably withheld or
delayed, and Korade shall cooperate fully with the sales agent for purposes of preparing the
Property for sale and making the Property available for inspections and prospective buyers.
9.3. Distribution of Proceeds The proceeds of sale shall be applied as follows:
(a) First, to pay to third parties all customary and usual costs of sale;
(b) The net proceeds of sale shall then be allocated to the Owners based on
their Interests as adjusted _pursuant to Section 5.5 above;
(c) Next, all amounts owing on the mortgage shall be paid from Korade's
share of the net proceeds;
(d) Next the remainder of Korade's share shall be paid to Korade; and
(e) City's share shall be paid to City.
As an example, assume the sales price of the Property is $1,600,000 net to
Owners, that the Owner's Interests are 78.25 for Korade and 21.75 for City, and at the
time of sale the principal balance of the C :1y Loan is $900,000; then at closing 78.25% of
the net proceeds ($1,252,000) shall be allocated to Korade, 21.75% of the net proceeds
shall be allocated to City ($348,000), the principal balance of the loan will be paid from
Korade's share, the City's share will be paid to City and the remainder of Korade's share
($1,252,000 - $900,000 = $352,000) will be paid to Korade.
As a further example, assume the sales price of the Property is $1,100,000 net to
Owners, that the Owner's Interests are 78.25 for Korade and 21.75 for City, and at the
time of sale the principal balance of the loan is $900,000; then at closing 78.25% of the
net proceeds ($860,750) shall be allocated to Korade, 21.75% of the net proceeds shall be
allocated to City ($239,250), Korade's entire share shall be applied toward payment of
the principal balance of the loan, the City's share will be paid to City and there will be no
proceeds available to pay to Korade.
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10. Encumbrance Of Ownership Interests
Except for Korade's pledge of her Interest in the Property as security for the City Loan,
no Owner shall have the right to, and no Owner shall, encumber, hypothecate, mortgage, pledge,
assign or otherwise alienate for security purposes all or any part of its or her Interest.
1 1. Defaults And Remedies
11.1. Defaults The following events shall be deemed a default ( "Default ") if not cured
within seven (7) calendar days (except if the cure shall reasonably require more than seven (7)
calendar days and the defaulting Owner has commenced action to cure the default within such
time) of the defaulting Owner's receipt of written notice of any such event from a non - defaulting
Owner:
(a) An Owner's failure to pay in full when due their share of any amounts
payable by such Owner pursuant to this Agreement, including, without limitation any amounts
described in Section 5- above.
(b) An Owner's failure to remove any involuntary lien or encumbrance against
the Property or their Interest or to bond against such lien or encumbrance arising from any
action by the defaulting Owner.
(c) An Owner's breach of any other obligations of such Owner under this
Agreement.
11.2. Remedies
In addition to all other remedies permitted at law, in equity, or under this Agreement, the
Owner that is in compliance with the terms and provisions of this Agreement (a "Non- defaulting
Owner ") shall have the remedies described in this Section 11.2 against an Owner who commits a
Default (a "Defaulting Owner ").
(a) Advance of Funds by Non-defaultin%z Owner The Non - defaulting Owner
shall have the right, but not the obligation, to advance money owing by the Defaulting Owner.
The amount of such advance shall constitute a loan to the Defaulting Owner and shall bear
interest at the prime or reference rate of the Bank of America, N.A., at such time, plus one
percent (1%) per annum (or the maximum legal rate, if less) ( "Default Interest Rate "), from the
date of advancement until paid in full.
(b) Payment of Advance Any such advance shall be due and repayable upon
demand of the advancing Non - defaulting Owner.
(c) Security for Advances The Non - defaulting Owners shall have a lien upon
the Interest of the Defaulting Owner to the extent of such advances and interest; provided,
however that such lien shall not be perfected and may not be foreclosed or otherwise enforced
until recording of a Notice of Lien in the Official Records of Santa Clara County, California.
Said notice shall state the name of the Defaulting Owner, the amount of the advance, together
with the interest, costs and reasonable attorneys' fees, and a description of the property against
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which the lien has been assessed. Each lien shall secure interest on any unpaid advance or
assessment and shall likewise secure costs of suit and reasonable attorney fees to be fixed and
awarded by the court in the event any action or suit is brought to collect such charge.
(d) Subordination of Lien The lien of each of the advances or assessments
provided for under this Section 11.2 shall be subordinate to the lien of any bona fide mortgage
or deed of trust now or hereafter placed upon the Defaulting Owner's Interest subject to
advances or assessments; provided, however, that such subordination shall apply only to the
advances or assessments which have become due and payable prior to the sale of the Defaulting
Owner's Interest pursuant to a decree of foreclosure of any such mortgage or deed of trust or
pursuant to a power of sale in such mortgage or deed of trust.
(e) Notice of Default Any advance not repaid or assessment not paid within
fifteen (15) calendar days after the due date shall be deemed to be in default and shall bear
interest from the due date at the Default Interest Rate and the Non - defaulting Owner may bring
an action at law against the Defaulting Owner, who shall be obligated to pay the same, or may
foreclose the lien against the Defaulting Owner's Interest in the Property. No action shall he
brought to foreclose the lien securing any advance or assessment under this Section 14.2 less
than ninety (90) calendar days following the mailing of a notice of lien described in Section
14.2(c) signed by the Non - defaulting Owner and recording of a copy of such notice in the
Official Records of Santa CIara County, California.
12. Miscellaneous Provisions
12.1. Governing Law This Agreement shall be subject to, governed by, and construed
in accordance with the laws of the State of California.
12.2. Amendment This Agreement may be amended, modified, or otherwise revised in
whole or in part only by mutual written agreement of all of the Owners.
12.3. Construction In the event of any dispute regarding any provision of this
Agreement, the terms of this Agreement shall be construed neutrally and shall not be construed
against or in favor of any Owner, notwithstanding the fact that one Owner may have been
responsible for drafting the initial form of this Agreement. The Owners acknowledge that they
have each participated equally in the negotiation and drafting of this Agreement prior to
execution and each have had the opportunity to be represented by legal counsel of their choice in
connection therewith. The headings of the sections and paragraphs of this Agreement are for
convenience only and in no way define, limit or affect the scope or substance of any section or
paragraph of this Agreement. Wherever appropriate in this Agreement, the singular shall be
deemed to refer to the plural and the plural to the singular, and pronouns of certain genders shall
be deemed to include either or both of the other genders.
12.4. No Assignment This Agreement is not assignable by either Owner without the
express written consent of the other Owner.
12.5. Notices Notices, demands, and ;)cceptances required or permitted to be given
hereunder shall be in writing and shall be personally delivered, delivered by reputable overnight
delivery service (such as FedEx), or delivered by registered or certified mail, return receipt
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requested, postage prepaid, to the City at: City of Cupertino, Attention: City Manager, Cupertino
City Hall, 10300 Torre Avenue, Cupertino, California 95014 -3202, and to Korade address shown
at the time notice is given in the personnel records of the City. Such notice shall be deemed
delivered and effective upon personal delivery or, if sent by delivery service or mailed, upon the
date of receipt shown on the records of such delivery service or such registered or certified mail
reply card.
12.6. Severability In the event any part or provision of this Agreement shall be
determined to be invalid or unenforceable under the laws of the State of California, the
remaining portions of this Agreement which can be separated from the invalid, unenforceable
provisions shall, nevertheless, continue in full force and effect. If such invalidity affects the
benefits provided to Korade hereunder, City and Korade agree to discuss alternatives; however,
Korade has no vested right to alternative compensation.
12.7. No Waiver The waiver, by any Owner hereto, of any covenant contained herein,
shall not be deemed a continuing waiver of same or of any other covenant contained herein.
12.8. Recordation This Agreement shall not be recorded by any Owner.
12.9. Binding Effect This Agreement shall inure to the benefit of, and shall be binding
upon, each of the Owners, their permitted assigns and successors in interest and shall constitute
covenants running with the Property.
12.10. Counterparts This Agreement may be executed in any number of counterparts,
each of which shall for all purposes be deemed an original, and all which shall together
constitute but one and the same instrument. Any signature page of this Agreement may be
detached from any counterpart without impairing the legal effect of any signatures, and may be
attached to another counterpart, identical in form, but having attached to it one or more
additional signature pages. This Agreement may be executed and delivered by signatures
provided by electronic facsimile transmission, by PDF delivery, or by other electronic means,
and any such delivery of executed counterparts shall be as binding and effective as original
signatures.
12.11. Attornevs Fees In the event any declaratory or other legal or equitable action is
instituted by one Owner against the other in connection with this Agreement, the prevailing party
shall be entitled to recover from the losing party all of its costs and expenses, including court
costs and reasonable attorneys' fees.
13. Mediation
Except as provided in Section 11 and for actions for injunctive relief or for unlawful
detainer, before instituting any legal action relating to the rights and/or duties of the Owners
under this Agreement, or in connection with any breach or default by any Owner hereunder, the
Owner that desires to initiate such action (the "Complainant ") must make a good faith attempt to
mediate such dispute in accordance with this Section. The Complainant shall send the other
Owner (the "Respondent ") written notice of the nature of the dispute, the facts giving rise to such
claim and the Complainant's desire to mediate the matter (the "Mediation Notice ") The
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Mediation Notice shall name a mediator (Who shall have at least five (5) years' experience
mediating real estate disputes in Santa Clara County, California and no personal or business
relationship with the Complainant). The Complainant and Respondent shall share the cost of
initiating and conducting mediation equally. Within seven (7) calendar days of Respondent's
receipt of the Mediation Notice, Respondent shall inform Complainant in writing if Respondent
does not agree with Complainant's choice of mediator (the "Rejection Notice "). Such Rejection
Notice shall include the name of Respondent's choice of qualified mediator as provided in this
Section 14. Complainant's and Respondent's mediators shall then select a third qualified mediator
to hear the dispute. Within thirty (30) calendar days after the final mediator is chosen, the
Owners shall schedule and attend a mediation session and attempt in good faith to resolve their
dispute. If the mediation does not resolve the dispute or if the Respondent refuses to attend such
mediation, the Complainant may commence fw legal action.
14. City Approvals
Whenever a reference is made herein to an action or approval to be undertaken by City,
the City Manager of the City or his or her designee is authorized to act on behalf of the City
unless specifically provided otherwise or the context would require otherwise. Except as
otherwise provided in this Agreement, whenever the City is required to provide an approval or
disapproval, City's approval shall not be unreasonably withheld, and in all events City shall give
such approval or disapproval within ten (10) business days of Korade's request. If City fails to
give such approval or disapproval with such 10- business day period, the request shall be deemed
approved.
15. City Resolution; Interpretation
It is understood that incorporated into this Agreement are the provisions contained in City
Council Resolution No. 99 -070. In the case of any conflict between the provisions of that
Resolution and the provisions of this Agreement, the provisions of this Agreement shall prevail.
(Signatures on i_ollowing page)
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IN WITNESS WHEREOF, the Owners, and each of them, have executed this Agreement
on the day and year first set forth above.
Carol Korade
THE CITY OF CUPERTINO, a municipal
corporation
Kris Wang
Mayor
APPROVED AS TO FORM
Colantuono & Levin, PC
Attorney for the City
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Exhibit "A"
Legal Description of Property
A -1
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