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HomeMy WebLinkAboutPCDC Resolution 2004-17 10/18/2004 RESOI.UTIOIV 2004-17 PETALUMA COMMUNITY DEVELOPMENT COMMISSION RESOLUTION AUTHORIZING MODIFICATIONS TO THE STOREFRONT IMPROVEMENT LOAN PROGRAM AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A LOAN AGREEMENT AND RELATED DOCUMENTS WITH STEPHEN A. LIND, ET AL., FOR THE RESTORATION AND HISTORIC PRESERVATION OF 119 PETALUMA BOULEVARD NORTH WHEREAS, a property owner in the Central Business District has requested financial assistance in order to undertake the restoration and rehabilitation of his building located at 1 19 Petaluma Boulevard North, Petaluma (the "Property"); and, WHEREAS, the Petaluma Community Development Commission (PCDC) approved a "Five-Year Implementation Plan" containing funding fora Storefront Improvement Loan Program (the "Program"); and, WHEREAS, it is economically infeasible for the Property owner to undertake the restoration and rehabilitation of the Property without Agency assistance; and, WHEREAS, PCDC staff have determined that modifications to the Storefront Improvement Loan Program are necessary in order to accomplish the goals of the Program; and, WHEREAS, the restoration and rehabilitation 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, modifications to the Program will facilitate the rehabilitation of structures in the Project Area, the elimination of blight, and the accomplishment of the goals of the Plan; and, WHEREAS, the PCDC has appropriated $200,000 for a Storefront Improvement Loan Program in the FY 2004-05 Budget; and, WHEREAS, Stephan A. Lind, et al., owner of 119 Petaluma Boulevard North has requested a Storefront Improvement Loan in an amount up to $200,000 for the first-time restoration and historic preservation of the building. NOW, THEREFORE, BE IT RESOLVED by the Petaluma Community Development Commission: 1. The Storefront Improvement Loan Program is hereby modified as follows for properties in the Central Business District that were built before 1904 and where a PCDC Resolution No. 2004-17 Page 1 property owner is undertaking a significant restoration of the historic edifice for the first- time: ® Property-owners are eligible for storefront improvement loans up to $200,000. ® The term of the loan is twenty years, after which it is payable. in full. ® Applicants must have a good credit history. • The loan is interest free. m All work is performed at prevailing wage rates. ® If the property is sold during the term of the loan, the entire loan is due on sale. ® Repayment of the loan is secured by a deed of trust on the property. 2. The Executive Director is authorized to execute a Loan Agreement and related documents, substantially in the form attached hereto, with Stephen A. Lind, et al., and to provide a loan in the amount of up to $200,000 for the purpose of the first- time restoration and historic preservation of the edifice to 1 19 Petaluma Boulevard North. Adopted this 18'h day of October, 2004 by the following vote: .Commissioner 'Aye No. ~' ° Absent Chair Glass X Harris X Healy X Vice Chair Moynihan X O'Brien X Thompson X Torliatt X - - - - - 4 1 '~~ ~ ~. ~~. / ~ i ~, f - ` ~- David Glass, Chair _ ATTEST: ~ = Gay e Pet sen, Recording Secretary ~,~ APPROVED ~O RM: ~~ c~ RichardJR. Rudnansky, nera Counsel PCDC Resolution No. 2004-17 Page 2 ATTACHMENT A LOAN AGREEMENT This Loan Agreement (this "Agreement") is entered into effective as of 2004 ("Effective Date") by and among Stephen A. Lind as Trustee of the Stephen A. Lind 1994 Trust dated August 29, 1994 and Elisabeth Dick, an individual formerly known as Elisabeth Laverne Lind, (collectively hereinafter, the "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 1 19 Petaluma Blvd. North 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 prior to 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 historic restoration of the building owned by Borrower and located on the Property in accordance with Exhibit B attached hereto (the Project"). E. The Agency has determined that (i) the Property and Borrower meet the Program eligibility requirements, (ii) provision 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. PCDC Resolution No. 2004-17 Page 3 ARTICLE I LOAN TERMS l .l LOAN AND NOTE. Agency agrees to loan to Borrower, and Borrower agrees to borrow from and repay to Agency, a sum of up to Two Hundred Thousand Dollars ($200,000) 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. 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. The Parties agree that: (i) the Loan amount shall be limited to One Hundred Thousand Dollars ($100,000) ("Initial Loan Amount"), unless Borrower demonstrates to the satisfaction of Agency that the cost of the Project will exceed One Hundred Fifty Thousand Dollars ($150,000); (ii) Agency shall disburse Loan Proceeds in excess of One Hundred Thousand Dollars only after Borrower provides evidence reasonably satisfactory to Agency that Borrower has expended on the Project the Initial Loan Amount together with. an additional Fifty Thousand Dollars ($50,000) from other sources, and (iii) Agency shall disburse Loan Proceeds only for and to the extent necessary for the purposes set forth in Section 2.1. 1.2 INTEREST RATE; PAYMENT DATES; MATURITY DATE. No interest shall be payable on the principal balance of the Loan except upon the occurrence of an Event of Default as specified in Section 2 of the Note. The entire outstanding principal balance of the Loan together with any other sums due under the Loan Documents shall be payable in full on the twentieth (20'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 of 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 first lien on the Property, and absent the written consent of Agency, may be subordinated only to the title exceptions identified in Exhibit F or as Agency shall approve in writing ("Permitted Exceptions"). Borrower agrees that the Deed of Trust shall remain a first 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, PCDC Resolution No. 2004-17 Page 4 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; (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: PCDC Resolution No. 2004-17 Page 5 (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 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 for the Loan, provided that Borrower has provided PCDC Resolution No. 2004-17 Page 6 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 l .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, subject 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; (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. PCDC Resolution No. 2004-17 Page 7 (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. PCDC Resolution No. 2004-17 Page 8 (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 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 or to 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. (h) 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. PCDC Resolution No. 2004-17 Page 9 4.2 PUNCTUAL PAYMENT. Borrower covenants to punctually pay the principal balance of the Note and interest (if any) 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. 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 PCDC Resolution No. 2004-17 Page 10 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 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 PCDC Resolution No. 2004-17 Page 1 1 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 j15 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; (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 PCDC Resolution No. 2004-17 Page 12 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. Sectior 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 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 PCDC Resolution No. 2004-17 Page 13 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 through the lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased." (c) In Contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, 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 No. 2004-17 Page 14 4.15 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. (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; PCDC Resolution No. 2004-17 Page 15 (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 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 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 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 of any applicable cure period set forth in such documents. PCDC Resolution No. 2004-17 Page 16 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; (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. PCDC Resolution No. 2004-17 Page 17 Agency: Petaluma Community Development Commission 1 1 English Street Petaluma, CA 94952 Attn: Borrower: 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. 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 or any other Loan Document shall be litigated exclusively in courts having PCDC Resolution No. 2004-17 Page 18 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 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 F 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 PCDC Resolution No. 2004-17 Page 19 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 OFFLCIALS, 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 OUT 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 No. 2004-17 Page 20 IN WITNESS WHEREOF, the Parties have each caused this Agreement to be duly executed as of the date first written above. BORROWER STEPHEN A. LIND 1994 TRUST dated August 29, 1994 By: Stephen A. Lind, Trustee Elisabeth Dick (formerly Elisabeth Laverne Lind) AGENCY: PETALUMA COMMUNITY DEVELOPMENT COMMISSION By: Its: Executive Director ATTEST: Agency Secretary APPROVED AS TO FORM: Agency Counsel PCDC Resolution No. 2004-17 Page 21 Exhibit A PROPERTY (Attach legal description.) PCDC Resolution No. 2004-17 Page 22 Exhibit B PROJECT (Attach description of rehabilitation/restoration work to be undertaken.) PCDC Resolution No. 2004-17 Page 23 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 apart. 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 (100%) 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 PCDC Resolution No. 2004-17 Page 24 Property or the Improvements on any elevators or any escalators therein and on, in or about the adjoining sidewalks, streets arid passageways; (iii) broad form property damage liability; (iv) additional insured and primary insured endorsements protecting Agency and City and their respective elected and appointed officials, officers, employees and agents; and (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 (30) 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) Edch 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 shall affect or limit the obligation of the insurance company to pay the amount of any loss sustained. PCDC Resolution No. 2004-17 Page 25 (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 arid ds 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. (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 bylaw) 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. PCDC Resolution No. 2004-17 Page 26 H. Compliance with Polic~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 No. 2004-17 Page 27 Exhibit D FORM OF PROMISSORY NOTE PCDC Resolution No. 2004-17 Page 28 EXHIBIT to LOAN AGREEMENT $ 200,000 SECURED PROMISSORY NOTE Petaluma, California 2004 FOR VALUE RECEIVED, Stephen A. Lind, as Trustee of the Stephen A. Lind 1994 Trust dated August 29, 1994, and Elisabeth Dick, an individual formerly known as Elisabeth Laverne Lind (collectively hereinafter, "Borrower") jointly and severally promise to pay to the Petaluma Community Development Commission ("Agency"), in lawful money of the United States of America, the principal sum of Two Hundred Thousand Dollars ($200,000) 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 l .l PAYMENT DATES; MATURITY DATE. The entire outstanding principal balance of this Note, together with all interest (if any) and all other sums accrued hereunder shall be payable in full on the twentieth (20'h) anniversary of the date hereof ("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 PCDC Resolution No. 2004-17 Page 29 other costs and fees then 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. ~ r~FFAUI TS 2.1 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 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 (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 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. PCDC Resolution No. 2004-17 Page 30 ,A,»~:;,~:~ (g) If any representation or warranty contained in the Loan Documents or any certificate furnished in connection with the Loan Documents or in connecaion 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 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 (10) 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 (ui- s~rh longer time as Agency may agree upon in writing), provided that in each case Harrower commences to cure the default within thirty (30) days and. thereafter prosecutes the curing of such default with due diligence and ir'. good faith. fi; IiI 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, ~.~t its option (i} by written notice to Borrower, declare the entire unpaid principal balance of fnis 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 ail rights and remedies available to it under applicable haw, and (iii) .,~ exercise any and all rights and remedies available to Agency under tl'eis I`Jo#e and the ,. _ other Loan Da~~uments, including ~!itrlo~Jt limitation the right to pursue frrec:lasure under :~~~ ~ the Deeu of Trust. Horrowe shall pay all re,asona'ole casts and expenses ncurred by or .. ~: on behalf of Ager~:y including, without limitation, reasonable attorneys' fees, incurred i~Y in connection with .Agency's enfcrcemer:t of this Ncte and the exercise of am or all cf .. its rights and. r`er:^edies hereunder and c~ii sr.;c'r; sums shall be a part of the indeiatedness ~~~: secured by the Deed of Trust. ~~ 2.3 l~E1=AULT RATE. Upor, the occurrence of an Everit of Defc~~lt; interest shall ` autorraticaliy be increased without notice to the rate of ten percent (,', ~°~n1 per annum _, lthe "Default Rare"); provided howevar, if cony payment due hereunder is not pai~a ~~ when dus, the Defauft Rate shall apply commencing upon the due date ror such payment. '~Jhen Borrower is no longer in d?fault, the Default Rate shall no ior-~ger apply, and the interest.rate shall once again be the rate specified in the first paragraph of this Note. Notwithstandincg -the foregoing provisions, if the inrterest rate charged exceeds the maximum le~ai role of interest, the rate sl'~all be the maximum rate pcrmitt~d toy' law. The imposition or acceptance of the Default Rate shall in no e:~/~:nt cor;s~ituie ~ waiver of a default ender ±his Note or prevent r..gency from exercis,ng ar~y a` its other rights or reme:~ies. Iv11SC:ELLANEUUS 3.1 _~1H1`~Jt=f~. The rights and reme~~ies of Agency under *his Note shall be cumulative ar~d rot alternative. N~~ waives by ~.gency of any right cr rerY~zdy under this P~C~: ;<esc':~~r~r: N ;. ?_JC~4-l % PU~e 31 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, p~ower~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) ho 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 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 PCDC Resolution No. 2004-17 Page 32 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; (C) be deemed in any way to impair the right of the Agency to assert the unpaid principal amount ofi 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 a 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 PCDC Resolution No. 2004-17 Page 33 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 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 SPECIMEN FORM _ STEPHEN A. LIND 1994 TRUST dated August 29, 1994 PCDC Resolution No. 2004-17 Page 34 By: Stephen A. Lind, Trustee Elisabeth Dick (formerly known as Elisabeth Laverne Lind) Approved as to form: -SPECIMEN FORM Agency Counsel PCDC Resolution No. 2004-17 Page 35 Exhibit E FORM OF DEED OF TRUST PCDC Resolution No. 2004-17 Page 36 Exhibit F PERMITTED EXCEPTIONS .Exceptions described in that certain Preliminary Report for the Property issued by Fidelity National Title Company with an effective date of September 10, 2004, 07:30 a.m. PCDC Resolution No. 2004-17 Page 37