HomeMy WebLinkAboutPCDC Resolution 2006-16 08/07/2006RESOLUTION NO. 2006-16
PETALUMA COMMUNITY DEVELOPMENT COMMISSION
AUTHORIZING MODIFICATIONS TO THE. STOREFRONT IMPROVEMENT LOAN PROGRAM;
AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A LOAN AGREEMENT AND RELATED
DOCUMENTS WITH MATTHEW J. CARTER TO PROVIDE A LOAN OF $50,000 FOR THE
RENOVATION OF THE CENTRAL ANIMAL HOSPITAL STOREFRONT AT 203 D STREET; AND
AUTHORIZING ADDITIONAL BUDGET
WHEREAS, the Petaluma Community Development Commission (PCDC) approved a
"Five-Year Implementation Plan" containing funding for a Storefront Improvement Loan Program
(the "Program"); and,
WHEREAS, a property owner in the Central Business District is requesting financial
assistance in order to aid in the renovation of the Central Animal Hospital storefront located at
203 D Street, Petaluma (the "Property"); and,
WHEREAS, it is economically infeasible for the Property owner to undertake full renovation
of the Property without Agency assistance; and,
WHEREAS, the renovation of the Property will eliminate blight in the Central Business
District redevelopment project area ("Project Area"), will be of benefit to the Project Area and
the City of Petaluma, and is consistent with the Redevelopment Plan for the Project Area (the
"Plan"); and,
WHEREAS, Matthew J. Carter, owner of 203 D Street has requested a Storefront
Improvement Loan Agreement in the amount of $50,000 for the renovation of the building; and,
WHEREAS, staff has determined that additional modifications to the Storefront
Improvement Loan Program and a Loan Agreement for 203 D Street are necessary in order to
accomplish the goals of the Program; and,
WHEREAS, staff has determined that authorizing additional budget of $50,000 is necessary
to fund this Loan Agreement.
PCDC Resolution 2006-16 Page T ~`
NOW THEREFORE BE IT RESOLVED by the Petaluma Community Development Commission:
The Storefront Improvement Loan Program is hereby modified to allow property
owners to be eligible for storefront improvement loans up to $50,000 for properties
that were built after 1904.
2. Contingent upon (i) Matthew J. Carter's ("Borrower's") execution of and
compliance with the terms of a Loan Agreement, Note and Deed of Trust
substantially in the form attached hereto; (ii) Borrower's provision of a policy of
title insurance in a form and containing only those exceptions which are
satisfactory to and approved in writing by Agency; and (iii) approval by Agency
of Borrower's credit, the Executive Director is authorized to execute a Loan
Agreement and related documents substantially in the form attached hereto
with Matthew J. Carter, and to provide a loan in the amount of $50,000.00 for the
purpose of the renovation of the Central Animal Hospital storefront at 203 D
Street, and authorize additional budget.
Adopted this 7'h day of August, 2006 by the following vote:
Commissioner Aye No Absent Abstain
Chair Glass X
Harris X
Healy X
Vice Chair Nau X
O'Brien X
Torliatt X
ATTEST:
-.
Karel~Nau, Vice C air --
~-
APPROVE S TO FORS',,.:`'.
Claire Cooper, Recording Sec Lary Eric W. Danly, General C unsel
PCDC Resolution 2006-16 Page 2
ATTACHMENT
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into effective as of , 2006
("Effective Date") by and among Matthew J. Carter ("Borrower") and the Petaluma Community
Development Commission ("Agency"). Agency and. Borrower are hereinafter collectively
referred to as the "Parties."
RECITALS
A. Borrower is the owner of fee title to the property located at 201-203 D Street in the
City of Petaluma, County of Sonoma, and more particularly described in Exhibit A attached
hereto (the "Property").
B. The Property is located within the Petaluma Central Business District
redevelopment project area ("Project Area").
C. The Agency operates a Storefront Improvement Loan Program (the "Program")
pursuant to which the Agency provides loans for the first-time reconstruction, rehabilitation or
restoration of buildings which are located in the Project Area and which were constructed after
1904.
D. Borrower has requested, and Agency has agreed to provide a loan (the "Loan")
pursuant to the terms and conditions hereof for the purpose of financing the restoration of the
building owned by Borrower and located on the Property (the "Project".)
E. The Agency has determined that (i) the Property and Borrower meet the Program
eligibility requirements, (ii) provision of a loan for the Project pursuant to the terms of this
Agreement is consistent with the redevelopment plan for the Project Area and is in the interests
of the health, safety and welfare of the residents of the Project Area and the City of Petaluma
("City"), and (iii) the Loan is necessary to make the Project economically feasible.
F. Concurrently herewith: (i) Borrower shall execute a promissory note ("Note") in
the amount of the Loan and a Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing ("Deed of Trust") which shall provide Agency with a security interest in the Property
and the improvements located thereon (the "Improvements"). This Agreement, the Note, and
the Deed of Trust are collectively hereinafter referred to as the "Loan Documents."
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows.
ARTICLE I
LOAN TERMS
1.1 LOAN AND NOTE. Agency agrees to loan to Borrower, and Borrower agrees to
borrow from and repay to Agency, a sum of up to Fifty Thousand Dollars ($50,000) subject to this
Section 1.1.1, upon the terms and conditions and for the purposes set forth in this Agreement.
The Loan shall be evidenced by the Note which shall be dated as of the Effective Date and
executed by Borrower substantially in the form attached hereto as Exhibit D. Provided that
Borrower has complied with all conditions precedent to disbursement of the Loan set forth in
Section 2.3, the Loan Proceeds shall be disbursed in accordance with Section 2.2 hereof.
PCDC Resolution 2006-16 Page 3
Agency shall have the option to terminate this Agreement, and shall have. no obligation
to fund the Loan if prior to the closing of the Loan Borrower does not demonstrate. to the
satisfaction of Agency that Borrower has funding available for the Project in an amount sufficient
to fully finance completion of the Project.
1.2 INTEREST RATE; PAYMENT DATES; MATURITY DATE. Interest shall be payable on the
principal balance of the Loan at the rate of four per cent (4%) per annum. Payments of
principal and interest, fully amortized over a period of sixty (60) months from the Effective Date,
shall be paid monthly to Agency by Borrower, with the first such payment due and payable thirty
(30) days from the Effective Date. Any payment received by Agency more than five (5) days
after the due date of said payment shall be subject to a Late Charge of $25.00. The entire
remaining outstanding principal balance of the Loan together with accrued interest and any
other sums due under the Loan Documents shall be payable in full on the fifth (5'h) anniversary of
the Effective Date (the "Maturity Date").
1.3 SECURITY. As security for repayment of the Note, Borrower shall execute the
Deed of Trust in favor of Agency as beneficiary pursuant to which Agency shall be provided a
lien against the Property and the Improvements. The Deed of Trust shall. be dated as o.f the
Effective Date, shall be substantially in the form attached hereto as Exhibit E, and shall be
recorded in the official records of Sonoma County. The Deed of Trust shall be a lien on the
Property, and absent the written consent of Agency, may be subordinated only to such title
exceptions as Agency shall approve in writing ("Permitted Exceptions"). Borrower agrees that
the Deed of Trust shall remain a lien on the Property throughout the term of the Loan.
1.4 PREPAYMENT; ACCELERATION.
(a) Prepayment. The Note or any portion of the outstanding principal balance due
under the Note may be prepaid at any time and from time to time, without penalty or premium.
Any prepayment of principal must be accompanied by interest accrued (if any) but unpaid to
the date of receipt of prepayment. Prepayments shall be applied first to accrued but unpaid
interest (if any) and then to principal.
(b) Due On Sale. Unless Agency agrees otherwise in writing, the entire unpaid
principal balance and all interest and other sums accrued under the Note shall be due and
payable upon the Transfer absent the prior written consent of Agency, of all or any part of or
interest in the Property or the Improvements, other than a lease of the Improvements or part
thereof entered into in the ordinary course of business. "Transfer" shall include any assignment,
hypothecation, mortgage, pledge, encumbrance or conveyance of this Agreement, the
Property, or the Improvements.
1.5 NONRECOURSE
Except as expressly provided in this Section 1.5, Borrower shall have no personal liability
for payment of the principal of, or interest (if any) on the Note, and the sole recourse of
Agency with respect to the payment of the principal of, and interest on-the Note shall be
to the Property and the Improvements and any other collateral held by Agency as
security for the Note; provided however, nothing contained in the foregoing limitation of
liability shall:
(A) impair the enforcement against all such security for the Loan of all the rights and
remedies of the Agency under the Deed of Trust and any financing statements Agency files in
connection with the Loan, as each of the foregoing may be amended, modified, or restated from
time to time;
PCDC Resolution 2006-16 Page 4
(B) impair the right of Agency to bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Agency to enforce and
realize upon the Deed of Trust, the interest in the Property and the Improvements created
thereby and any other collateral given to Agency in connection with the indebtedness
evidenced by the Note, and to name the .Borrower as party defendant in any such action;
(C) be deemed in any way to impair the right of the Agency to assert the unpaid
principal amount of the Loan as a demand for money within the .meaning of Section 431.70 of
the California Code of Civil Procedure or any successor provision. thereto;
(D) constitute a waiver of any right which Agency may have under any bankruptcy law
to file a claim for the full amount of the indebtedness owed to Agency under the Note or to
require that the Property and the Improvements shall continue to secure all of the indebtedness
owed to Agency in accordance with the Note and the Deed of Trust; or
(E) .limit or restrict the ability of Agency to seek or obtain a judgment against Borrower to
enforce against Borrower to:
(a) recover under Sections 4.8, 4.13.2 and 4.15 hereof (pertaining to Borrower's
indemnification obligations), or
(b) recover from Borrower compensatory damages as well as other costs and
expenses incurred by Agency (including without limitation attorney's fees and expenses)
arising as a result of the occurrence of any of the following:
(i) any fraud or material misrepresentation on the part of the Borrower,
any authorized representative of the Borrower in connection with the request for
or creation of the Loan, or in any Loan Document, or in connection with any
request for any action or consent by Agency in connection with the Loan;
(ii) any failure to maintain insurance on the Property and Improvements as
required pursuant to the Loan Documents;
(iii) failure to pay taxes, assessments or other charges due on the Property
and Improvements;
(iv) the presence of hazardous or toxic material or waste on the Property
or other violation of the Borrower's obligations under Section 4.13 hereof, or
Section 7.1 1 of the Deed of Trust (pertaining to environmental matters);
(v) the occurrence of any act or omission of Borrower that results in waste
to or of the Property or the Improvements and which has a material adverse
effect on the value of the Property or the Improvements;
(vi) the removal or disposal of any personal property or fixtures in violation
of the Deed of Trust;
(vii) the material misapplication of the Loan Proceeds; or
(viii) the material misapplication of the proceeds of any insurance policy
or award resulting from condemnation or the exercise of the power of eminent
PCDC Resolution 2006-16 Page 5
domain or by reason of damage, loss or destruction to any portion of the Property
or the Improvements.
ARTICLE II
USE AND DISBURSEMENT OF PROCEEDS
2.1 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan ("Loan
Proceeds") solely and exclusively to pay for costs billed to Borrower by third-parties in
connection with the design and construction of the Project and such other costs related to the
Project as Agency may approve in writing.
2.2 DISBURSEMENT OF PROCEEDS. Upon satisfaction of the conditions set forth in
Section 2.3, at close of escrow forthe Loan, provided that Borrower has provided Agency with a
written requisition specifying the amount and use of the requested Loan Proceeds,
accompanied by copies of bills and invoices from third parties and such other documentation
as Agency may reasonably require, including without limitation, evidence of compliance with
applicable requirements of the Site Plan and Architecture Review Committee ("SPARC"), the
initial disbursement of Loan Proceeds shall be disbursed into escrow for distribution to Borrower.
Subsequent disbursements shall be made to Borrower no more than once per calendar month,
upon Agency's receipt of written requisitions and supporting documentation as described in this
Section.
2.3 CONDITIONS PRECEDENT TO DISBURSEMENT OF PROCEEDS.
Agency's obligation to fund the Loan and disburse the proceeds thereof is conditioned
upon the satisfaction of all of the following conditions:
(a) Borrower's delivery to Agency of each of the following documents, fully-
executed and acknowledged as appropriate: (i) the Note, (ii) the Deed of Trust, and (iii) this
Agreement;
(b) The recordation of the Deed of Trust in the Official Records of Sonoma
County, subject only to Permitted Exceptions (as defined in Section 1.3);
(c) Borrower's delivery to Agency of evidence reasonably satisfactory to Agency
that Borrower has obtained all necessary permits (including without limitation, building permits),
licenses, and approvals required to undertake the Project, or that the receipt of such permits is
subject only to such conditions as Agency shall reasonably approve;
(d) Agency and SPARC shall have approved the final plans and specifications for
the Project;
(e) Borrower's delivery to Agency of evidence reasonably satisfactory to Agency
that Borrower has secured binding commitments, subiect only to commercially reasonable
conditions, for all financing necessary for the successful completion of the Project;
(f) The issuance by an insurer satisfactory to Agency of a lender's title policy ("Title
Policy") for the benefit of Agency in the amount of the Loan, insuring that the lien of the Deed of
Trust is subject only to Permitted Exceptions and such other defects, liens, conditions,
encumbrances, restrictions, easements and exceptions as Agency may approve in writing and
containing such endorsements as Agency may reasonably require, with the cost of such Title
Policy to be paid by Borrower;
PCDC Resolution 2006-16 Page b
(g) Borrower's delivery to the Agency of evidence of insurance coverage in
accordance with the requirements set forth in Exhibit C attached hereto;
(h) Reserved.
(i) Borrower's delivery to Agency of all of the following: (a) Project budget; (b)
construction contract; (c) performance bonds or other assurance of completion reasonably
acceptable to Agency; and (d) copies of such other documents related to the development
and financing of the Project as Agency may reasonably request; and
(j) No material adverse change as determined by Agency in its reasonable
judgment shall have occurred in the condition of the Property or the Improvements or in the
financial or other condition of Borrower since the date of this Agreement.
2.4 NO OBLIGATION TO DISBURSE PROCEEDS UPON DEFAULT. Notwithstanding
any other provision of this Agreement, the Agency shall have no obligation to disburse or
authorize the disbursement of any portion of the Loan Proceeds following:
(i) The failure of any of Borrower's representations and warranties to be true
and correct in all material respects;
(ii) The termination of this Agreement by mutual agreement of the Parties; or
(iii) The conditions to disbursement of the Loan set forth in Section 2.3 have
not been satisfied within 180 days following the Effective Date, unless an
extension of such date is approved by Agency in writing.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Borrower makes the following representations, warranties and covenants:
(a) LEGAL STATUS; AUTHORITY; OWNERSHIP. Borrower has all requisite power and
authority to undertake the Project and to execute, deliver and perform its obligations under the
Loan Documents. Borrower is the owner in fee of the Property and the Improvements, subject
only to liens, encumbrances, easements, restrictions, conditions, and other matters of record or
disclosed in writing to Agency.
(b) NO VIOLATION. The execution of the Loan Documents and Borrower's
performance thereunder do not and will not result in a breach of or constitute a default under
any agreement, indenture or other instrument to which Borrower is a party or by which Borrower
may be bound.
(c) AUTHORIZATION. The Loan Documents to which Borrower is a party and the
transactions contemplated thereby have each been duly authorized by Borrower, and when
executed and delivered will each constitute a valid and binding obligation of Borrower,
enforceable in accordance with the respective terms thereof.
(d) LITIGATION. There are no pending or to Borrower's knowledge, threatened
actions or proceedings before any court or administrative agency which may adversely affect
PCDC Resolution 2006-16 Page. 7
the financial condition or operation of Borrower or Borrower's development of the Project and
ownership of the Property and the Improvements.
(e) Reserved.
(f) COMPLIANCE WITH LAWS. Borrower is in compliance in all material respects with
all local, state and federal laws, rules, regulations, orders and decrees which are applicable to
the Property onto Borrower in relation thereto ("Applicable Law") including without limitation, all
environmental, health and safety and employment laws. Borrower has received no notice from
any governmental authority regarding any threatened or pending zoning, building, fire, or
health code violation or violation of other governmental regulations concerning the Property
that has not been corrected, and no condition on the Property violates any Applicable Law.
(g) ENVIRONMENTAL CONDITION. Except as disclosed in writing to City, as of the
Effective Date to the best knowledge of Borrower: (i) the Property is free and has always been
free of Hazardous Materials (as defined below) and is not and has never been in violation of
any Environmental Law (as defined below); (ii) there are no buried or partially buried storage
tanks located on the Property; (iii) no notice, warning, notice of violation, administrative
complaint, judicial complaint, or other formal or informal notice has been issued alleging that
conditions on the Property are or have ever been in violation of any Environmental Law or that
the Property is subject to investigation or inquiry regarding Hazardous Materials thereon or the
potential violation of any Environmental Law; (iv) there is no monitoring program required by the
Environmental Protection Agency or any other governmental agency concerning the Property;
(v) no toxic or hazardous chemicals, waste, or substances of any kind have ever been spilled,
disposed of, or stored on, under or at the Property, whether by accident, burying, drainage, or
storage in containers, tanks, holding areas, or any other means; (vi) the Property has never been
used as a dump or landfill; and (vii) Borrower has disclosed to City all information, records, and
studies in possession of Borrower or reasonably available to Borrower relating to the Property
concerning Hazardous Materials.
(g) DISCLOSURE. No representation or warranty made by Borrower in this Agreement
or in the Loan Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein not misleading. There is no fact known
to Borrower which has or might reasonably be anticipated to have a material adverse effect on
the business, assets, financial condition of Borrower, or Borrower's ability to undertake the Project
which has not been disclosed to Agency in writing.
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 USE OF FUNDS. Borrower covenants that it shall use the Loan Proceeds solely for
purpose of financing the Project in accordance with Section 2.1.
4.2 PUNCTUAL PAYMENT. Borrower covenants to punctually pay the principal
balance of the Note and interest accrued thereon at the times and place and in the manner
specified in the Note.
4.3 PAYMENT OF OTHER INDEBTEDNESS. Borrower covenants to punctually pay all
charges, assessments, taxes and fees related to the Property or the Improvements and to
punctually pay the principal and interest due on any other indebtedness related to the Property
or the Improvements now or hereafter at any time owed by the Borrower to the Agency or any
other lender.
PCDC Resolution 2006-16 Page 8
4.4 ACCOUNTING RECORDS: PROPERTY INSPECTION. Borrower covenants to maintain
accurate books and records in accordance with standard accounting principles consistently
applied, and to permit the Agency, during business hours and upon reasonable notice to
inspect, audit and examine such books and records with respect to the Project, the Property
and the Loan and to inspect the Property during normal business hours upon reasonable notice.
4.5 COMPLIANCE WITH LAWS. Borrower covenants to comply with all federal, state
and local laws, regulations, ordinances and rules applicable to the Property and the Project.
Without limiting the generality of the foregoing, Borrower shall comply with all applicable
requirements of state and local building codes and regulations, and all applicable statutes and
regulations relating to accessibility for the disabled.
4.6 INSURANCE. Borrower shall maintain and keep in force at Borrower's expense,
insurance coverage with respect to the Project and the Property in accordance with the
requirements set forth in Exhibit C attached hereto and incorporated herein.
4.7 FACILITIES. Borrower shall keep the Property and the Improvements, and the
personal property used in .Borrower's operations in good repair and condition, and from time to
time make necessary repairs, renewals and replacements thereto so that the Property and
Improvements shall be preserved and maintained.
4.8 INDEMNIFICATION. Borrower shall indemnify, defend (with counsel reasonably
acceptable to Agency), and hold harmless the Agency, the City, and their respective elected
and appointed officials, officers, agents, and employees (collectively the Indemnitees"), from
and against, and shall pay on demand, any and all losses, liabilities, damages, costs, claims,
demands, penalties, fines, orders, judgments, injunctive or other relief, expenses and charges
(including attorneys' fees and expenses of attorneys) (collectively "Liabilities") arising directly or
indirectly in any manner in connection with or as a result of (a) any breach of Borrower's
covenants under the Loan Documents, (b) any failure of Borrower's representations and
warranties to be true and correct in all material respects when made, (c) injury or death to
persons or damage to property or other loss occurring on the Property, whether caused by the
negligence or any other act or omission of Borrower or any other person or by negligent, faulty,
inadequate or defective design, building, construction or maintenance or any other condition
or otherwise, or (d) any claim, demand or cause of action, or any action or other proceeding,
whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises
out of the Property, the Project, the Loan, the Loan Documents, or any transaction
contemplated thereby, or any failure of Borrower to comply with all applicable state, federal
and local laws and regulations, including without limitation, applicable provisions of the
California Building Standards Code, the Prevailing Wage Laws, and the Americans with
Disabilities Act in connection with the construction or operation of the Project, provided that no
Indemnitee shall be entitled to indemnification under this Section for matters caused by such
Indemnitee's gross negligence or willful misconduct. The obligations of Borrower under this
Section shall survive the expiration or termination of this Agreement, the making and repayment
of the Loan, any release or reconveyance of the Deed of Trust, and any foreclosure proceeding,
foreclosure sale, or delivery of a deed in lieu of foreclosure.
4.9 NOTICE TO AGENCY. Within three business days after any of the following shall
occur, Borrower shall provide written notice thereof to Agency: (1) the occurrence of any Event
of Default hereunder of which Borrower acquires knowledge; (2) any change in name, identity,
legal structure, business location, or address of Borrower; (3) any uninsured or partially uninsured
loss affecting the Property or the Improvements through fire, theft, liability, or property damage
in excess of an aggregate of Fifty Thousand Dollars ($50,000); and (4) Borrower's receipt of a
PCDC Resolution 2006-16 Page 9
notice of default under any mortgage or other financing .document affecting the Property or
the Improvements. Borrower shall use best efforts to ensure that Agency shall receive timely
notice of, and shall have a right to cure, any Borrower default under any financing document
affecting the Property or the Improvements and that provisions mandating such notice and
allowing such right to cure shall be included in all such documents. Agency shall record a
Request for Notice of Default and Sale. Borrower shall provide to Agency a copy of all notices
of default that Borrower receives from the holder of any mortgage or other financing document
affecting the Improvements or the Property.
4.10 TAXES AND OTHER LIABILITIES. Borrower shall pay and discharge when due any
and all indebtedness, obligations, assessments, taxes, including federal and state payroll and
income taxes which are the obligations of Borrower in relation to the Project, the Property, or the
Improvements except those that Borrower may in good faith contest or as to which a bona fide
dispute may arise, provided provision is make to the satisfaction of Agency for eventual
payment thereof in the event that it is found that the same is an obligation of Borrower.
4.1 1 LITIGATION. Borrower shall provide written notice to Agency within three business
days after Borrower acquires knowledge of any litigation pending or threatened against
Borrower involving a claim exceeding Fifty Thousand Dollars ($50,000).
4.12 EXPENSES OF COLLECTION OR ENFORCEMENT. If at any time Borrower defaults
under any provision of the Loan Documents, Borrower shall pay to the Agency in addition to any
other sums that may be due to Agency, an amount equal to the costs and expenses (including
without limitation, attorneys' fees and expenses) Agency incurs in connection with the
collection, enforcement, or correction of the default, and such amounts shall be a part of the
indebtedness secured by the Deed of Trust.
4.13 HAZARDOUS MATERIALS.
4.13.1 Covenants. Borrower shall not cause or permit any Hazardous Materials
(as defined below) to be brought upon, kept, stored or used in, on, or about the Property by
Borrower, or the agents, employees, contractors or invitees of Borrower except for materials
commonly used in construction activities similar to those related to the Project, or in the
operation and maintenance of the Property and the Improvements, in each case in
compliance with all applicable laws, and shall not cause any release of Hazardous Materials
into, onto, under or through the Property. If any Hazardous Material is discharged, released,
dumped, or spilled in, on, under, or about the Property and results in any contamination of the
Property or adjacent property, or otherwise results in the release or discharge of Hazardous
Materials in, on, under or from the Property, Borrower shall promptly take all actions at Borrower's
sole expense as are necessary to comply with all Environmental Laws (as defined below).
"Hazardous Materials" means any substance, material or waste which is or becomes regulated
by any federal, state or local governmental authority, and includes without limitation (i)
petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and
any material containing asbestos; (iii) any substance, material or waste regulated by or listed
(directly or by reference) as a "hazardous substance", "hazardous material", "hazardous
waste", "toxic waste", "toxic pollutant", "toxic substance", "solid waste" or "pollutant or
contaminant" in or pursuant to, or similarly identified as hazardous to human health or the
environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101,
et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal
Water Pollution Control Act [33 U.S.C. Section 1251 ], the Clean Air Act [42 U.S.C. Section 7401, et
PCDC Resolution 2006-16 Page 10
seq.], the California Underground Storage of Hazardous Substances Act [California Health and
Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act
[California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act
[California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water
and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and
the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as
they now exist or are hereafter amended, together with any regulations promulgated
thereunder; (iv) any substance, material or waste which is defined as such or regulated by any
"Superfund" or "Superlien" law, or any Environmental Law; or (v) any other substance, material,
chemical, waste or pollutant identified as hazardous or toxic and regulated under any other
federal, state or local environmental law, including without limitation, asbestos, polychlorinated
biphenyls, petroleum, natural gas and synthetic fuel products and by-products.
"Environmental Law" means all federal, state or local statutes, ordinances, .rules, regulations,
orders, decrees, judgments or common law doctrines, and provisions and conditions of permits,
licenses and other operating authorizations regulating, or relating to, or imposing liability or
standards of conduct concerning (i) pollution or protection of the environment, including natural
resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as
defined above) or other products, raw materials, chemicals or other substances; (iii) protection
of the public health or welfare from the effects of by-products, wastes, emissions, discharges or
releases of chemical substances from industrial or commercial activities; (iv) the manufacture.,
use or introduction into commerce of chemical substances, including without limitation, their
manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal;
or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the
remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in
effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 51 Ol ,
et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal
Water Pollution Control Act [33 U.S.C. Section 1251 ], the Clean Air Act [42 U.S.C. Section 7401, et
seq.], the California Underground Storage of Hazardous Substances Act [California Health and
Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act
[California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act
[California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water
and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and
the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as
they now exist or are hereafter amended, together with any regulations promulgated
thereunder.
4.13.2 INDEMNIFICATION. Borrower shall indemnify, defend (with counsel
reasonably acceptable to Agency), and hold the Indemnitees harmless from and against
Liabilities arising directly or indirectly in any manner connection with or as a result of the breach
of Borrower's covenants set forth in Section 4.13.1 or the actual or alleged release or presence of
any Hazardous Materials on, under, in or about the Property, whether known or unknown,
foreseeable or unforeseeable, regardless of the source of such release or when such release
occurred or such presence is discovered. The foregoing indemnity includes, without limitation,
all costs of investigation, assessment, containment, removal, remediation of any kind, and
disposal of such Hazardous Materials, all costs of determining whether the Property is in
compliance with Environmental Laws, all costs associated with bringing the Property into
compliance with all applicable Environmental Laws, and all costs associated with claims for
damages or injury to persons, property, or natural resources. The indemnity described in this
Section shall survive the expiration or termination of this Agreement, the making and repayment
PCDC Resolution 2006-16 Page 1 1
of the Loan, the release or reconveyance of the Deed of Trust, and any foreclosure proceeding,
foreclosure sale or delivery of deed in lieu of foreclosure.
4.14 NON-DISCRIMINATION. Borrower covenants by and for itself and for 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,
familial status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property, nor shall Borrower or any person claiming under or through
Borrower establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees in the Property.
4.14.1 MANDATORY LANGUAGE IN ALL SUBSEQUENT DEEDS. LEASES AND CONTRACTS. All
deeds, leases or contracts made or entered into by Borrower, its successors or assigns, as to any
portion of the Property, the Improvements, or the Project, shall contain therein 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, creed, religion, sex, marital status, national origin or ancestry 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 the
lessee that this 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, creed, religion, sex, marital status, national origin or ancestry 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 fhrough 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, creed, religion, sex, marital status, national origin or
ancestry 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 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 of the land."
PCDC Resolution 2006-16 Page 12
4.1 S PREVAILING WAGES. Borrower shall pay or shall cause Borrower's contractor and
subcontractors to pay prevailing wages in the construction of the Project as those wages are
determined pursuant to Labor Code Section 1720 et seq. and the regulations adopted pursuant
thereto ("Prevailing Wage Laws") and shall comply or shall cause the contractor and
subcontractors to comply with the all other applicable provisions of the Prevailing Wage Laws.
Borrower shall maintain or shall cause the contractor and subcontractors to maintain such
records as are necessary to determine if prevailing wages have been paid as required pursuant
to the Prevailing Wage Laws. During the construction of the Project Borrower shall cause the
contractor to post at the Property the applicable prevailing rates of per diem wages. Borrower
shall, and hereby agrees to, unconditionally indemnify, defend (with counsel acceptable to
Agency), and hold harmless the Indemnitees from and against any and all Liabilities, which
directly or indirectly, in whole or in part, are caused by, arise from, or relate to, or are alleged to
be caused by, arise from, or relate to, the payment or requirement of payment of prevailing
wages or the requirement of competitive bidding in the construction of the Project, the failure to
comply with any state or federal labor laws, regulations or standards in connection with this
Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of
Agency or Borrower related to this Agreement with respect to the payment or requirement of
payment of prevailing wages or the requirement of competitive bidding, whether or not any
insurance policies shall have been determined to be applicable to any such claims, demands,
suits, actions, losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive or other
relief, costs, damages, or administrative, enforcement or judicial proceedings. It is further
agreed that Agency does not, and shall not, waive any rights against Borrower which it may
have by reason of this indemnity and hold harmless agreement because of the acceptance by
Agency, or the deposit with Agency, of any of the insurance policies described in this
Agreement. The representations, warranties and covenants contained in this Section shall
survive the expiration or termination of this Agreement, the making and repayment of the Loan,
any release or reconveyance of the Deed of Trust., and any foreclosure proceeding, foreclosure
sale, or delivery of a deed in lieu of foreclosure.
ARTICLE V
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute an event of
default hereunder ("Event of Default"):
(a) If Borrower fails to pay when due the principal and interest (if any)
payable under the Note and such failure continues for ten (10) days after Agency notifies
Borrower thereof in writing.
(bJ If, pursuant to or within the meaning of the United. States Bankruptcy Code
or any other federal. or state law relating to insolvency or relief of debtors ("Bankruptcy Law"),
Borrower (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order
for relief against Borrower in an involuntary case; (iii) consents to the appointment of a trustee,
receiver, assignee, liquidator or similar official for Borrower; (iv) makes an assignment for the
benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Borrower in an involuntary case, (ii) appoints a trustee,
receiver, assignee, liquidator or similar official for Borrower or substantially all of Borrower's assets,
(iii) orders the liquidation of Borrower, or (iv) issues or levies a judgment, writ, warrant of
PCDC Resolution 2006-16 Page 13
attachment or similar process against the Property or the Project, and in each case the order or
decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance.
(d) If an event of default has been declared by the holder of any debt
instrument secured by a mortgage or deed of trust on the Project or Borrower's interest in the
Property and such holder exercises a right to declare all amounts due under that debt
instrument immediately due and payable, subject to the expiration of any applicable cure
period set forth in such holder's documents.
(e) If the Borrower fails to maintain insurance on the Property and the Project
as required pursuant to the Loan Documents, and Borrower fails fio cure such default within 15
days.
(f) Subject to Borrower's right to contest the following charges pursuant to
the Loan Documents, if the Borrower fails to pay taxes or assessments due on the Property or the
Project or fails to pay any other charge that may result in a lien on the Property or the Project,
and Borrower fails to cure such default within 15 days.
(g) If any representation or warranty contained in the Loan .Documents or any
certificate furnished in connection with the foregoing or in connection with any request for
disbursement of Loan Proceeds proves to have been false or misleading in any material adverse
respect when made.
(h) If the Borrower defaults in the performance of any term, provision,
covenant or agreement (other than an obligation enumerated in this Article V) contained in this
Agreement or in any other Loan Document, and unless such document specifies a shorter cure
period for such default, the default continues for ten (10) days in the event of a monetary
default or thirty (30) days in the event of a nonmonetary default after the date upon which
Agency shall have given written notice of the default to Borrower (or such longer time as
Agency may agree upon in writing), provided that in each case Borrower commences to cure
the default within thirty (30) days and thereafter prosecutes the curing of such default with due
diligence and in good faith.
(i) If an Event of Default shall have been declared. under any other Loan
Document, subject to the expiration of any applicable cure period set forth in such documents.
ARTICLE VI
REMEDIES
6.1 REMEDIES AND RIGHTS UPON DEFAULT. Upon the occurrence of an Event of
Default and the expiration of any applicable cure period, Agency shall have all remedies
available to it under law or equity, including, but not limited to the. following, and Agency may,
at its election, without notice to or demand upon Borrower, except for notices or demands
required by law or expressly required pursuant to the Loan Documents, exercise one or more of
the following remedies:
a) Accelerate and declare the balance of the Note and interest accrued thereon
immediately due and payable;
b) Seek specific performance to enforce the terms of the Loan Documents;
c) Foreclose on the Property pursuant to the Deed of Trust;
PCDC Resolution 2006-16 Page 14
d) Pursue any and all other remedies available under law to enforce the terms of
the Loan Documents and Agency's rights thereunder.
6.2 .REMEDIES CUMULATIVE. Each of the remedies provided herein is cumulative and
not exclusive of, and shall not prejudice any other remedy provided in any other Loan
Document. The Agency may exercise from time to time any rights and remedies available to it
under applicable law, in addition to, and not in lieu of, any rights and remedies expressly
granted in this Agreement or in any other instrument or notice, demand or legal process of any
kind.
ARTICLE VII
MISCELLANEOUS
7.1 NOTICES. Except as otherwise specified. in this Agreement, all notices to be sent
pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective
addresses specified below or to such other address as a Party may designate by written notice
delivered to the other Party in accordance with this Section. All such notices shall be sent by:
(a) personal delivery, in which case notice shall be deemed delivered upon
receipt;
(b) certified or registered mail, return receipt requested, in which case notice shall
be deemed delivered two (2) business days after deposit, postage prepaid in the United States
mail;
(c) nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) day after deposit with such courier; or
(d) facsimile transmission, in which case notice shall be deemed delivered on
transmittal, provided that a transmission report is generated reflecting the accurate transmission
thereof.
Agency: Petaluma Community Development Commission
1 1 English Street
Petaluma, CA 94952
Attn:
Borrower: Matthew J. Carter
201-203 D Street
Petaluma, CA 95952
7.2 COUNTERPARTS. This Agreement may be executed in multiple counterparts each
of which shall be an original and all of which taken together shall constitute one and the same
instrument.
7.3 SEVERABILITY. If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions shall continue in full force and effect unless the rights and obligations of the Parties
are materially altered or abridged by such invalidation, voiding or unenforceability.
PCDC Resolution 2006-16 Page 15
7.4 LEGAL ACTIONS; ATTORNEYS' FEES. In the event any legal action is commenced
to interpret or to enforce the terms of this Agreement or to collect damages as a result of any
breach thereof, the Party prevailing in any such action shall be entitled to recover against the
other Party all reasonable attorneys' fees and costs incurred in such action.
7.5 CAPTIONS; INTERPRETATION. The captions of the Sections and Articles of this
Agreement are for convenience only and are not intended to affect the interpretation or
construction of the provisions herein contained. The language of this Agreement shall be
construed as a whole according to its fair meaning and not strictly for or against any Party. Time
is of the essence in the performance of this Agreement.
7.6 FURTHER ASSURANCES. The Parties agree to execute, acknowledge and deliver
to the other such other documents and instruments, and take such other actions, as either shall
reasonably request as may be necessary to carry out the intent of this Agreement.
7.7 PARTIES NOT CO-VENTURERS. Nothing in this Agreement is intended to or shall
establish the Parties as partners, co-venturers, or principal and agent with one another.
7.8 GOVERNING LAW; VENUE. This Agreement shall in all respects be construed and
enforced in accordance with laws of the State of California without regard to principles of
conflicts of laws. The Parties consent to the jurisdiction of any federal or state court in the
jurisdiction in which. the Property is located (the "Property Jurisdiction"). Borrower agrees that
any controversy arising under or in relation to this Agreement br any other Loan Document shall
be litigated exclusively in courts having jurisdiction in the Property Jurisdiction. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile, habitual residence or
otherwise.
7.9 WAIVER; MODIFICATION AND AMENDMENT. No failure or delay on the part of the
Agency in exercising any right, power, or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power, or remedy preclude any other or
further exercise thereof or the exercise of any other right, power, or remedy hereunder. No
modification or waiver of any provision of this Agreement, nor any consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in writing, and then
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other circumstances. No
amendment to or modification of this Agreement shall be effective unless and until such
amendment or modification is in writing, properly approved in accordance with applicable
procedures, and executed by the Parties.
7.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and assigns. Notwithstanding the foregoing,
Agency's obligation to make the. Loan is personal to Borrower, and shall not be assignable by
Borrower by operation of law or otherwise absent the express written consent of Agency, and
any such assignment by operation of law or otherwise shall be void.
7.1 1 NO THIRD PARTY BENEFICIARIES.. There shall be no third party beneficiaries to this
Agreement.
7.12 ENTIRE AGREEMENT; EXHIBITS. This Agreement, together with the other Loan
Documents, constitutes the entire agreement between the Parties with respect to the subject
PCDC Resolution 200b-1 b Page 1 b
matter hereof and supersedes any and all prior or contemporaneous oral or written agreements
and negotiations between the Parties with respect thereto. Exhibits A through E attached
hereto are incorporated herein by reference as though fully set forth herein.
7.13 SURVIVAL. All representations made by Borrower herein and the provisions of
Sections 4.8, 4.13.2, 4.14, 4.14.1 and 4.15 hereof shall survive the expiration or termination of this
Agreement, the making and repayment of the Loan, any release or reconveyance of the Deed
of Trust, and any foreclosure proceeding, foreclosure sale, or delivery of a deed in lieu of
foreclosure. The representations of Borrower made herein have been or will be relied upon by
the Agency, notwithstanding any investigation made by the Agency or on its behalf.
7.14 AGENCY STATUS. Borrower recognizes and agrees that Agency is not a
commercial lending institution, but a public agency exercising its authority to protect the public
health, safety and welfare. Any duties or obligations which a commercial lending institution may
have to Borrower shall not apply to this transaction except as set forth herein and in the Loan
Documents.
7.15 ACTION BY THE AGENCY. Except as may be otherwise specifically provided
herein, whenever any approval, notice, direction, or consent by the Agency is required or
permitted under this Agreement, such action shall be in writing, and such action may be given,
made or taken by the Agency Executive Director or by any person who shall have been
designated by the Agency Executive Director, without further approval by the Agency
governing board. Agency shall use reasonable best efforts to respond to requests for any such
approval, notice, direction, or consent in a timely manner.
7.16 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 or any
successor in interest to any of the foregoing in the event of any default or breach by the
Agency, or for any amount of money which may become due to Borrower or Borrower's
successor in interest or for any obligation of Agency under this Agreement.
7.17 RIGHT OF ACCESS. Borrower hereby grants to Agency and Agency's agents and
employees the right, upon reasonable notice to Borrower of not less than two business days, to
enter upon the Property and the Improvements for the purpose of inspecting, examining,
surveying and reviewing the same for the purpose of ensuring compliance with the Loan
Documents.
7.18 PRORATION OF CLOSING COSTS. Agency and Borrower shall each pay one-half
of the costs of escrow and any recording fees applicable to the Loan Documents.
7.19 WAIVER OF TRIAL BY JURY. BORROWER AND AGENCY EACH (A) AGREE NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OU7 OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A
JURY, AND (B) WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT
THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
PCDC Resolution 2006-16 Page 17
IN WITNESS WHEREOF, the Parties have each caused this Agreement to be duly executed
as of the date first written above.
BORROWER
Matthew J. Carter
AGENCY:
PETALUMA COMMUNITY DEVELOPMENT COMMISSION
By:
Its: Executive Director
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
Agency Counsel
PCDC Resolution 2006-16 Page 18
Exhibit A
PROPERTY
(Legal Description.)
PARCEL ONE:
Lot Number 91, as shown upon the Map of the City of Petaluma, Sonoma County, California,
surveyed under instruction from the Board of Trustees of said City and the U.S. Surveyor General,
by Jas. T. Stratton, U.S. Deputy Surveyor, December, 1865.
Being the same property described in the Deed by Marie Cobb and Charles Torliatt to Peter
Torliatt and Theresa Jewett, and recorded May 26, 1948 in Book 799 of Official Records, page 80,
Serial No. C-88193, Sonoma County Records.
PARCEL TWO:
A Portion of Lot 92, in the city of Petaluma, County of Sonoma, State of California, as the same is
laid down and designated upon the Official Map of said City, as made by James T. Stratton,
Esq., U.S. Deputy Surveyor, and more particularly described as follows:
Commencing at a point on the Southerly line of Second Street, in said City of Petaluma, distant
100.2 feet, Southeasterly from the most Southerly corner of Second Street and D Street, and at
the point of intersection of the dividing line between Lots 91 and 92, and said Southerly line of
Second Street; running thence Southeasterly along the Southerly line of Second Street, 50.3 feet;
thence at right angles, Southwesterly and parallel with the division line between Lots 91 and 92,
100 feet, more or less, to rear or Southwesterly line of said Lot 92; thence Northwesterly along the
Southwesterly line of said Lot 92, 50.3 feet; thence at right angles, Northeasterly along the division
line between Lots 92, 89, and 91, 100 feet, more or less, to the point of beginning.
Beginning the same premises described in that certain Deed by Magdalena to Lena M. Husler,
recorded July 23, 1909 in Liber 255 of Deeds, page 409, Sonoma County Records.
PCDC Resolution 2006-16 Page 19
Exhibit B
PROJECT
(Description of Rehabilitation/Restoration Work to be Undertaken)
This project entails constructing a new entry way to the existing building on the D Street frontage,
the installation of new windows along the side of the building on the Second Street frontage,
and new landscaping along both frontages. Plans have been reviewed and approved by
S.P.A.R.C.
PCDC Resolution 2006-16 Page 20
Exhibit C
INSURANCE REQUIREMENTS
Unless Agency agrees otherwise in writing, Borrower shall, at Borrower's sole cost and expense,
during the term of the Note dated as of the date hereof and executed by .Borrower for the
benefit of Agency (the "Note") shall keep and maintain the following policies of insurance.
Capitalized terms used without definition in this Exhibit C shall have the meaning ascribed to
such terms in the Loan Agreement of which this Exhibit is a part.
A. Property Insurance. Insurance for the risks of direct physical loss, naming Agency as loss
payee, with minimum coverage being the perils insured under the standard Causes of Loss -
Special form (ISO Form CP 10 30) or its equivalent, covering all Improvements, all fixtures and
equipment located on or in, or constituting a part of, the Property, in an amount equal to one
hundred percent (l 00%) of the full replacement cost of all such property. The insurance shall (a)
cover explosion of steam and pressure boilers and similar apparatus, if any, located on the
Property, and (b) cover floods if the Property is in a Special Hazard Area, as determined by the
Federal Emergency Management Agency or as shown on a National Flood Insurance Program
flood map. The insurance required hereunder shall be in amounts sufficient to prevent Borrower
from becoming a co-insurer under the terms of the applicable policies, with not more than a Ten
Thousand Dollars ($10,000) deductible (or such higher deductible approved by the Agency)
from the loss payable for any casualty. The policies of insurance carried in accordance with this
Paragraph A shall contain a "replacement cost endorsement," an "increased cost of
construction endorsement," and an endorsement covering underground work, if applicable to
the Project.
B. Liability Insurance. Commercial general liability insurance on an "occurrence basis"
covering all claims with respect to injury or damage to persons or property occurring on, in or
about the Property or the Improvements. Commencing upon the date of initial disbursement of
Loan Proceeds and at all times prior to repayment of all sums payable under the Note, the limits
of liability under this Paragraph B shall be not less than Two Million Dollars ($2,000,000) combined
single limit per occurrence, with a deductible no greater than Ten Thousand Dollars ($10,000) or
such higher deductible as may be approved by Agency. Upon receipt of written demand from
Agency, Borrower shall increase the limits of liability insurance required hereunder to the amount
commensurate with that generally carried by a majority of owners of other comparable projects
in Sonoma County. The insurance shall also include:
(i) coverage against liability for bodily injury or property damage arising out of the
use, by or on behalf of Borrower, of any owned, non-owned, leased or hired automotive
equipment in the conduct of any and all operations conducted in connection with the
Project or the Property;
(ii) premises and operations including, without limitation, bodily injury, personal injury,
death or property damage occurring upon, in or about the Property or the
Improvements on any elevators or any escalators therein and on, in or about the
adjoining sidewalks, streets and passageways;
(iii) broad form property damage liability;
(iv) additional insured and primary insured endorsements protecting Agency and
City and their respective elecfed and appointed officials, officers, employees and
agents; and
PCDC Resolution 2006-7 b Page 21
(v) personal injury endorsement.
C. Worker`s Compensation Insurance. Worker's compensation insurance, in the amount
required under then applicable state law, covering Borrower's employees, if any, at work in or
upon the Property or engaged in services or operations in connection with the Project,- the
Improvements or the Property. Borrower shall require that any general construction contract
entered into by Borrower with regard to the Project include a contractual undertaking by the
general contractor to provide worker's compensation insurance for its employees engaged in
construction of the Project in an amount in compliance with applicable state law.
D. Course of Construction Insurance. Course of construction insurance, naming Agency as
loss payee in the same amount as required in Paragraph A above for property insurance,
covering all construction activities on the Property.
E. General Insurance Provisions. All policies of insurance provided for in this Exhibit shall be
provided under valid and enforceable policies, in such forms and amounts as hereinbefore
specified, issued by insurers licensed to do business in the State of California (or approved to do
business in California and listed on the California Department of Insurance list of Eligible Surplus
Lines Insurers or successor listing) and having a rating of A/VII or better in Best Insurance Guide
or, if Best Insurance Guide is no longer in existence, a comparable rating from a comparable
rating service. Prior to the closing of the Loan, and thereafter, not less than thirty (~Q) days prior
to the expiration date of each policy furnished pursuant to this Exhibit C, Borrower shall deliver to
Agency certificates evidencing the insurance required to be carried by Borrower under this
Exhibit C. If requested by Agency, Borrower shall deliver within fifteen (15) days following such
request, certified, complete copies of the insurance policies required hereunder. Insurance
policies to be provided herein shall meet the following:
(a) Each policy of insurance obtained pursuant to this Agreement, other than
worker's compensation insurance, shall contain endorsements which provide (i) a waiver by the
insurer of the right of subrogation against Agency, Borrower or any subtenant for negligence of
any such person, (ii) a statement that the insurance shall not be invalidated should any insured
waive in writing prior to the loss any or all right of recovery against any party for loss accruing to
the property described in the insurance policy, and (iii) a provision that no act or omission of
Borrower which would otherwise result in forfeiture or reduction of the insurance therein provided
sh-all affect or limit the obligation of the insurance company to pay the amount of any loss
sustained.
(b) By endorsements, Agency and its elected and appointed officials, officer,
employees and agents shall be named as additional insured under the policies of liability
insurance and as loss payee under the property damage and course of construction insurance
required to be maintained by Borrower hereunder.
(c) Each policy required hereunder shall include a Notice of Cancellation or
Change in Coverage Endorsement which shall provide that such policy shall not be cancelled
or materially changed without at least thirty (30) days' prior written notice by registered or
certified mail to Agency.
(d) All insurance policies shall provide that there shall be no exclusion from
coverage for cross liability among the listed insureds.
(e) Any certificate of insurance applicable to course of construction insurance to
be maintained shall be deposited with Agency prior to commencement of construction.
PCDC Resolution 2006-16 Page 22
(f) Each policy shall contain an endorsement that proves that the insurance
applies separately to each insured that is seeking coverage or against whom a claim is made,
except with respect to the limits of liability.
(g) Each policy shall be written as a primary policy not contributing with and not
in excess of coverage that Agency or City may carry.
(h) Each policy shall expressly provide that neither Agency nor City shall not be
required to give notice of accidents or claims and that neither Agency nor City shall have
liability for premiums.
F. Blanket Policies. Any insurance provided for in this Exhibit C may be placed by a policy or
policies of blanket insurance; provided, however, that such policy or policies provide that the
amount of the total insurance allocated to the Property and the Improvements shall be such as
to furnish protection the equivalent of separate policies in the amounts herein required, and
provided further that in all other respects any such policy or policies shall comply with the other
provisions of this Exhibit.
G. Waiver of Subrogation. To the extent permitted by law and the policies of insurance
required to be maintained hereunder, and without affecting such insurance coverage, Agency
and Borrower each waive any right to recover against the other (a) damages for injury or death
of persons, (b) damage to property, (c) damage to the Property or the Improvements or any
part thereof, or (d) claims arising by reason of any of the foregoing, to the extent that such
damages and/or claims are covered (and only to the extent of such coverage) by insurance
actually carried by either Agency or Borrower. This provision is intended to restrict each party (as
permitted by law) to recover against insurance carriers to the extent of such coverage, and
waive fully, and for the benefit of each, any rights and/or claims which might give rise to a right
of subrogation in any insurance carrier.
H. Compliance with Policy Requirements. Borrower shall observe and comply with the
requirements of all policies of public liability, fire and other policies of insurance at any time in
force with respect to the Property, and Borrower shall so perform and satisfy the requirements of
the companies writing such policies that at all times companies of good standing shall be willing
to write or to continue such insurance.
I. Additional Insurance. Borrower shall have the right to carry such additional insurance as
Borrower may desire from time to time or as may be required by any mortgagee with a security
interest in the Property.
PCDC Resolution 2006-16 Page 23
Exhibit D
FORM OF PROMISSORY NOTE
EXHIBIT fo LOAN AGREEMENT
SECURED PROMISSORY NOTE
50,000 Petaluma, California
2006
FOR VALUE RECEIVED, Matthew J. Carter ("Borrower") promises to pay to the Petaluma
Community Development Commission ("Agency"), in lawful money of the United States of
America, the principal sum of Fifty Thousand Dollars ($50,000) or so much thereof as may be
advanced by Agency pursuant to the Loan Agreement referred to below, in accordance with
the terms and conditions described herein.
This Secured Promissory Note (this "Note") has been executed and delivered pursuant to
and in accordance with the terms and conditions of a Loan Agreement dated as of the date
hereof by and between Borrower and Agency (the "Loan Agreement"), and is subject to the
terms and conditions of the Loan Agreement, which are by this reference incorporated herein
and made a part hereof. Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Loan Agreement.
This Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing ("Deed of Trust") dated as of the date hereof, executed by Borrower for the benefit
of Agency and encumbering the property described therein. Agency shall be entitled to the
benefits of the security provided by the Deed of Trust and shall have the right to enforce the
covenants and agreements contained herein, in the Deed of Trust and the Loan Agreement.
PAYMENTS
1.1 PAYMENT DATES' MATURITY DATE INTEREST RATE; PAYMENT DATES; MATURITY DATE.
Interest shall be payable on the principal balance of the Loan at the rate of four per cent (4`~0)
per annum. Payments of principal and interest, fully amortized over a period of sixty (60) months
shall be paid monthly to Agency by Borrower, with the first such payment due and payable thirty
(30) days from the Effective Date. Any payment received by Agency more than five (5) days
after the due date of said payment shall be subject to a Late Charge of $25.00. The entire
remaining outstanding principal balance of the Loan together with accrued interest and any
other sums due under the Loan Documents shall be payable in full on the fifth (5'") anniversary of
the Effective Date (the "Maturity Date"). Agency shall credit payments made under this Note
first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid
interest (if any), and then to principal.
1.2 DUE ON SALE. The entire unpaid principal balance and all sums accrued
hereunder shall be immediately due and payable upon the Transfer (as defined in Section 1.4 of
the Loan Agreement) absent Agency consent, of all or any part of the Property or the
Improvements, or any interest therein.
1.3 PREPAYMENT. Borrower may, without premium or penalty, at any time and from
time to time, prepay all or any portion of the outstanding principal balance due under this Note.
Prepayments shall be applied first to any unpaid late charges and other costs and fees then
PCDC Resolution 2006-16 Page 24
due, then to accrued but unpaid interest, if any, and then to principal. In no event shall any
amount due under this Note become subject to any rights of offset, deduction or counterclaim
on the part of Borrower.
1.4 MANNER OF PAYMENT. All payments on this Note shall be made to Agency at 1 1
English Street, Petaluma, CA 94952, or such other place as Agency shall designate to Borrower
in writing, or by wire transfer of immediately available funds to an account designated by
Agency in writing.
2. DEFAULTS
2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events
sha11 constitute an event of default hereunder ("Event of Default"):
(a) If Borrower fails to pay when due any sum payable hereunder and such
failure continues for ten (10) days after Agency notifies Borrower thereof in writing.
(b) If, pursuant to or within the meaning of the United States Bankruptcy Code
or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"),
Borrower (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order
for relief against Borrower in an involuntary case; (iii) consents to the appointment of a trustee,
receiver, assignee, liquidator or similar official for Borrower; (iv) makes an assignment for the
benefit of its creditors; or (v} admits in writing its inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (iJ is for relief against Borrower in an involuntary case, (ii) appoints a trustee,
receiver, assignee, liquidator or similar official for Borrower or substantially all of Borrower's assets,
(iii) orders the liquidation of Borrower, or (iv) issues or levies a judgment, writ, warrant of
attachment or similar process against the Property or the Project, and in each case the order or
decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance.
(d) If an event of default has been declared by the holder of any debt
instrument secured by a mortgage or deed of trust on the Project or Borrower's interest in the
Property and such holder exercises a right to declare all amounts due under that debt
instrument immediately due and payable, subject to the expiration of any applicable cure
period set forth in such holder's documents.
(e) If the Borrower fails to maintain insurance on the Property and the Project
as required pursuant to the Loan Documents and Borrower fails to cure such default within 15
days.
(f) Subject to Borrower's right to contest the following charges pursuant to
the Loan Documents, if the Borrower fails to pay taxes or assessments due on the Property or the
improvements located thereon, or fails to pay any other charge that may result in a lien on the
Property, and Borrower fails to cure such default within 15 days..
(g) If any representation or warranty contained in the Loan Documents or any
certificate furnished in connection with the Loan Documents or in connection with. any request
for disbursement of Loan Proceeds proves to have been false or misleading in any material
adverse respect when made.
PCDC Resolution 2006-16 Page 25
(h) If the Borrower defaults in the performance of any term, provision,
covenant or agreement (other than an obligation enumerated in this Section 2.1) contained in
any Loan Document, and unless such document specifies a shorter cure period for such default,
the default continues for ten (l0) days in the event of a monetary default or thirty (30) days in
the event of anon-monetary default after the date upon which Agency shall have given written
notice of the default to Borrower (or such longer time as Agency may agree upon in writing),
provided that in each case Borrower commences to cure the default within thirty (30) days and
thereafter prosecutes the curing of such default with due diligence and in good faith.
(i) If an Event of Default shall have been declared under any other Loan
Document subject to the expiration or any applicable cure period set forth in such documents.
2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, Agency may,
at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon and all sums due hereunder, immediately due
and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies
available to it under applicable law, and (iii) exercise any and all rights and remedies available
to Agency under this Note and the other Loan Documents, including without limitation the right
to pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and
expenses incurred by or on behalf of Agency including, without limitation, reasonable attorneys'
fees, incurred in connection with Agency's enforcement of this Note and the exercise of any or
all of its rights and remedies hereunder and all such sums shall be a part of the indebtedness
secured by the Deed of Trust.
2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall
automatically be increased without notice to the rate of ten percent (10%) per annum (the
"Default Rate"); provided however, if any payment due hereunder is not paid when due, the
Default Rate shall apply commencing upon the due date for such payment. When Borrower is
no longer in default, the Default Rate shall no longer apply, and the interest rate shall once
agdin be the rate specified in the first paragraph of this Note. Notwithstanding the foregoing
provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall
be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall
in no event constitute a waiver of a default under this Note or prevent Agency from exercising
any of its other rights or remedies.
3. MISCELLANEOUS
3.1. WAIVER. The rights and remedies of Agency under this Note shall be cumulative
and not alternative. No waiver by Agency of any right or remedy under this Note shall be
effective unless in a writing signed by Agency. Neither the failure nor any delay in exercising any
right, power or privilege under this Note will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege by Agency will preclude
any other or further exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law (a) no claim or right of
Agency arising out of this Note can be discharged by Agency, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing, signed by Agency; (b) no waiver that may
be given by Agency will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on Borrower will be deemed to be a waiver of any obligation of
Borrower or of the right of Agency to take further action without notice or demand as provided
in this Note. Borrower hereby waives presentment, demand, protest, notices of dishonor and of
protest and all defenses and pleas on the grounds of any extension or extensions of the time of
PCDC Resolution 2006-16 Page 26
payment or of any due date under this Note, in whole or in part, whether before or after maturity
and with or without notice.
3.2. NOTICES. Any notice required or permitted to be given hereunder shall be given
in accordance with Section 7.1 of the Loan Agreement.
3.3. SEVERABILITY. If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain in full force and
effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain
in full force and effect to'the extent not held invalid or unenforceable.
3.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the State of
California without regard to principles of conflicts of laws. All persons and entities in any manner
obligated under this Note consent to the jurisdiction of any federal or state court in the
jurisdiction in which the Property is located (the "Property Jurisdiction"). Borrower agrees that
any controversy arising under or in relation to the Note or any other Loan Document shall be
litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to the Note and any other Loan Document. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts for any such litigation and waives any
other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
3.5 PARTIES IN INTEREST. This Note shall bind Borrower and its successors and assigns
and shall accrue to the benefit of Agency and its successors and assigns.
3.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Note are
provided for convenience only and will not affect its construction or interpretation.
3.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and Agency under this
Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by
the Deed of Trust will in no manner make Agency the partner or joint venturer of Borrower.
3.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of
this Note.
3.9 NONRECOURSE. Except as expressly provided in this Section 3.9, Borrower shall
have no personal liability for repayment of this Note, and the sole recourse of Agency with
respect to the repayment of the principal of, and interest (if any) on, the Note shall be to the
Property and the Improvements and any other collateral held by Agency as security for this
Note; provided however, nothing contained in the foregoing limitation of liability shall:
(A) impair the enforcement against all such security for the Loan of all the rights and
remedies of the Agency under the Deed of Trust and any financing statements Agency files in
connection with the Loan as each of the foregoing may be amended, modified, or restated from
time to time;
(B) impair the right of Agency to bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Agency to enforce and
realize upon the Deed of Trust, the interest in the Property created thereby and any other
collateral given to Agency in connection with the indebtedness evidenced by this Note, and to
name the Borrower as party defendant in any such action;
PCDC Resolution 2006-16 Page 27
(C) be deemed in any way to impair the right of the Agency to assert the unpaid
principal amount of the Loan as a demand for money within the meaning of Section 431.70 of
the California Code of Civil Procedure or any successor provision thereto;
(D) constitute a waiver of any right which Agency may have under any bankruptcy law
to file a claim for the full amount of the indebtedness owed to Agency under this Note or to
require that the Property and the Improvements shall continue to secure all of the indebtedness
owed to Agency in accordance with this Note and the Deed of Trust; or
(E) limit or restrict the ability of Agency to seek or obtain d judgment against Borrower to
enforce against Borrower to:
(a) recover under Sections 4.8, 4.13.2 or 4.15 of the Loan Agreement (pertaining
to Borrower's indemnification obligations), or
(b) recover from Borrower compensatory damages as well as other costs and
expenses incurred by Agency (including without limitation attorney's fees and expenses)
arising as a result of the occurrence of any of the following:
(i) any fraud or material misrepresentation on the part of the Borrower,
any authorized representative of Borrower in connection with the request for or
creation of the Loan, or in any Loan Document, or in connection with any request
for any action or consent by Agency in connection with the Loan;
(ii) any failure to maintain insurance on the .Property as required pursuant
to the Loan Documents;
(iii) failure to pay taxes, assessments or other charges due on the Property
and Improvements;
(iv) the presence of hazardous or toxic material or waste on the Property
or other violation of the Borrower's obligations under Section 4.13 of the Loan
Agreement or Section 7.1 1 of the Deed of Trust (pertaining to environmental
matters);
(v) the occurrence of any act or omission of Borrower that results in waste
to or of the Property or the Improvements and which has a material adverse
effect on the value of the Property or the Improvements;
(vi) the removal or disposal of any personal property or fixtures in violation
of the .Deed of Trust;
(vii) the material misapplication of the Loan Proceeds; or
(viii) the material misapplication of the proceeds of any insurance policy
or award resulting from condemnation or the exercise of the power of eminent
domain or by reason of damage, loss or destruction to any portion of the Property
or the Improvements.
4. WAIVER OF TRIAL BY JURY. BORROWER AND AGENCY EACH (A) AGREE NOT TO ELECT A TRIAL BY
JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES
PCDC Resolution 2006-16 Page 28
AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY, AND (B) WAIVE ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first
written above.
BORROWER
MATTHEW J. CARTER
Approved as to form:
Agency Counsel
PCDC Resolution 2006-16 Page 29
Exhibit E
FORM OF DEED OF TRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Petaluma Communify Development
Commission
1 1 English Street
Petaluma, CA 94952
Attn: City Clerk
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE ~~6103, 27383
Space above this line for Recorder's use.
DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
("Deed of Trust") is made as of , 2006, by Matthew J. Carter, "Trustor") to
as trustee ("Trustee"), for the benefit of the Petaluma Community
Development Commission, a public body corporate and politic ("Beneficiary").
RECITALS
A. Trustor owns fee simple title to the land described in Exhibit A attached hereto
and incorporated herein by this reference (the "Land"). The Land is located within the
.Petaluma Central Business District redevelopment project area
B. Beneficiary and Trustor have entered into a loan agreement dated as of the date
hereof (the "Loan Agreement") pursuant to which Beneficiary will loan to Trustor a sum of up to
$50,000 (the "Loan") for the purpose of partially financing the rehabilitation of the building
located on the Land. Trustor has issued to Beneficiary a secured promissory note dated as of the
date hereof (the "Note") to evidence Trustor's obligation to repay the Loan. Capitalized terms
used herein without definition shall have the meaning ascribed to such terms in the Loan
Agreement.
C. As a condition precedent to the making of the Loan, Beneficiary has required
that Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a first
priority lien and security interest in the Property (as hereafter defined) to secure repayment of
the Note.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows.
PCDC Resolution 2006-16 Page 30
Grant in Trust
In consideration of the foregoing and for the purpose of securing payment and
performance of the Secured Obligations defined and. described in Section 2, Trustor
hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee,
in trust for the benefit of Beneficiary, with power of sale and right of entry and possession,
all estate, right, title and interest which Trustor now has or may later acquire in and to the
Land, and all of the following, whether presently owned or hereafter acquired:
a._ All buildings, structures, and improvements, now or hereafter located or
constructed on the Land ("Improvements");
b. All appurtenances, easements, rights of way, pipes, transmission lines or wires and
other rights used in connection with the Land or the Improvements or as a means of access
thereto, whether now or hereafter owned or constructed or placed upon or in the Land or
Improvements and all existing and future privileges, rights, franchises and tenements of the Land,
including all minerals, oils, gas and other commercially valuable substances which may be in,
under or produced from any part of the Land, and all water rights, rights of way, gores or strips of
land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or
adjoining the Land and Improvements (collectively, "Appurtenances");
c. All machinery, equipment, fixtures, goods and other personal property of the
Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or
hereafter located at or used in connection with the Land, the Improvements or Appurtenances,
and all improvements, restorations, replacements, repairs, additions or substitutions thereto
(collectively, "Equipment");
d. All existing and future leases, subleases, licenses, and other agreements relating
to the use or occupancy of all or any portion of the Land or Improvements (collectively,
"Leases"), all amendments, extensions, renewals or modifications thereof, and all rent, royalties,
or other payments which may now or hereafter accrue or otherwise become payable
thereunder to or for the benefit of Trustor, including but not limited to security deposits
(collectively, "Rents");
e. All insurance proceeds and any other proceeds from the Land, Improvements,
Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made
with or other security deposits given to utility companies, all claims or demands relating to
insurance awards which the Trustor now has or may hereafter acquire, including all advance
payments of insurance premiums made by Trustor, and all condemnation awards or payments
now or later made in connection with any condemnation or eminent domain proceeding
("Proceeds"); and
PCDC Resolution 2006-16 Page 31.
f. All revenues, income, rents, royalties, payments and profits produced by the
Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter
acquired by Trustor ("Gross Revenues");
All of the above-referenced interests of Trustor in the Land, Improvements, Appurtenances,
Equipment, Leases, Rents, Proceeds and Gross Revenues as hereby conveyed to Trustee or
made subject to the security interest herein described are collectively referred to herein as the
"Property."
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and
performance of the following (collectively, the "Secured Obligations"): (i) all present and future
indebtedness evidenced by the Note and any amendment thereof, including principal, interest
and all other amounts payable under the terms of the Note; (ii) all present and future obligations
of Trustor to Beneficiary under the Loan Agreement, the Note and this Deed of Trust (collectively
hereafter the "Loan Documents"); (iii) all additional present and future obligations of Trustor to
Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing
now or in the future) which states that it is or such obligations are, secured by this Deed of Trust;
(iv) all obligations of Trustor to Beneficiary under all modifications, supplements, amendments,
renewals, or extensions of any of the foregoing, whether evidenced by new or additional
documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to
protect Beneficiary's interests under this Deed of Trust or any other Loan Document as such may
be modified, supplemented, amended, renewed or extended.
3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently
and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue, income
and proceeds of the Property. This is an absolute assignment and not an assignment for security
only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents,
royalties, issues, profits, revenue, income and proceeds as they become due and payable prior
to any Event of Default hereunder. Upon. the occurrence of any such Event of Default,
Beneficiary may terminate such license without notice to or demand upon Trustor and without
regard to the adequacy of any security for the indebtedness hereby secured, and may either in
person, by agent, or by a receiver to be appointed by a court, enter upon and take possession
of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits,
including those past due and unpaid, and apply the same, less costs and expenses of operation
and collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and
in such order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues,
profits, revenue, income and proceeds of the Property does not depend upon whether or not
Beneficiary takes possession of the Property. The entering upon and taking possession of the
Property, the collection of such rents, issues, and profits, and the application thereof as
aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to such notice.. If an Event of Default occurs while Beneficiary is in possession
of all or part of the Property and/or is collecting and applying Rents as permitted under this
Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and
invoke every right and remedy afforded any of them under this Deed of Trust and at law or in
equity, including the right to exercise'the power of sale granted hereunder. Regardless of
whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the
Improvements, Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be
responsible for performing any obligation of Trustor under any Lease, shall not be liable in any
manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and
shall not be responsible for any waste committed by lessees or any third parties, or for dangerous
or defective condition of the Property or any negligence in the management, repair or control
PCDC Resolution 2006-16 Page 32
of the Property. Absent Beneficiary's written consent, Trustor shall not accept prepayment of
Rents for any rental period exceeding one month.
4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the
Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary. The
parties acknowledge that some of the Property may be determined under applicable law to be
personal property or fixtures. To the extent that any Property may be or be determined to be
personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security
interest in all such Property to secure payment and performance of the Secured Obligations.
This Deed of Trust constitutes a security agreement under the California Uniform Commercial
Code, as amended or recodified from time to time (the "UCC"), covering all such Property. To
the extent such Property is not real property encumbered by the lien granted above, and is not
absolutely assigned by the assignment set forth above, it is the intention of the parties that such
Property shall constitute "proceeds, products, offspring, rents, or profits" (as defined in and for
the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be
modified or supplemented) of the Land and Improvements.
5. Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes
Beneficiary, as secured party, to file such financing statements and amendments thereof and
such continuation statements with respect thereto as Beneficiary may deem appropriate to
perfect and preserve Beneficiary's security interest in the Property and Rents, without requiring
any signature or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all
fees and costs that Beneficiary may incur in filing such documents in public offices and in
obtaining such record searches as Beneficiary may reasonably require. If any financing
statement or other document is filed in the records normally pertaining to personal property, that
filing shall not be construed as in any way derogating from or impairing this Deed of Trust or the
rights or obligations of the parties under it.
Everything used in connection with the Property and/or adapted for use therein and/or which is
described or reflected in this Deed of Trust is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be regarded as part of the estate encumbered by this
Deed. of Trust irrespective of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better identification of certain equipment
items capable of being thus identified in a recital contained herein or in any list filed with
Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so
filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the
proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain
proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present
or future lease or rights to income growing out of the use and/or occupancy of the property
conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way
altering any of the rights of Beneficiary as determined by this instrument or impugning the priority
of Beneficiary's lien granted hereby or by any other recorded document. Such mention in any
financing statement is declared to be solely for the protection of Beneficiary in the event any
court or judge shall at any time hold, with respect to the matters set forth in the foregoing
clauses (1 ), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be
effective against a particular class of persons, including but not limited to the federal
government and any subdivisions or entity of the federal government.
b. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant
to the provisions of the UCC with respect to all of the Property constituting fixtures, is being
recorded as a fixture financing statement and filing under the UCC, and covers property, goods
and equipment which are or are to become fixtures related to the Land and the Improvements.
PCDC Resolution 2006-16 Page 33
Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of
Sonoma County and shall also operate from the date of such filing as a fixture filing in
accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust
shall also be effective as a financing statement covering minerals or the like (including oil and
gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the
"debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the
UCC.
7. Trustor's Representations; Warranties and Covenants; Rights and Duties of the Parties.
7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor
lawfully possesses arid holds fee simple interest in the Land and the Improvements, (ii) Trustor has
good and marketable title to all of the Property; (iii) Trustor has the full and unlimited power, right
and authority to encumber the Property and assign the Rents; (iv) subject only to encumbrances
of record and senior liens permitted pursuant to the Loan Agreement or otherwise approved in
writing by Beneficiary ("Permitted Encumbrances"), this Deed of Trust creates a valid first lien on
Trustor's entire interest in the Property; (v) except with respect to Permitted Encumbrances,
Trustor owns the Property free and clear of all deeds of trust, mortgages, security agreements,
reservations of title or conditional sales contracts, (vi) there is no financing statement affecting
the Property on file in any public office; and (vii) Trustor's correct current address is specified in
Section 10.2.
Trustor further represents and warrants that this Deed of Trust and all other documents
delivered or to be delivered. by Trustor in connection herewith: (a) have been duly authorized,
executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do not violate
the provisions of any agreement to which Trustor is a party or which affects the Property. Trustor
further represents and warrants that there are no pending, or to Trustor's knowledge, threatened
actions or proceedings before any court or administrative agency which may adversely affect
Trustor's ownership of-the Property.
7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay
and perform all obligations of Trustor arising in connection with the Secured Obligations in
accordance with the respective terms thereof.
7.3 Use of Loan Proceeds• Preservation and Maintenance of Property; Compliance
with Laws. Trustor covenants that it shall use the Loan Proceeds solely for purpose of financing
the Project in accordance with the Loan Agreement. Trustor shall keep the Land and
Improvements in good repair and condition, and from time to time shall make necessary repairs,
renewals and replacements thereto so that the Property shall be preserved and maintained.
Trustor covenants to comply with all federal, state and local laws, regulations, ordinances and
rules applicable to the Property and the Project, including without limitation all applicable
requirements of state and local building codes and regulations, Prevailing Wage Laws, and all
applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not
remove, demolish or materially alter any Improvement without Beneficiary's consent, shall
complete or restore promptly and in good and workmanlike manner any building, fixture or
other improvement which may be constructed, damaged, or destroyed thereon, and shall pay
when due all claims for labor performed and materials furnished therefor. Trustor shall use the
Land and Improvements solely for purposes authorized by the Loan Documents, shall not
commit or allow waste of the Property, and shall not commit or allow any act upon or use of the
Property which would violate any applicable law or order of any governmental authority, nor
shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist
PCDC Resolution 2006-16 Page 34
thereon which could invalidate or which would be prohibited by any insurance coverage
required to be maintained on the Property pursuant to the Loan Documents.
7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an
Event of Default hereunder if any Transfer (as defined in Section 1.4 of the Loan Agreement) of
the Property, any part thereof, or interest therein occurs in violation of the requirements of the
Loan Documents. If any such Transfer shall occur in violation of such requirements, without
limiting the provisions of Section 8 hereof,. all obligations secured by this Deed of Trust,
irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and
without demand, immediately become due and payable, subject to any applicable cure
period.
7.5 Inspections; Books and Records. Beneficiary and its agents and representatives
shall have. the right at any reasonable time upon reasonable notice to enter upon and inspect
the Property to ensure compliance with the Loan Documents. Trustor shall maintain complete
and accurate books of account and other records (including copies of supporting bills and
invoices) adequate to document the use of the Loan Proceeds and the operation of the
Property, together with copies of all written contracts, Leases and other instruments which affect
the Property. The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection at any reasonable time by Beneficiary following two business days
prior notice.
7.6 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all
taxes, levies, assessments and other charges affecting the Property that are (or if not paid may
become) a lien on all or part of the Property. Trustor may, at Trustor's expense, contest the
validity or application of any tax, levy, assessment or charge affecting the Property by
appropriate legal proceedings promptly initiated and conducted in good faith and with due
diligence, provided that (i) Beneficiary is reasonable satisfied that neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such
contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably
be required from time to time by Beneficiary; and provided further that Trustor shall timely make
any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.
Trustor shall immediately discharge or cause to be discharged any lien on the Property
(other than encumbrances approved by Beneficiary as of the date hereof in writing). Trustor
shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance
which now does or later may encumber or appear to encumber all or part of the Property or
any interest in it, whether or not such lien, charge or encumbrance is or would be senior or
subordinate to this Deed of Trust. Trustor shall not be required to pay any tax, levy, charge or
assessment so long as its validity is being actively contested in good faith and by appropriate
actions and/or proceedings.
7.7 Subro aq tion. Beneficiary shall be subrogated to the liens of all encumbrances,
whether released of record or not, which are discharged in whole or in part by Beneficiary in
accordance with this Deed of Trust,
7.8 Hazard, Liability and Workers' Compensation Insurance. At all times during the
term hereof, Trustor shall at Trustor's expense, maintain insurance policies in accordance with the
requirements set forth in the Loan Agreement. Trustor shall file with Beneficiary prior to the
commencement of the term hereof, certificates evidencing each of the insurance policies
required pursuant to the Loan Agreement, and such certificates shall provide that at least thirty
(30) days' prior written notice shall be provided to Beneficiary prior to the expiration;
PCDC Resolution 2006-16 Page 35
cancellation or change in coverage under each such policy. If any insurance policy required
pursuant to the Loan Agreement is canceled or the coverage provided thereunder is reduced,
Trustor shall, within ten (10) days after receipt of written notice of such cancellation or reduction
in coverage, but in no event later than the effective date of cancellation or reduction, file with
Beneficiary a certificate showing that the required insurance has been reinstated or provided
through another insurance company or companies. Upon failure to so file such certificate,
Beneficiary may, without further notice and at its option, procure such insurance coverage at
Trustor's expense, and Trustor shall promptly reimburse Beneficiary for such expense upon receipt
of billing from Beneficiary.
7.9 Hazardous Materials. Trustor shall not cause or permit any Hazardous Material
(as defined in Section 4.13.1 of the Loan Agreement) to be brought upon, kept, stored or used in,
on, under, or about the Land by Trustor, its agents, employees, contractors or invitees except for
incidental supplies ordinarily used in the construction and operation of the Project in compliance
with all applicable laws, and shall not cause any release of Hazardous Materials into, onto, under
or through the Land. If any Hazardous Material is discharged, released, dumped, or spilled in, on,
under, or about the Land and results in any contamination of the Land or adjacent property, or
otherwise results in the release or discharge of Hazardous Materials in, on, under or from the Land,
Trustor shall promptly take all actions at its sole expense as are necessary to comply with all
Environmental Laws (as defined below).
Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and
hold Beneficiary and its elected and appointed officials, officers, agents and employees
(collectively, "Indemnitees") harmless from and against any and all loss, claim, liability, damage,
demand, judgment, order, penalty, fine, ,injunctive or other relief, cost, expense (including
reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or
assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually
"Claim" and collectively "Claims") arising in connection with the breach of Trustor's covenants
and obligations set forth in this Section 7.9 or otherwise arising in connection with the presence or
release of Hazardous Materials in, on, under, or from the .Property. The foregoing indemnity
includes, without limitation, all costs of investigation, assessment, containment, removal,
remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether
the Land is in compliance with Environmental Laws, all costs associated with bringing the Land
into compliance with all applicable Environmental Laws, and all costs associated with claims for
damages or injury to persons, property, or natural resources.
Without limiting the generality of the foregoing, Trustor shall, at Trustor's own cost and
expense, do all of the following:
(i) pay or satisfy any judgment or decree that may be entered against any Indemnitee or
Indemnitees in any legal or administrative proceeding incident to any matters against which
Indemnitees are entitled to be indemnified under this Deed of Trust;
(ii) reimburse Indemnitees for any expenses paid or incurred in connection with any
matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and
(iii) reimburse Indemnitees for any and all expenses, including without limitation out-of-
pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection with
the enforcement by Indemnitees of their rights under this Deed of Trust, or in .monitoring and
participating ih any legal or administrative proceeding.
PCDC Resolution 2006-16 Page 36
Trustor's obligation to indemnify the Indemnitees shall not be limited or impaired by any
of the following, or by any failure of Trustor to receive notice of or consideration for any of the
following: (i) any amendment or modification of any Loan Document; (ii) any extensions of time
for performance required by any Loan Document; (iii) any provision in any of the Loan
Documents limiting Beneficiary's recourse to property securing fhe Secured Obligations, or
limiting the personal liability of Trustor, or any other party for payment of all or any part of the
Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made
by Trustor under this Deed of Trust or by Trustor or any other party under any Loan Document, (v)
the release of Trustor or any other person, by Beneficiary or by operation of law, from
performance of any obligation under any Loan Document; (vi) the release or substitution in
whole or in part of any security for the Secured Obligations; and (vii) Beneficiary's failure to
properly perfect any lien or security interest given as security for the Secured Obligations.
The provisions of this Section 7.9 shall be in addition to any and all other obligations and
liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled to
indemnification under this Section without regard to whether Beneficiary or that Indemnitee has
exercised any rights against the Property or any other security, pursued any rights against any
guarantor or other party, or pursued any other rights available under the Loan Documents or
applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall
survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding,
any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of
the lien of this Deed of Trust.
Without limiting any of the remedies provided in this Deed of Trust, Trustor acknowledges
and agrees that each of the provisions in this Section 7.9 is an environmental provision (as
defined in Section 736(f) (2) of the California Code of Civil Procedure) made by Trustor relating to
real property security (the "Environmental Provisions"), and that Trustor's failure to comply with
any of the Environmental Provisions will be a breach of contract that will entitle Beneficiary to
pursue the remedies provided by Section 736 of the California Code of Civil Procedure ("Section
73b") for the recovery of damages and for the enforcement of the Environmental Provisions.
Pursuant to Section 736,. Beneficiary's action for recovery of damages or enforcement of the
Environmental Provisions shall not constitute an action within the meaning of Section 726(a) of
the California Code of Civil Procedure or constitute a money judgment for a deficiency or a
deficiency judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the California
Code of Civil Procedure.
"Environmental Law" means all federal, state or local statutes, ordinances, rules,
regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions
of permits, licenses and other operating authorizations regulating, or relating to, or imposing
liability or standards of conduct concerning (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees and agents, to any
Hazardous Material (as defined above) or other products, raw materials, chemicals or other
substances; (iii) protection of the public health or welfare from the effects of by-products,
wastes, emissions, discharges or releases of chemical substances from industrial or commercial
activities; (iv) the manufacture, use or introduction into commerce of chemical substances,
including without limitation, their manufacture, formulation, labeling, distribution, transportation,
handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous
substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil,
as now or may at any later time be in effect, including but not limited to the Toxic Substances
Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response,
Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials
Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and
PCDC Resolution 2006-16 Page 37
Recovery Act [42 U.S.C.. 6901, et seq..], the Federal Water Pollution Control Act [33 U.S.C. Section
1251 ], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of
Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the
California Hazardous Substances Account Act [California Health and Safety Code Section
25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section
25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health
and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act
[California Water Code Section 13000, et seq.], as they now exist or are hereafter amended,
together with any regulations promulgated thereunder.
7.10 Notice of Claims; Defense of Security; Reimbursement of Costs.
(a) Notice of Cldims. Trustor shall provide written notice to Beneficiary of any
uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or property
damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within three business days
of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive timely notice of,
and shall have a right to cure, any default under any other financing document or other lien
affecting the Property and shall use best efforts to ensure that provisions mandating such notice
and allowing such right to cure shall be included in all such documents. Within three business
days of Trustor's receipt thereof, Trustor shall provide Beheficiary with a copy of any notice of
default Trustor receives in connection with any financing document secured by the Property or
any part thereof.
(b) Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve and
defend the Property and title to and right of possession of the Property, the security of this Deed
of Trust and the rights and powers of Beneficiary and Trustee created under it, against all
adverse claims.
(c) Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable
fees,. costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or
Trustee may render in connection with this Deed of Trust, including without limitation, fees and
expenses related to provision of a statement of obligations or related to a reconveyance.
Trustor further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances
which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of
this Deed of Trust, including any rights or remedies afforded to Beneficiary or Trustee or both. of
them under Section 8.2, whether or not any lawsuit is filed, or in defending any action or
proceeding arising under or relating to this Deed of Trust, including reasonable attorneys' fees
and other legal costs, costs of any disposition of the Property under the power of sale granted
hereunder or any judicial foreclosure, and any cost of evidence. of title.
(dj Notice of Chances. Trustor shall .give Beneficiary prior written notice of any
change in the address of Trustor and the location of any Property, including books and records
pertaining to the Property.
7.1 1 Indemnification.
(a) Trustor shall indemnify, defend (with counsel reasonably acceptable to
Beneficiary), and hold harmless the Trustee and the Indemnitees (as defined in Section 7.9) from
and against all Claims arising directly or indirectly in any manner in connection with or as a result
of (a) any breach of Trustor's covenants under any Loan Document, (b) any representation by
Trustor in any Loan Document which proves to be false or misleading in any material respect
when made, (c) injury or death to persons or damage to property or other loss occurring on the
PCDC Resolution 2006-16 Page 38
Land or in any improvement located thereon, whether caused by the negligence or any other
act or omission of Trustor or any other person or by negligent, faulty, inadequate or defective
design, building, construction or maintenance or any other condition or otherwise, (d) any claim,
demand or cause of action, or ahy action or other proceeding, whether meritorious or not,
brought or asserted against any Indemnitee which relates to or arises out of the Property, or any
Loan Document or any transaction contemplated thereby, or any failure of Trustor to comply
with .all applicable state, federal and local laws and regulations applicable to the Property,
provided that no Indemnitee shall be entitled to indemnification under this Section for matters
caused by such Indemnitee's gross negligence or willful misconduct. The obligations of Trustor
under this Section shall survive the repayment of the Loan and shall be secured by this Deed of
Trust. Notwithstanding any contrary provision contained herein, the obligations of Trustor under
this Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a
deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust.
(b) Limitation of Liability. Beneficiary shall not be directly or indirectly liable to Trustor
or any other Person as a consequence of any of the following: (i) Beneficiary's exercise of or
faifu~e to exercise any rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
Beneficiary's failure or refusal to perform or discharge any obligation or liability of Trustor under
any agreement related to the Property or under this Deed of Trust; (iii) any waste committed by
lessees of the Property or any third parties, or any dangerous or defective condition of the
Property; or (iv) any loss sustained by Trustor or any third party resulting from any act or omission
of Beneficiary in managing the Property after an .Event of Default, unless the loss is caused by the
willful misconduct, gross negligence, or bad faith of Beneficiary. Trustor hereby expressly waives
and releases all liability of the types described ih this Section 7.1 1(bl, and agrees that Trustor shall
assert no claim related to any of the foregoing against Beneficiary.
7.12 Insurance and Condemnation Proceeds. Any award of damages in connection
with any condemnation for public use of, or injury to the Property or any part thereof is hereby
assigned and shall be paid to Beneficiary who may apply such moneys to any indebtedness
secured hereby in such order as Beneficiary may determine, or at the option of Beneficiary the
entire amount so collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
7.13 Release, Extension, Modification. At any time and from time to time, without
liability therefor and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of
the Property, consent to the making of any map or plat of the Land or part thereof, join in
granting any easement or creating any restriction affecting the Property, or join in any extension
agreement or other agreement affecting the lien or charge hereof. At any time and from time
to time, without liability therefor and without notice, Beneficiary may (i) release any person liable
for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the
terms of payment of any Secured Obligation; (iii) accept additional real or personal property of
any kind as security for any Secured Obligation, or (iv) substitute or release any property securing
the Secured Obligations.
7.1.4 Reconveyance. Upon written request of Beneficiary stating that all of the
Secured Obligations have been paid in full, and upon surrender of this Deed of Trust, and the
Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under
this Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any
matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of
Trustee and all recordation fees related to such reconveyance.
PCDC Resolution 2006-16 Page 39
8. Default and Remedies
8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default shall
occur under this Deed of Trust upon the occurrence of any one or more of the following events:
(i) Beneficiary's declaration of an Event of Default under any Loan
Document, subject to the expiration of any applicable cure period set forth in such document;
(ii) Trustor fails to perform any monetary obligation which arises under this
Deed of Trust, and does not cure that failure within ten (10) days following written notice from
Beneficiary or Trustee;
(iii) If Trustor's interest in the Property or any part thereof is voluntarily or
involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of Section
7_4 hereof or if any other Transfer (as defined in the Loan Agreement) occurs in violation of the
Loan Agreement;
(iv) Trustor fails to maintain the insurance coverage required under the Loan
Agreement or otherwise fails to comply with the requirements of Section 7.8 hereof and Trustor
fails to cure such default within the time specified in Section 7.8;
(v) Subject to Trustor's right to contest such charges as provided herein,
Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any
other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure
such default within 1 S days.
(vi) Any representation or warranty of Trustor contained in or made in
connection with the execution and delivery of this Deed of Trust or in any certificate or
statement furnished pursuant hereto or in any other Loan Document proves to have been false
or misleading in any material adverse respect when made;
(vii) If, pursuant to or within the meaning of the United States Bankruptcy Code
or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"),
Trustor (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for
relief against Trustor in an involuntary case; (iii) consents to the appointment of a trustee,
receiver, assignee, liquidator or similar official for Trustor; (iv) makes an assignment for the benefit
of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
(viii) If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Trustor in an involuntary case, (ii) appoints a trustee,
receiver, assignee, liquidator or similar official for Trustor or substantially all of Trustor's assets, or
(iii) issues or levies a judgment, writ, warrant of attachment or similar process against the Property
or the Project, and in each case the order or decree is not released, vacated, dismissed or fully
bonded within 60 days after its issuance.
(ix} The holder of any other debt instrument secured by a mortgage or deed
of trust on the Property or part thereof declares an event of default thereunder and exercises a
right to declare all amounts due under that debt instrument immediately due and payable.,
subject to the expiration of any applicable cure period set forth in such holder's documents; or
PCDC Resolution 2006-16 Page 40
(x) Trustor fails to perform any obligation arising under this Deed of Trust other
than one enumerated in this Section 8.1, and does not cure that failure either within ten (10)
days ("Initial Cure Period") after written notice from Beneficiary or Trustee in the event of a
monetary default, or within thirty (30) days after such written notice in the event of a
nonmonetary default (or such longer time as Beneficiary may agree upon in writing), provided
that Trustor commences to cure the default within the Initial Cure Period and thereafter
prosecutes such cure with due diligence and in good faith and Beneficiary in the exercise of
reasonable judgment determines that a cure cannot reasonably be completed prior to
expiration of the Initial Cure Period.
8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein,
at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and
all of the rights and remedies described below, and may exercise any one or more or all, of the
remedies set forth in any Loan Document, and any other remedy existing at law or in equity or
by statute. All of Beneficiary's rights and remedies shall be cumulative, and the exercise of any
one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to
collect dll expenses incurred. in pursuing the remedies provided hereunder, including without
limitation reasonable attorneys' fees and costs of title evidence.
(a) Acceleration. Beneficiary may declare any or all of the Secured
Obligations to be due and payable immediately.
(b) Receiver. Beneficiary may apply to any court of competent jurisdiction
for, and obtain appointment of, a receiver for the Property.
(c) Entr .Beneficiary, in person., by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part of the Property, and may
also do any and all other things in connection with those actions that Beneficiary may in its sole.
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: taking and possessing copies of all of Trustor's or the then owner's
books and records concerning the Property; entering into, enforcing, modifying, or canceling
Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting
tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to
Trustor; completing any unfinished construction; and/or contracting for and making repairs and
alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been
removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor
hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney- in-fact to perform
such acts and execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of Trustor's name
on any instruments. Regardless of any provision of this Deed of Trust, Beneficiary shall not be
considered to have accepted any property other than cash or immediately available funds in
satisfaction of any obligation of Trustor to Beneficiary, unless Beneficiary has given express written
notice of Beneficiary's election of that remedy in accordance with UCC Section 9621, as it may
be amended or recodified from time to time.
(d) Cure; Protection of Security. Either Beneficiary or Trustee may cure any
breach or default of Trustor, and if it chooses to do so in connection with any such cure,
Beneficiary or Trustee may also enter the Property and/or do any and all other things which it
may in its sole discretion consider necessary and appropriate to protect the security of this Deed
of Trust. Such other things may include: appearing in and/or defending any action or
proceeding which purports to affect the security of, or the rights or powers of Beneficiary or
Trustee under, this Deed of Trust; paying, purchasing, contesting or compromising any
PCDC Resolution 2006-16 Page 41
encumbrance, charge, lien or claim of lien which in Beneficiary's or Trustee's sole judgment is or
may be senior in priority to this Deed of Trust, such judgment of Beneficiary or Trustee to be
conclusive as among Beneficiary, Trustee and Trustor; obtaining insurance and/or paying any
premiums or charges for insurance required to be carried hereunder; otherwise caring for and
protecting any and all of the Property; and/or employing counsel, accountants, contractors and
other appropriate persons to assist Beneficiary or Trustee. Beneficiary and Trustee may take any
of the actions permitted under this Subsection 8.21d) either with or without giving notice to any
Person, except for notices required under applicable law. Any amounts disbursed by Beneficiary
pursuant to this paragraph shall become additional indebtedness secured by this Deed of Trust.
(e) UCC Remedies.. Beneficiary may exercise any or all of the remedies
granted to a secured party under the UCC.
(f) Judicial Action. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for
foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the
covenants or agreements of this Deed of Trust.
(g) Power of Sale. Under the power of sale hereby granted, Beneficiary shall
have the discretionary right to cause some or all of the Property, including any Property which
constitutes personal property, to be sold or otherwise disposed of in any combination and in any
manner permitted by applicable law.
8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted,
Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of
its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause
such notice to be recorded in the office of the Recorder of each County wherein the Property or
some part thereof is situated.
Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of
Trust and the Note or other evidence of indebtedness which is secured hereby, together with a
written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions
of law and this Deed of Trust.
Notice of sale having been given as then required by law, and not less than the time
then required by law having elapsed after recordation of such notice of default, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale,
either as a whole or in separate parcels and in such order as it may determine, at public. auction
to the highest bidder for cash in lawful. money of the United States, payable at time of sale.
Trustee may, and at Beneficiary's request shall, postpone sale of all or any portion of the Property
by public announcement at such time and place of sale, and from time to time thereafter may
postpone such sale by public announcement at the time and place fixed by the preceding
postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold,
but without any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including
Trustor, Trustee, or Beneficiary, may purchase at such sale.
After deducting all costs, fees, and expenses of Trustee and of the trust hereby created,
including reasonable attorneys' fees in connection with sale, Trustee shall apply the proceeds of
sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms
hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person
or persons legally entitled thereto.
PCDC Resolution 2006-16 Page 42
At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid for
and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Beneficiary may settle -for the purchase price by
crediting the sales price of the property against the following obligations:
(a) First, the portion of the Secured Obligations attributable to the expenses of
sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse
Beneficiary or Trustee under Section 7.101c); and
(b) Second, the remaining balance of all other Secured Obligations in any order
and proportions as Beneficiary in its sole discretion may choose.
9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes
of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary;
(b) the benefit of all laws now existing or which may hereafter be enacted providing for any
appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling
in the event of foreclosure; and (d) all presentments, demands for performance; notices
of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance
of this Deed of Trust and of the existence, creation, or incurring of new or
additional indebtedness, and demands and .notices of every kind.
10. Miscellaneous Provisions
10.1 .Additional Provisions. The Loan Documents grant further rights to Beneficiary and
contain further agreements and affirmative and negative covenants .by Trustor which apply to
this Deed of Trust and the Property.
10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be
mailed to Trustor at the address set forth below. That address is also the mailing address of
Trustor as debtor under the UCC. Beneficiary's address set forth below is the address for
Beneficiary as secured party under the UCC. Except for any notice required under applicable
law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be
made in writing, and sent to the parties at their respective addresses specified below or to such
other address as a party may designate by written notice delivered to the other parties in
accordance with this Section. All such notices shall be sent by:
receipt;
(a) personal delivery, in which case notice shall be deemed delivered upon
(b) certified or registered mail, return receipt requested, in which case notice
shall be deemed delivered two (2) business days after deposit, postage prepaid in the United
States mail;
(c) nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) day after deposit with such courier; or
(d) facsimile transmission, in which case notice shall be deemed delivered on
transmittal, provided that a transmission report is generated reflecting the accurate transmission
thereof.
Beneficiary: Petaluma Community Development Commission
PCDC Resolution 2006-16 Page 43
1 1 English Street
Petaluma, CA 94952
Attention: City Clerk
Trustors: Matthew J. Carter
201-203 D St.
Petaluma, CA 94952
Trustee: Fidelity National Title Company
1 1 5'" Street, Suite 201
Petaluma, CA 94952
10.3 Successors and Assigns. The terms, covenants and conditions of this Deed of
Trust shall be binding on and inure to the benefit of the heirs, successors, and assigns of the
parties; provided however this Section 10.3 does not waive the provisions of Sections 7.4.
10.4 Substitution of Trustee. Beneficiary may from time to time or at any time substitute
a trustee or trustees to execute the trust hereby created, and when any such substitution has
been filed for record in the office of the Recorder of Sonoma County, it shall be conclusive
evidence of the appointment of such trustee or trustees, and such new trustee or trustees shall
succeed to all of the powers and duties of the Trustee named herein.
10.5 Attorneys.' Fees and Costs. In any action or proceeding to foreclose this Deed of
Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and
Trustee all costs of such action or proceeding, including reasonable attorneys' fees.
10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be governed
by the laws of the State of California without regard to principles of conflicts of laws. Trustor
agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated
exclusively in the jurisdiction where the Land is located (the "Property Jurisdiction"). The state
and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to the Loan Documents.
Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such
litigation, and waives any other venue to which it .might be entitled by virtue of domicile,
habitual residence or otherwise.. If any provision of this Deed of Trust is held unenforceable or
void, that provision shall be deemed severable from the remaining provisions, and shall in no
way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for
convenience only and are not intended to affect the interpretation or construction of the
provisions herein contained. In this Deed of Trust, whenever the context so requires, the singular
number includes the plural.
10.7 Waiver, Modification and Amendment. Each waiver by Beneficiary or Trustee
must be in writing, and no waiver shall be construed as a continuing waiver. No waiver shall be
implied from any delay or failure by Beneficiary or Trustee to take action on account of any
default of Trustor. Consent by Beneficiary or Trustee to any act or omission by Trustor shall not be
construed as a consent to any other or subsequent act or omission or to waive the requirement
for Beneficiary's or Trustee's consent to be obtained in any future or other instance. No
amendment to or modification of this Deed of Trust shall be effective unless and until such
amendment or modification is in writing, executed by Trustor and Beneficiary. Without limiting
the generality of the foregoing, Beneficiary's acceptance of payment of any sum secured
hereby after its due date shall not constitute a waiver by Beneficiary of its right either to require
PCDC Resolution 2006-16 Page 44
prompt- payment when due of all other sums so secured or to declare default for failure so to
paY•
10.8 Action By Beneficiary. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted
under this Agreement, such action shall be in writing, and such action may be given, made or
taken by Beneficiary's Executive Director or by any person who shall have been designated by
Beneficiary's Executive Director, without further approval by the governing board of Beneficiary.
Beneficiary shall use reasonable best efforts to respond to requests for any such approval,
notice, direction, or consent in a timely manner. In any approval, consent, or other
determination by Beneficiary required hereunder, Beneficiary shall act reasonably and in good
faith.
10.9 Joint and Several Liability. if Trustor consists of more than one person or entity,
each shall be jointly and severally liable for the faithful performance of all of Trustor's obligations
under this Deed of Trust.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written
above..
MATTHEW J. CARTER
ATTACH NOTARIZATION
PCDC Resolution 2006-16 Page 45
Exhibit A
PROPERTY DESCRIPTION
(Legal Description)
PARCEL ONE:
Lot Number 91, as shown upon the Map of the City of Petaluma, Sonoma County, California,
surveyed under instruction from the Board of Trustees of said City and the U.S. Surveyor General,
by Jas. T. Stratton, U.S. Deputy Surveyor, December, 1865.
Being the same property described in the Deed by Marie Cobb and Charles Torliatt to Peter
Torliatt and Theresa Jewett, and recorded May 26, 1948 in Book 799 of Official Records, page 80,
Serial No. C-88193; Sonoma County Records.
PARCEL TWO:
A Portion of Lot 92, in the city of Petaluma, County of Sonoma, State of California, as the same is
laid down and designated upon the Official Map of said City,. as made by James T. Stratton,
Esq., U.S. Deputy Surveyor, and more particularly described as follows:
Commencing at a point on the Southerly line of Second Street, in said City of Petaluma, distant
100.2 feet, Southeasterly from the most Southerly corner of Second Street and D Street, and at
the point of intersection of the dividing line between Lots 91 and 92, and said Southerly line of
Second Street; running thence Southeasterly along the Southerly line of Second Street, 50.3 feet;
thence at right angles, Southwesterly and parallel with the division line between Lots 91 and 92,
100 feet, more or less, to rear or Southwesterly line of said Lot 92; thence Northwesterly along the
Southwesterly line of said Lot 92, 50.3 feet; thence at right angles, Northeasterly along the division
line between Lofis 92, 89, and 91, 100 feet, more or less, to the point of beginning.
Beginning the same premises described in that certain Deed by Magdalena to Lena M. Husler,
recorded July 23, 1909 in Liber 255 of Deeds, page 409, Sonoma County Records.
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ACKNOWLEDGMENT
State of California )
ss.
County of Sonoma )
On before me, a Notary Public, 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(is), 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-ed the instrument.
WITNESS my hand and official seal.
NOTARY PUBLIC
ACKNOWLEDGMENT
State of California )
ss.
County of Sonoma )
On before me, a Notary Public, 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(is), 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-ed the instrument.
WITNESS my hand and official seal.
NOTARY PUBLIC
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