Loading...
CC Resolution No. 9363 RESOLUTION NO. 9363 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AUTHORIZING EXECUTION OF LOAN AGREEMENT BETWEEN THE CITY OF CUPERTINO AND COMMUNITY HOUSING DEVELOPERS, INC. WHEREAS, the Housing and Community Development Act of 1974 provides that funds be made available for the Community Development Block Grant program; and WHEREAS, the City of Cupertino receives funds under the Urban County provisions of the Act; and WHEREAS, the City of Cupertino receives fees in lieu of the development of affordable housing; and WHEREAS, the City of Cupertino is required to utilize these funds to provide affordable housing in the City of Cupertino; and WHEREAS, Community Housing Developer, Inc. has received a loan from the City to provide affordable housing. NOW, THEREFORE, BE IT RESOLVED that the City of Cupertino hereby authorizes that an agreement be entered into between the City and Community Housing Developers; and BE IT FURTHER RESOLVED that the City Council of the City of Cupertino hereby authorizes the City Manager to execute the agreement. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of June, 1995 by the following vote: YQ1!: Members of the City Council AYES: NOES: ABSENT: ABSTAIN: Bautista, Sorensen, Burnett None Koppel, Dean None ATTEST: APPROVED: /s/ Kimberly Smith City Clerk /s/ Don Burnett Vice Mayor, City of Cupertino LOAN AGREEMENT by and between THE CITY OF CUPERTINO and COMMUNITY HOUSING DEVELOPERS, INC. 19000D.P50 06/14/95 TABLE OF CONTENTS (continued) Paae ARTICLE 5: ASSIGNMENT AND TRANSFERS . . . . . . . . . . . . 21 5.1 Definitions . . . . .. . . . . . . 21 5.2 Purpose of Restrictions on Transfer . . . . . . . 21 5.3 Prohibited Transfers . . . . . . . . . . . . . . 22 5.4 Permitted Transfers Without Prior City Approval 22 5.5 Permitted Transfers With Prior City Approval 22 5.6 Effectuation of Certain Permitted Transfers . . . 23 5.7 Release of Developer . . . . . . . . . . . . . . 23 ARTICLE 6: DEFAULTS AND REMEDIES . . . . . . . . . . . . . 23 6.1 Developer Events of Default . . . . . . . . . . . 23 6.2 City Events of Default . . . . . . . . . . . . . 25 6.3 No Default Termination . . . . . . . . . . . . . 26 6.4 Remedies Cumulative . . . . . . . . . . . . . . . 26 6.5 Waiver of Terms and Conditions . . . . . . . . . 26 ARTICLE 7: SECURITY FINANCING AND RIGHTS OF HOLDERS . . . . 27 7.1 Encumbrances Only for Development Purposes . . . 27 7.2 Holder Not Obligated to Construct . . . . . . . . 27- 7.3 Notice of Default and Right to Cure . . . . . . . 27 7.4 Failure of Holder to Complete Improvements . . . 28 7.5 Right of City to Cure . . . . . . . . . . . . . . 28 7.6 Right of City to Satisfy Other Liens . . . . . . 29 7.7 Holder to be Notified . . . . . . . . . . . . . . 29 ARTICLE 8: GENERAL PROVISIONS . . . . . . . . . . . . . . . 29 8.1 Notices, Demands and Communications. . . . . . . 29 8.2 Termination . . . . . . . . . . . . . . . . . . . 30 8.3 Non -Liability of Officials, Employees and Agents. . . . . . . . . . . . . . . . . . . . . 30 8.4 Forced Delay. . . . . . . . . . . . . . . . . . 30 8.5 Inspection of Books and Records. . . . . . . . . 31 8.6 Title of Parts and Sections. . . . . . . . . . . 31 8.7 Applicable Law . . . . . . . . . . . . . . . . . . 31 8.8 Severability . . . . . . . . . . . . . . . . . . 31 8.9 Legal Actions. . . . . . . . . . . . . . . . . . 31 8.10 Binding Upon Successors; Covenants to Run With Land. . . . . . . . . . . . . . . . . . . . . . 32 8.11 Parties Not Co -Venturers. . . . . . . . . . . . 32 8.12 Entire Understanding of the Parties. . . . . . . 32 8.13 Approval . . . . . . . . . . . . . . . . . . . . 32 8.14 Counterparts; Multiple Originals . . . . . . . . 33 8.15 Amendments . . . . . . . . . . . . . . . . . . . 33 19000D.PS0 06/14/95 WITH REFERENCE TO THE FACTS RECITED ABOVE, the City and the Developer (the "Parties") agree as follows: ARTICLE 1: DEFINITIONS 1.1 Definitions In addition to the terms defined elsewhere in this Agreement, the following definitions shall apply: (a) "Affordable Units" has the meaning given in Section 4.9. (b) "Agreement" means this Loan Agreement. (c) "Approved Development Loan" means any of the following loans to the Developer in connection with the Development: (i) the Bank Loan; (ii) the County HOME Loan; (iii) the County Trust Fund Loan; (iv) the CHFA Loan; and (v) any other loan approved by the City in its sole discretion. (d) "Bank Loan" means a loan to be made by Wells Fargo Bank to the Developer for the construction of the Improvements in the maximum amount of One Million Seven Hundred Fifty -Two Thousand Dollars ($1,752,000). (e) "CHFA Loan" means a loan to be made to the Developer by the California Housing Finance Agency to replace the Bank Loan and provide permanent financing for the Improvements in the maximum principal amount of the Bank Loan. (f) "City" means the City of Cupertino, California, operating through its governing body and its various departments. (g) "City Deed of Trust" means the deed of trust encumbering the Property and securing the City Note and this Agreement. A form of the City Deed of Trust is attached as Exhibit C. (h) "City Loan" means the loan to be made by the City to the Developer pursuant to this Agreement in the maximum principal amount of Eight Hundred Twenty -One Thousand Dollars ($821,000), as further described in Section 2.1 below. (i) "City Note" means the promissory note to be signed by the Developer to evidence the Developer's obligation to repay the City Loan. A form of the City Note is attached as Exhibit B. 19000D.P50 06/14/95 -2- (x) "Security Financing Interest" means the security interest created by any mortgage, deed of trust, or similar financing encumbrance on the Property securing an Approved Development Loan. (y) "Term" has the meaning given in Section 8.2(a). (z) "Transfer" has the meaning given in Section 5.1. (aa) "Unit" has the meaning given in Section 4.9. 1.2 Exhibits The following exhibits are attached to and incorporated into this Agreement: Exhibit A: Legal Description of the Property Exhibit B: Form of City Note Exhibit C: Form of City Deed of Trust Exhibit D: CDBG Requirements Exhibit E: Development Budget ARTICLE 2: LOAN PROVISIONS 2.1. Loan. The City shall loan to the Developer the principal amount of Eight Hundred Twenty -One Thousand Dollars ($821,000), to be disbursed in the manner described in Section 2.5 below. The obligation to repay the City Loan shall be evidenced by the City Note in substantially the form attached to this Agreement as Exhibit B. 2.2 Interest And Repayment. The interest and repayment terms for the City Loan are set forth in the City Note; provided, however, that on or after the eleventh (11th) anniversary of the date of the Note the City may review the operating history of the Development to determine whether the Development has Surplus Cash, as defined in the Note, sufficient to make fixed payments on the.Note. In addition, any project savings shall be used to reduce the principal due under the Note. Any such requirement by City of fixed payments or 19000D.P50 06/14/95 -4- Developer has duly authorized entry into and performance under this Agreement. (f) The proceeds of the City Loan, together with other funds or firm commitments for funds that the Developer has obtained in connection with the Development, are not less than the amount that the City determines is necessary to pay for development of the Development and to satisfy all of the covenants contained in this Agreement. 2.6 Subordination. (a) The City shall subordinate, and shall execute such documents as may be necessary to subordinate, the priority of the City Deed of Trust to encumbrances on the Property in connection with the Bank Loan and, upon repayment of the Bank Loan, the CHFA Loan, but in no event shall the City subordinate its deed of trust to encumbrances which in principal amount exceed $1,752,000. Pursuant to Section 8.13 of this Agreement the is hereby authorized without further authorization from the City Council to negotiate and execute subordination agreements in connection with the Bank Loan and the CHFA Loan in accordance with the provisions of this Section 2.6. (b) The City may include in any subordination documents that effectuate the subordination described in Section 2.6(a) reasonably adequate notice and cure rights to enable the City to protect its financial interests in the Development. ARTICLE 3: CONSTRUCTION OF THE DEVELOPMENT 3.1 Commencement of Construction. The Developer shall commence construction of the Improvements no later than one hundred eighty (180) days after recordation of the City Deed of Trust. Developer shall submit a final pro -forma to City prior to the commencement of construction. 3.2 Completion of Construction. The Developer shall diligently prosecute to completion the construction of the Improvements and shall complete the construction no later than eighteen (18) months after commencement. Completion of construction of the Improvements shall be evidenced by issuance of a governmental certificate of occupancy for all forty (40) units in the Improvements. 19000D.P50 06/14/95 C. assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged. (b) If the Developer fails to discharge any lien, encumbrance, charge, or claim in the manner required in Section 3.6(a), then in addition to any other right or remedy, the City may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Developer's expense. Alternately, the City may require the Developer to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against the Developer. (c) The Developer 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. The Developer authorizes the City, but without any obligation, to record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Development. 3.7 Post -Construction Audit. Developer shall submit to City within three (3) months after completion of construction an audit of construction costs and expenditures conducted by an independent certified public accountant. ARTICLE 4: CONTINUING OBLIGATIONS 4.1 Applicability. The Developer shall comply with this Article Four throughout the Term. Prepayment of the City Loan shall not relieve the Developer of the obligation to comply with this Article Four. 4.2 Use Maintenance and Operation. The Developer shall: (a) Promptly following the completion of construction of the Improvements, continuously operate and maintain the Development as multifamily housing rented to occupants and at rent levels in conformity with Sections 4.10 and 4.11. 19000D.P50 _ 06/14/95 - 8 /3-f 4.6 Indemnity; Insurance. (a) The Developer shall indemnify, defend (with counsel reasonably approved by the City, at the City's option), and hold the City, and its employees, officers and agents harmless against all claims which arise out of or in connection with the ownership or occupancy of or construction on or in connection with the Property by the Developer or the Developer's contractors, subcontractors, agents, employees, or tenants. This indemnity shall not extend to any claim arising solely from the City's negligence or failure to perform its obligations under this Agreement. This Section 4.6(a) shall survive the termination of this Agreement. (b) The Developer shall maintain the following minimum insurance coverage, issued by an insurer and in a form reasonably acceptable to the City: (i) Worker's Compensation insurance, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident. (ii) 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, Broad form Property Damage Projects and Completed Operations. (iii) 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 Developer and its contractors and agents do not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required. (iv) Property insurance covering the Improvements covering all risks of loss, including flood, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City. If a holder of Security Financing Interest requires greater insurance coverage, then such greater coverage shall apply in the place of the coverage described above for purposes of this subsection (b). 19000D.P50 06/14/95 -10- 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 as "Hazardous Materials") except such of the foregoing as may be customarily and lawfully kept and used in and about residential rental property. The. Developer shall immediately advise the City in writing if at any time it receives written notice of (a) any and all enforcement, cleanup, removal, or other governmental or regulatory actions instituted, completed, or threatened against the Developer or the Property pursuant to any applicable federal, state, or local laws, ordinances, or regulations relating to any Hazardous Materials ("Hazardous Materials Law"); (b) all claims made or threatened by any third party against the Developer or the Property relating to damage, contribution, cost recovery compensation, loss, or injury resulting from any Hazardous Materials (the matters set forth in clauses (a) and (b) above are referred to as "Hazardous Materials Claims"); and (c) the Developer'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 California Health and Safety Code Sections 25220 et sea. or corresponding regulations, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability, or use of the Property under any Hazardous Materials Law. The Developer shall permit the City to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials. The Developer shall indemnify, defend (with counsel reasonably acceptable by the City, at the City's option), and hold harmless the City and its directors, officers, employees, and agents 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 or under 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 City in connection with clauses (a) and (b), including (but not limited to) reasonable attorneys' fees. This paragraph shall survive termination of this Agreement. 4.8 Non -Discrimination. 19000D.PS0 06/14/95 -12 (f) "Moderate Income Household" means a household with an Adjusted Income that does not exceed one hundred twenty percent (1200) of Median Income. (g) "Moderate Income Units" means the Units which, pursuant to Section 4.10 below, are required to be occupied by Moderate Income Households. (h) "Rent" means the total of monthly payments by the tenants of a Unit for the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by the Developer which are required of all tenants, other than security deposits; the cost of an adequate level of service for utilities paid by the tenant, including garbage collection, sewer, water, and electricity, gas, other heating, cooking, and refrigeration fuel, but not telephone or cable television service; and any other interest, taxes, fees, or charges for use of the land or associated facilities and assessed by a public or private entity other than the Developer, and paid by the tenant. (i) "Unit" means one of the forty (40) dwelling units on the Property to be developed pursuant to this Agreement. (j) "Very Low Income Household" means a household with an Adjusted Income that does not exceed fifty percent (50%) of Median Income. (k) "Very Low Income Units" means the Units which, pursuant to Section 4.10 below, are required to be occupied by Very Low Income Households. 4.10 Occupancy Requirements. At least eight (8) Units shall be occupied by or, if vacant, available for rental and occupancy by, Very Low Income Households, at least eleven (11) Units shall be occupied by or, if vacant, available for rental and occupancy by, Low Income Households, and at least twenty-one (21) Units shall be occupied by or, if vacant, available for rental and occupancy by, Moderate Income Households. To extent any of the requirements of this Article Four are inconsistent with the requirements of the California Housing Finance Agency ("CHFA"), subject to CDBG regulations compliance with CHFA requirements shall constitute compliance with the requirements of this Article Four. 4.11 Allowable Rent. 19000D.P50 06/14/95 - 14 - household as a Low Income Household, but has not increased above one hundred twenty percent (120%) of Median Income, then such household's Unit shall no longer be considered a Low Income Unit and shall begin to be considered a Moderate Income Unit, and the Rent may be increased to not greater than one -twelfth of thirty percent (300) of one hundred ten percent (1100) of Median Income upon sixty (60) days written notice to the tenant, and the Developer shall rent the next available Unit to a Low Income Household to satisfy the occupancy requirements of Section 4.10, at a Rent in accordance with Section 4.11. (c) If upon recertification of an occupant household's income the Developer discovers that the Adjusted Income of a Very Low Income Household, Low Income Household or a Moderate Income Household has increased above one hundred twenty percent (120%) of Median Income, then such household's Unit shall no longer be deemed a Very Low Income Unit, a Low Income Unit or a Moderate Income Unit, as applicable, and the Rent charged that household may be increased without limitation under this Agreement upon sixty (60) days written notice to the tenant, and the Developer shall rent the next available Unit to a Very Low Income Household, Low Income Household or Moderate Income Household, as applicable, to satisfy the occupancy requirements of Section 4.10, at a Rent in accordance with Section 4.11. (d) There shall be no violation of the occupancy requirements of Section 4.10 on account of the continuous occupancy of a Unit by a household that was a Very Low Income Household, Low Income Household or Moderate Income Household upon initial occupancy of the Unit but that is no longer a Very Low Income Household, Low Income Household or Moderate Income Household. When such a household vacates its Unit, the Developer shall rent the Unit to a Very Low Income Household, Low Income Household or Moderate Income Household, as applicable, to satisfy the occupancy requirements of Section 4.10, at a Rent in accordance with Section 4.11. (e) When a Very Low Income Unit, Low Income Unit or Moderate Income Unit becomes vacant upon the termination of the occupancy of the Unit, the Unit shall be deemed to be continuously occupied by a Very Low Income Household, Low Income Household or Moderate Income Household, as applicable, until reoccupied, at which time the character of the Unit shall be redetermined. 4.13 Lease Provisions. 19000D.P50 06/14/95 -16 - /3-/L The Developer shall obtain, complete, and maintain on file income certifications from each Very Low Income Household, Low Income Household and Moderate Income Household, dated no more than thirty (30) days prior to initial occupancy and annually thereafter. The Developer shall make a good faith effort to verify that the income reported by an applicant in an income certification is accurate by obtaining one or more of the following as a part of the verification process: (a) a pay stub for the most recent pay period; (b) an income tax return for the most recent tax year; (c) an income verification form from the applicant's current employer; or (d) an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies. If none of the previously mentioned forms of verification is possible, then another form of independent verification may be obtained. If an occupant of an Affordable Unit refuses to provide information requested by the Developer for the annual certification, then the Developer shall immediately terminate such household's tenancy in a manner consistent with applicable laws. 4.15 Tenant Selection. (a) The Developer shall not discriminate against Very Low Income Household, Low Income Household or Moderate Income Household applicants on the basis of source of income or rent payment (for example, AFDC or Section 8), and the Developer shall consider a prospective tenant's satisfactory credit history and previous satisfactory rent history of at least one (1) year as sufficient evidence of the ability to pay the applicable Rent on a timely basis when due. For example, ability to pay shall be demonstrated if a Very Low Income Household, Low Income Household or Moderate Income Household can show that it paid in a timely manner the same percentage or more of its income for rent as it would be required to pay for the Rent applicable to the Affordable Unit to be occupied. (b) In selecting tenants from among eligible applicants, the Developer shall give priority to the following: (i) an applicant household in which at least one member (A) has been displaced, within the meaning of Title 25 19000D.P50 06/14/95 -18 - management agent (the "Management Agent") reasonably acceptable to the City, with demonstrated ability to operate residential facilities like those on the Property in a manner that will provide decent, safe, and sanitary housing. The Developer shall submit for the City's approval the identity of any proposed Management Agent. The Developer shall also submit such additional information about the background, experience, and financial condition of any proposed Management Agent as is reasonably necessary for the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, then the City shall approve the proposed Management Agent by notifying the Developer in writing. Unless the proposed Management Agent is disapproved by the City within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. (b) Upon the City's request, the Developer shall cooperate with the City in the periodic review of the management practices and financial status of the Property at the following times: (1) within thirty (30) days after the issuance of a certificate of occupancy for the last residential unit in the Development; (2) within six (6) months after the issuance of a certificate of occupancy for the last residential unit in the Development; and (3) within thirty (30) days after each anniversary of the issuance of the issuance of a certificate of occupancy for the last residential unit in the Development. The purpose of each periodic review will be to enable the City to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. 4.21 Specific Enforcement of Affordability Restrictions. Specific enforcement of the Developer's agreement to comply with the rent and occupancy restrictions of this Article Four is the only means by which the City may obtain the benefits of the Affordable Units, and the Developer therefore agrees to the imposition of the remedy of specific performance against it in the case of any Developer non-compliance with the rent and occupancy restrictions of this Article Four. In addition to the remedies specified in this Section 4.21, the City shall have the right to pursue any of the remedies set forth in Article Seven below. 4.22 Fees and Taxes. 19000D.P50 06/14/95 -20- the quality of the use, operation, and maintenance deemed critical by the City in the construction of the Property; (b) The fact that a change in ownership or control of the owner of the Property, or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the Developer or the degree thereof, is for practical purposes a transfer or disposition of the Property; and (c) The importance to the City and the City of the standards of use, operation, and maintenance of the Property. It is because of the qualifications and identity of the Developer that the City is entering into this Agreement and that Transfers are permitted only as provided in this Agreement. 5.3 Prohibited Transfers. The limitations on Transfers set forth in this Article Five shall apply throughout the Term. Except as expressly permitted in this Agreement, the Developer represents that it has not made or created, and agrees that it will not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law, without the prior written approval of the City. Any Transfer made in contravention of this Section 5.3 shall at the City's discretion be void and shall be deemed to be a default under this Agreement, whether or not the Developer knew of or participated in such Transfer. 5.4 Permitted Transfers Without Prior City Approval. The following Transfers shall be permitted at any time without the prior approval of the City: (a) the rental of a Unit in the ordinary course of business; (b) the Transfer of a Security Financing Interest to a lender making an Approved Development Loan; (c) a Transfer pursuant to enforcement rights associated with a Security Financing Interest, subject to Section 5.6; and (d) if the holder of a Security Financing Interest acquires fee title to the Property pursuant to enforcement rights 19000D.P50 06/14/95 - 2 2 - / -15 (ii) A failure by the Developer to make a payment that is due and payable to the City under the City Note. (iii) A failure by the Developer to comply with the occupancy and affordability standards of Article Four. (iv) Any Transfer other than as permitted by Article Five. (v) A failure by the Developer to comply with any other requirement of this Agreement or the City Deed of Trust. (vi) Any Developer representation or warranty contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the City in connection with this Agreement, proving to have been incorrect in any material respect when made. (vii) Any monetary default by the Developer under an instrument creating or secured by a Security Financing Interest for which the holder has accelerated or has the right to accelerate the repayment obligation. (b) The Developer shall have a cure period after notice from the City before any facts set forth in subsections (a)(i), (ii), (iii), (iv), or (v) constitute a Developer Event of Default. With respect to facts set forth in subsection (a)(ii), the cure period shall be five (5) days. With respect to facts set forth in subsections (a)(i), (iii), (iv), and (v), the cure period shall be sixty (60) days, or such longer period as may reasonably be necessary to cure so long as the Developer commences to cure within sixty (60) days and diligently prosecutes the cure to completion. (c) The existence of any Developer Event of Default shall relieve the City of any obligation to make or continue disbursements under this Agreement, shall result in automatic acceleration of the City Note (unless otherwise specified in writing by the City), shall give the City the right to terminate this Agreement (except that a Developer Event of Default arising solely under Section 6.1(a)(v) shall not give the City the right to terminate this Agreement, and except that certain provisions of this Agreement shall survive termination, as described in Section 8.2(b)), and shall give the City the right to proceed with any and all remedies at law or in equity, including actions for damages or specific performance (as specifically approved by the Developer in Section 4.22), subject to Section 7.3. 19000D.P50 _ 06/14/95 - 2 13_4 6.2 City Events of Default. Each of the following shall constitute a "City Event of Default" under this Agreement: (a) A failure by the City to make a disbursement of City Loan funds as required by Article Two. (b) A failure by the City to comply with any other requirement of this Agreement applicable to the City. The City shall have a cure period after notice from the Developer before any facts set forth in subsections (a) or (b) constitute an City Event of Default. The cure period shall be sixty (60) days, or such longer period as may reasonably be necessary to cure so long as the City commences to cure within sixty (60) days and diligently prosecutes the cure to completion. The occurrence of any City Event of Default shall relieve the Developer of any obligation to perform under this Agreement, and shall give the Developer the right to proceed with any and all remedies at law or in equity, including actions for damages or specific performance. 6.3 No Default Termination. Either Party may terminate this Agreement upon the condemnation, seizure, or appropriation of any part of the Property in a manner that impairs the Developer's ability to comply with the occupancy and affordability requirements of Sections 4.10 through 4.21. The disposition of condemnation proceeds shall be as otherwise determined by law. 6.4 Remedies Cumulative. No right, power, or remedy given to a Party by the terms of this Agreement 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 Party. Neither the failure nor any delay on the part of a Party to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by a Party of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 6.5 Waiver of Terms and Conditions. 19000D.P50 06/14/95 -26- X3_/7 However, nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. 7.3 Notice of Default and Right to Cure. (a) Whenever the City delivers any notice of default or demand to the Developer, the City shall at the same time deliver to each holder of record of any permitted Security Financing Interest a copy of such notice or demand. Each such holder shall (insofar as the rights of the City are concerned) have the right (but not the obligation) to (i) cure the default within ninety (90) days after the receipt of the notice or such longer period as may reasonably be necessary to cure so long as (x) the holder commences to cure within ninety (90) days and diligently prosecutes the cure to completion, or (y) the holder has commenced, within such ninety (90) day period, appropriate proceedings, under the instrument creating its security Financing Interest, to obtain possession (through foreclosure or appointment of a receiver) of the Property, and diligently prosecutes such proceedings and proceeds to cure after obtaining possession any default under this Agreement that can reasonably be cured, and (ii) add the cost thereof to the security interest debt and the lien on its security interest. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect such improvements or construction already made) without first having expressly assumed in writing the Developer's obligations relating to such improvements under this Agreement. Any such holder properly completing such improvements pursuant to this paragraph shall be entitled, upon written request made to the City, to an Estoppel Certificate of Completion from the City. (b) Whenever the Developer delivers any notice of default or demand to the City, the Developer shall at the same time deliver to each holder of record of any permitted Security Financing Interest a copy of such notice or demand. 7.4 Failure of Holder to Complete Improvements. In any case where six (6) months after default by the Developer in completion of construction of the Improvements under this Agreement, the holder of any permitted Security Financing Interest, having first exercised its option to construct, has not proceeded diligently with construction, the City shall be 19000D.P50 06/14/95 0 Cupertino, California 9 Attn: Developer: Community Housing Developers, Inc. 255 North Market Street Suite 290 San Jose, California 95110 Attn: Executive Director 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 8.1. Delivery shall be deemed to have occurred at the time indicated on the receipt for delivery or refusal of delivery. 8.2 Termination. (a) Unless earlier terminated pursuant to Section 7.1, the term of this Agreement (the "Term") shall commence as of the Commencement Date and shall terminate on the date which is the earlier of: (1) forty (40) years from the date of commencement of the term of the CHFA Loan or (2) the date of final repayment of all principal and interest due under the City Note (the "Expiration Date"). Following the Expiration Date, neither party shall have any further rights or obligations under the Agreement except that the non-discrimination obligations set forth in Section 4.8 and the indemnification obligations set forth in Sections 4.6(a) and 4.7 shall survive such termination. (b) Upon the termination of this Agreement prior to the Expiration Date pursuant to Section 7.1, the non- discrimination obligations set forth in Section 4.8 and the indemnification obligations set forth in Sections 4.6(a) and 4.7. 8.3 Non -Liability of Officials, Emplovees and Agents. No member, official, employee or agent of the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or any successor or on any obligation under the terms of this Agreement. 8.4 Forced Delay. 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 19000D.P50 06/14/95 -30- action shall be entitled to recover against the Party not prevailing all reasonable attorneys' fees and costs incurred in such action. In the event legal action is commenced by a third party or parties, the effect of which is to directly or indirectly challenge or compromise the enforceability, validity, or legality of this Agreement and/or the power of the City to enter into this Agreement or perform its obligations hereunder, either the City or the Developer may (but shall have no obligation to) defend such action. Upon commencement of any such action, the City and the Developer shall meet in good faith and seek to establish a mutually acceptable method of defending such action. 8.10 Binding Upon Successors; Covenants to Run With Land. This Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors, and assigns of each of the Parties. However, there shall be no Transfer except pursuant to the terms of this Agreement. Any reference in this Agreement to a specifically named Party shall be deemed to apply to any successor, heir, administrator, executor, or assign of such Party who has acquired an interest in compliance with the terms of this Agreement, or under law. The covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Property. However, on the termination of this Agreement, such covenants and restrictions shall expire (except where survival of such covenants and restrictions is otherwise provided). Each and every contract, deed, or other instrument hereafter executed covering or conveying the Property shall be held conclusively to have been executed, delivered, and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed, or other instrument, unless the City expressly releases the Property from the requirements of this Agreement. 8.11 Parties Not Co -Venturers. Nothing in this Agreement is intended to or does establish the Parties as partners, co -venturers, or principal and agent with one another. 8.12 Entire Understanding of the Parties. This Agreement constitutes the entire understanding and agreement of the Parties. 19000D.P50 06/14/95 -32- /3 -z EXHIBIT A (Legal Description of the Property) 19000D.P50 06/14/95 A-1 3. Loan Agreement. This Note is made to evidence a loan (the "City Loan") made pursuant to that certain loan agreement dated as of between the Borrower and the City (the "City Loan Agreement"). Unless otherwise indicated, capitalized words not defined in this Note have the meaning given in the City Loan Agreement. 4. Deed of Trust. This Note is secured by a deed of trust on the Property (the "City Deed of Trust"). 5. Maturity. All unpaid principal and interest on this Note shall be due and payable upon the earlier of : (1) the Due Date; (2) a Transfer of any portion of the Property (as defined in the City Loan Agreement); or (3) occurrence of an Event of Default (as defined in section 4). 6. Default. Any of the following constitute an Event of Default under this Note: (1) any failure to pay in full any payment required under this Note; (2) any default or failure of performance under this Note, the City Loan Agreement, or the City Deed of Trust; or (3) any default or failure of performance under any other loan agreement, note or deed of trust of the Borrower with respect to the Property. 7. Acceleration. Upon the occurrence of an Event of Default, the Agency shall have the right to accelerate the Due Date and declare all of the unpaid principal and accrued interest immediately due and payable. Any failure by the City to pursue its legal and equitable remedies upon an Event of Default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under this Note, the City Deed of Trust, and the City Loan Agreement. Nor shall acceptance by the City of any payment provided for in this Note constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. 8. No Offset. The Borrower waives any rights of offset it now has or may later have against the City and its successors and assigns. 9. Waiver; Attorneys' Fees. The Borrower and any endorsers or guarantors of this Note, for themselves and their heirs, legal representatives, successors, and assigns, respectively, severally waive the following: diligence; presentment; protest; demand; notice of protest, dishonor and non-payment; any rights to be released by reason of any extension of time or change in terms of payment, or change or release of any security given for the payments of this Note; and the right to plead any statute of limitations as a defense to any demand on 19000D.P50 06/14/95 B-2 C. The directors of the Borrower, as well as Community Housing Developers, Inc. and its officers, directors, employees, and agents, shall in no event have any direct or indirect personal liability for payment of the principal of, or interest on, the City Loan or the performance of the Borrower's obligations under the City Deed of Trust, the City Loan Agreement, or this Note. 12. Miscellaneous Provisions. a. All notices to the Borrower or the City shall be given in the manner and at the addresses set forth in the City Loan Agreement. b. No assignment of the Borrower's rights or obligations under this Note, shall be made voluntarily, or by operation of law without the prior written consent of the City, and any assignment without such consent shall be void. C. This Note may be amended only by an agreement in writing signed by both the Borrower and the City. d. This Note shall be governed by and construed in accordance with the laws of the State of California. e. If any provision of this Note shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions of this Note shall not be in any way affected or impaired. f. The times for the performance of any obligations under this Note shall be strictly construed, time being of the essence. Borrower: Community Housing Developers, Inc. By: Its: 19000D.P50 06/14/95 B-4 TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: Section 1. By the execution and delivery of this Deed of Trust and the Promissory Note secured hereby, that the provisions of subdivisions A and B inclusive, of the fictitious deed of trust recorded in the office of the Recorder of the County of Santa Clara in Book 6626 of Official Records, at Page 664, hereby are adopted and incorporated herein and made a part hereof as fully as though set forth herein at length; that it will observe and perform said provisions; and that the references to the property, obligations, and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust. Section 2. Except as permitted by the Loan Agreement, Trustor shall not, voluntarily or involuntarily or by operation of law, sell, transfer, lease, pledge, encumber, create a security interest in, or otherwise hypothecate or alienate all or any part of the Security, without Beneficiary to any sale, transfer, lease, pledge, encumbrance, creation of a security interest in, or other hypothecation. Beneficiary may, at its option, declare the indebtedness secured hereby immediately due and payable, without notice to Trustor or any other person or entity (except as provided herein), upon any such sale, transfer, lease, pledge, encumbrance, creation of a security interest in, or other hypothecation or alienation in violation hereof. Without the written consent of Beneficiary, no sale, transfer, lease, pledge, encumbrance, creation of a security interest in, or other hypothecation of, the Security shall relieve or release Trustor from primary liability under this Deed of Trust or the Promissory Note, as the case may be. As used in this Section 2, the term "transfer" includes, without limitation, the following transactions: (a) Any total or partial sale, assignment or conveyance, or creation of any trust or power, or any transfer in any other mode or form with respect to the Security or any part thereof or any interest therein, or any contract or agreement to do the same; (b) The cumulative transfer of more than ten percent (10%) of the capital stock, partnership profit and loss interest, or other form of interest in Trustor; and (c) Any merger, consolidation, sale or lease of all or substantially all of the assets of Trustor provided that this provision shall not be interpreted to prohibit leasing of the Property to tenants leasing the individual units comprising the Project located upon the Property. 19000D.P50 06/14/95 C-2 EXHIBIT A (Legal Description of the Property) /3-z s 19000D.P50 06/14/95 EXHIBIT D CDBG REQUIREMENTS D-1