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HomeMy WebLinkAboutBridges of America Foundation - 1998-08-03I? Ho4t I iazo. Xv Council/Agency Meeting Held: 03- 19-al Deferred/Continued to: XA roved 0 Conditio ally Approved 0 Denied U-T. tAtyCieryLnature Council Meeting Date: 3/19101 Department ID Number: ED 01-10 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENTAGENCY= MEMBERS SUBMITTED BY: RAY SILVER, Executive Director4r4o PREPARED BY: DAVID BIGGS, Director of Economic Development SUBJECT: Approve Appropriation of Housing Set Aside Funds in the Amount of $201,121.35 for Sher Lane/Parkside Lane Affordable Housing Project o TA Statement of Issue, funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: The Redevelopment Agency adopted Resolution Number 290 on August 31, 1998 and concurrently entered into an Owner Participation Agreement (OPA) with Bridges America Sher Lane, L.P. for the acquisition and rehabilitation of a 66 unit apartment complex at 16112 Sher Lane and 16121 Parkside Lane. This project was approved at a total cost of $1,200,734 to be paid from Redevelopment Agency Housing Set Aside funds and HOME Investment Partnership Program funds. The Agency action authorizing this project appropriated only $1,001,000. The Agency action indicated that additional funds necessary to complete the project would be appropriated in the future. At this time, staff requests Council to appropriate Housing Set Aside Funds in the amount of $201,121.35 for this purpose. Funding Source: $201,121.35 of Housing Set Aside Funds, Account 30680301.82800. Recommended Action: Motion to: 1. Appropriate $201,121.35 of Housing Set Aside Funds for the rehabilitation of 16112 Sher Lane and 16121 Parkside Lane. Alternative Actions : Do not approve the appropriation, and modify the terms of the Agency's agreement with Bridges America Sher Lane, L.P. Analysis: On August 31, 2000, the Redevelopment Agency and Bridges America Sher Lane, L.P. entered into an Owner Participation Agreement (OPA) for the acquisition and rehabilitation of a 66 unit apartment complex at 16112 Sher Lane and 16121 Parkside Lane. t REQUESTFOR REDEVELOPMENT AGE�Y ACTION MEETING DATE: 3119101 DEPARTMENT ID NUMBER: ED 01-10 The total cost for this project was approved at $1,200,734, of which $1,001,000 would come from Redevelopment Agency Housing Set Aside funds, and $199,734 would come from either HOME Investment Partnership Program funds or additional Housing Set Aside funds. The Agency directed staff to use Set Aside funds for property acquisition and the first phase of rehabilitation. After Set Aside funds were fully expended, additional funds were to be appropriated to pay for remaining rehabilitation work. The additional appropriated funds would be either HOME funds or Housing Set Aside funds. On July 17, 2000, staff requested Council to appropriate HOME funds for remaining balance of this project. Although Council approved this request and HOME funds are available, the project developer, Bridges America Sher Lane, L.P., recently indicated that it prefers to receive Set Aside funds. The Agency's OPA allows the developer this option. The July 17, 2000 Agency action is attached for your review. As of this date, the following has been spent for acquisition and rehabilitation using the initial appropriation of Set Aside funds: $844,531.10 Set Aside funds spent for site acquisition 1155,081.55 Set Aside funds spent to date for rehabilitation ;999.612.62 TOTAL SPENT AS OF 7117100 Of the initial appropriation, $1,387.35 was not spent. This amount, together with the $199,734 unappropriated balance of the Agency's commitment to the project is included in this request, in the sum of $201,121.35. Bridges America Sher Lane, L.P. is ready to complete the rehabilitation of the project site. After the requested funds are appropriated and all rehabilitation work is completed, the final project budget will be as follows: $844,531.10 Set Aside funds spent for site acquisition $3W202.90 Set Aside funds spent for rehabilitation $1.20U 4.00 TOTAL EXPENDITURES In return for the above Agency assistance, Bridges America Sher Lane, L.P. agreed to maintain income and affordability restrictions on the property for 30 years. According to the agreement, 33 units will be restricted to and maintained affordable for very low-income households (those earning less than 50% of the area median income). The remaining 33 units will be restricted to and maintained affordable for moderate -income households (those earning less than 110% of the area median income). Because this site is located outside of the Agency's Project Area, only 33 affordable units may be counted towards fulfilling the Agency's affordable housing production requirements. All 66 units are eligible to be counted toward the Agency's replacement housing obligations. RCA for Set Aside Funds -2- 311101 2:59 PM REQUESTFOR REDEVELOPMENT AGEI4Y ACTION MEETING DATE: 3/19101 DEPARTMENT 1D NUMBER: ED 01-10 Environmental Status: Categorically excluded under the National Environmental Protection Act (NEPA). Categorically exempt under the California Environmental Quality Act (CEQA), Section 15061(b)(3). Attachment(s)• 1. 2. 3. 4. RCA Author: HOLTZ (5901) RAA from August 31, 1998 approving the OPA and Agency Resolution No. 290 for the Sher LanelParkside Lane affordable housing project RAA from July 17, 2000 appropriating HOME funds for the Sher LanelParkside Lane affordable housing project Agency Resolution No. 290 authorizing the Sher LanelParkside Lane affordable housing project OPA between the Agency and Bridges America Sher Lane, L.P. for the Sher LanelParkside Lane affordable housina nroiect RCA for Set Aside Funds -3- 311101 2:59 PM RAA from August 31, 1998 Approving the Owner Participation Agreement and Agency Resolution Number 290 for the Sher Lane/Parkside Lane Affordable Housing Project ATTACHMENT #1 i v Council/Agency Meeting Held: 3117 erred/Continued to: Approved, O Conditionally AxKoved. Q Denied 211 1-rly City Clerk's Signature I Council Meeting Date: August 31, 1998 1 Department ID Number: ED 98-38 1 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIUREDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY - MEMBERS i SUBMITTED BY: RAY SILVER, City Administrator/Executive DirectorGzt_� 00 - -< n r~ PREPARED BY: DAVID C. BIGGS, Economic Development Director Wo'-'z 7() n SUBJECT: Approve Loan Agreement With Bridges America For The -F Acquisition and Rehabilitation of 16112 Sher Lane & 1612'Ir n Parkside Lane�S ,f fa, 02 qa "i > Statement of Issue. Funding Source, Recommended Action, Attemative Actions}, Analysis, Environmental Status, Attachment(s) Statement of Issue: On August 3, 1998, the Agency approved conceptual deaf points for the acquisition of Sher Lane and directed that a loan agreement be drafted. A loan agreement between the Redevelopment Agency and Bridges America is submitted for approval. The agreement provides up to $1,001,000 in redevelopment housing set aside for the acquisition and rehabilitation of a sixty-six (66) unit project at 16112 Sher Lane & 16121 Parkside Lane. Additional HOME funds in the amount of $200,122 will be committed to the project at a later date for rehabilitation costs. Funding Source: Budgeted funds in Account No. E-TX-ED-968-6-10-00 and Unbudgeted Housing Set Aside Funds. Recommended Action: Motion to: 1. Adopt Redevelopment Agency Resolution 'No. � 90 between the Redevelopment Agency and Bridges America for the acquisition and rehabilitation of 16112 Sher Lane and 16121 Parkside Lane. 2. Approve an Owner Participation Agreement between the Redevelopment Agency and Bridges America and authorize execution 'of the agreement and all attachments by the Chairperson and Agency Clerk. 3. Waive the City's insurance requirements for purposes of approving the Agency loan agreement only. Direct staff to ensure that the minimum insurance requirements are met by Bridges America by the start of rehabilitation activities. u REQUEST FOR CITY COUNCIUREDEVELOPMENT AGENCY ACTION MEETING DATE: August 31 , 1998 DEPARTMENT ID NUMBER: ED 98-38 4. Authorize the transfer of Agency housing funds in the amount necessary to Orange Coast Title Company (Escrow #102518 TA) to effect the closing of the acquisition escrow. Alternative Action(s): Do not approve the loan agreement, or modify the proposed terms and conditions. Analysis: For many months, staff and Bridges America (Bridges) have been negotiating over Agency financial assistance for the acquisition and rehabilitation of a sixty-six unit rental property located at 16112 Sher Lane and 16121 Parkside Lane. Staff and Bridges have concluded negotiations (a complete outline of deal points for both agreements is included as Attachment No. 1) and have agreed to the following terms: Redevelopment Agency Responsibilities • The Agency will provide $1,000,612 in redevelopment housing set aside funds and up to $200,122 in HOME Investment Partnership funds as a loan to Bridges America (Bridges). These funds will be used to acquire and rehabilitate a sixty- six (66) unit rental property located at 16112 Sher Lane and 16121 Parkside Lane. • The HOME funds will be used exclusively for rehabilitation costs and will be administered through a separate agreement. Developer Responsibilities All sixty-six (66) units will be subject to income and affordability restrictions, which can be defined as follows: Thirty three (33) units must be rented to median income tenants. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053, and the required unit mix is as follows: • Seventeen (17) one bedroom units, and; • Sixteen (16) two bedroom units. Twenty-two (22) units must be rented to very low income tenants. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053, and the required unit mix is as follows: • Sixteen (16) one bedroom units, and; • Six (6) two bedroom units. Eleven (11) units must be rented to very low income tenants based on HOME program regulations and at no time will the rents for any unit exceed the "low" HOME rent as defined by HUD. All eleven units will be two bedroom units. RAASHERi -2- 08128/98 3:52 PM REQUEST FOR CITY COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: August 31, 1998 DEPARTMENT ID NUMBER: ED 98-38 • Bridges agrees to guarantee the amount of capital reserves that it shows on the final approved pro forma that is to be submitted to the Redevelopment Agency. Beginning in the third year of the agreement, and continuing annually through the thirtieth year, Bridges will forward the proceeds of a residual receipts account to the Redevelopment Agency as a means of repayment of the redevelopment set aside funds. The minimum amount of the annual repayment will be fifty percent (50%) of the available cash flow. The remaining fifty percent (50%) will be used for a Capital reserve account until said account reaches an amount equal to an amount determined by the Agency and Bridges to be appropriate. After the Capital Account has reached the agreed balance, one hundred percent (100%) of the available net cash flow will be used for repayment. • The Agency Loan Note shall not bear interest except from and after a default. That potion of the principal amount of the Agency Loan Note will be converted from a loan to a grant to Bridges in the following manner: On the first anniversary after approval of the Agency Loan Note, provided that the Note has not been accelerated and all amounts due and payable, and Bridges is not in default, approximately three and three quarter percent (3.333%) of the original loan amount shall automatically convert from principal under the Agency Loan Note to a grant to Bridges. Project Description The proposed project consists of a sixty-six unit building located on adjacent parcels. Together, the property was appraised at $4.5 million in January of 1998. The project is located south of Edinger Avenue, between Sher Lane and Parkside Lane. (see Attachment No. 2). There are 34 one bedroom and 32 two bedroom units. The units are 725 square feet and 900 square feet respectively. Rents for the units are as follows: R, 5 aUnit S ze ;i -114i cork -eVeOM Projecied Re`tit - - - One Bedroom Very LowE_ $658 Two Bedroom Very Low $740 One Bedroom Moderate $695 Two Bedroom Moderate $825 With the income restrictions proposed by the Agency ranging from very low income (50% of median income) to moderate income (110% of median income), the project will be mixed income. Because the properties are located outside the redevelopment area, the Agency will be able to count thirty-three of the very low income units toward its production RAASHER1 -3- 08/28/98 3:52 PM ' � V REQUEST FOR CITY COUNCILIREDEVELOPMENT AGENCY ACTION MEETING DATE: August 31, 1998 DEPARTMENT ID NUMBER: ED 98-38 housing requirements. The balance of the units can be counted toward any replacement housing obligations the Agency will incur through the Waterfront development. Redevelopment Agencies are permitted to assist affordable housing projects outside of project areas if proper legislative findings are made. City Council Resolution No. 6026 and Agency Resolution 174, adopted on June 26, 1989, give the required authorization. A minimum of $350,000 in rehabilitation is needed, as there has been deferred maintenance on both properties. Agency staff is working with Bridges to refine the cost estimates and will continue to work closely throughout the rehab process. Bridges America Bridges America is a Houston -based nonprofit that was formed to improve the distribution of food stuffs to Third World countries, primarily Haiti. Bridges also distributes food in the Houston area on a weekly basis to needy families. Bridges has a local affiliate in Fountain Valley. In the last few years, Bridges has expanded its mission to include the development of affordable housing. More information is included as Attachment No. 3. In 1996, Bridges acquired a troubled eighty unit apartment project in Huntington Beach. Since that time, the property has vastly improved under the ownership and management of Bridges. Forty-two of the units are restricted for affordable rents by covenant by Holly- Seacliff developers who needed to fulfill affordable housing conditions placed on single family projects approved by the Planning Commission and City Council. Bridges also has an acquisition and rehab project underway in the City of Corona. Further, Bridges has entered discussions with the City of Santa Ana over possible affordable housing projects. While the Agency has focused on assisting nonprofit developers acquire and rehab small properties in the Oakview redevelopment project subarea, this project offers an opportunity to meet Agency housing requirements on a larger scale and in more diverse areas of the city. On July 15, 1998, the Council's Economic Development Committee (EDC) heard a presentation on the project by Agency staff and Bridges America. The EDC directed staff to move forward with the project to the full Council (Agency). On August 3,1998, the Agency directed staff to move forward with the project based on the conceptual dealpoints and to return to the next available meeting with a loan agreement. The Agency's involvement with this project is consistent with the City Council's established goal of providing for a diverse housing stock throughout the community (City Goal #7). RAASHERI -4- 08128/98 3:52 PMI • REQUEST FOR CITY COUNCILIREDEVELOPMENT AGENCY ACTION MEETING DATE: August 31 , '1998 DEPARTMENT ID NUMBER: ED 98-38 Environmental Status: Exempt under the California Environmental Quality Act (CEQA) Attachment(s): 1. Agency Resolut r� & Loan Agreement Nc. C 2. Keyser Marston Associates Report 3. August 3, 1998 Approval Action 4. Location Map 5. Bridges America Background Information RCA Author. G. Brown, ext 8831 RAASHER1 -5- 08/28/98 3:52 W V V RAA from July 17, 2000 Appropriating HOME Funds for the Sher Lane/Parkside Lane Affordable Housing Project ATTACHMENT #2 Council/Agency Meeting Held: r7 — rl Deferred/Continued to: Ap aved C1 Conditional) Approved 0 Denied W- dwtlen nature o ting Date: 7/17100 Department ID Number: 00-31 /L{YV LJ JUL 2 4 2000 CITY OF HUNTINGTON BEACH [r����++ �/�E-yy�f�r�Rr'F���r:;v REQUEST FOR REDEVELOPMENT AGENCY ACTION ECOl�F4i?.+Ili l)EVELC,-.?.lr*,lY SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGEKOY ...1.1_� MEMBERS .- ...... MCr,..�: SUBMITTED BY: RAY SILVER, Executive Director Qly PREPARED BY: DAVID BIGGS, Director of Economic Development a SUBJECT: Approve Appropriation of HOME Funds in the Amount of $199,734 for Sher Lane/Parkside Lane Affordable Housing Project, - Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Anatysis, Environmental Status, Attachment(s) Statement of Issue: The Redevelopment Agency adopted Resolution Number 290 on August 31, 1998 and concurrently entered into an Owner Participation Agreement (OPA)-with Bridges America Sher Lane, L.P. for the acquisition and rehabilitation of a 66 unit apartment complex at 16112 Sher Lane and 16121 Parkside Lane. This project was approved at a total cost of $1,200,734 to be paid from Redevelopment Agency Housing Set Aside funds and HOME Investment Partnership Program funds. The Agency action authorizing this project noted that HOME funds would be committed at an appropriate date in the future in an amount not to exceed $199,734. Bridges America Sher Lane, L.P. is ready to commence rehabilitation work to be paid with HOME funds. This request seeks approval to appropriate up to $199,734 of HOME funds for this purpose. Funding Source: Federal HOME Investment Partnership Program Funds from existing annual grant. Recommended Action: 1. Appropriate $199,734 of federal HOME Investment Partnership Program funds as per the Agency's OPA with Bridges America Sher Lane, L.P. for the rehabilitation of 16112 Sher Lane and 16121 Parkside Lane. Alternative Action(s): Do not approve the expenditure of HOME funds and modify the terms of the Agency's agreement with Bridges America -Sher Lane, L.P. Analys!s: On August 31, 2000, the Redevelopment Agency and Bridges America Sher Lane, 1..P, entered into an Owner Participation Agreement (OPA) for the acquisition, ana rehabilitation of a 66 unit apartment complex at 16112 Sher Lane and 16121 Parkside Lane. U REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: 7117100 DEPARTMENT ID NUMBER: 00-31 The total cost for this project was approved at $1,200,734, of which $1,001,000 would come from Redevelopment Agency Housing Set Aside funds, and $199,734 would come from HOME Investment Partnership Program funds. The Agency directed staff to use Set Aside funds for property acquisition and the first phase of rehabilitation. After Set Aside funds were fully expended, HOME funds were to be appropriated to pay for remaining rehabilitation work. As of this date, the following has been spent for acquisition and rehabilitation using Set Aside funds: $844,531.10 Set Aside funds spent for site acquisition 155 081.55 Set Aside funds spent to date for rehabilitation 999 612 62 TOTAL SPENT AS OF 7/17100 There is currently $1,387.35 of remaining Set Aside funds and $199,734 of unappropriated HOME funds required to complete this project. This request seeks approval to appropriate up to $199,734 of HOME funds for this purpose. HOME funds are provided to the City as a grant on an annual basis. After the above HOME funds are appropriated and all rehabilitation work is completed, the final project budget will be as follows: $844,531.10 Set Aside funds spent for site acquisition �156,468.90 Set Aside funds spent for rehabilitation $1,001,000.00 Subtotal of Set Aside funds spent �199 734.00 HOME funds spent for rehabilitation 1 200 34 0 TOTAL EXPENDITURES In return for the above Agency assistance, Bridges America Sher Lane, L.P. agreed to maintain income and affordability restrictions on the property for 30 years. According to the agreement, 33 units will be restricted to and maintained affordable for very low-income households (those earning less than 50% of the area median income). The remaining 33 units will be restricted to and maintained affordable for moderate -income households (those earning less than 110% of the area median income). Because this site is located outside of the Agency's Project Area, 33 affordable units may be counted towards fulfilling the Agency's affordable housing production requirements. All 66 units are eligible to be counted toward the Agency's replacement housing obligations. Environmental Status: Not Applicable RCA for HOME funds -2- 716f00 8:19 AM REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: 7117/00 DEPARTMENT ID NUMBER: 00-31 Attachment(s)• 1. RAA from August 31, 1998 approving the OPA and Agency Resolution No. 290 for the Sher LanelParkside Lane affordable housing project 2. OPA between the Agency and Bridges America Sher Lane, L.P. for the Sher LanelParkside Lane affordable housing project 3. Agency Resolution No. 290 authorzing the Sher LanelParkside Lane affordable housing oroiect RCAAuthor. HOLTZ(5901) RCA for HOME funds -3- 716100 6:19 AM V Agency Resolution Number 290 Authorizing the Sher Lane/Parkside Lane Affordable Housing Project ATTACHMENT #3 V RESOLUTION NO. 290 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING AN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND BRIDGES AMERICA SHER LANE, L.P. WHEREAS, California Health and Safety Code Section 33334.2 and the Redevelopment Plan for the Huntington Beach Redevelopment Project ("Project Area") authorize'and direct the Redevelopment Agency of the City of Huntington Beach ("Agency") to expend not less than twenty percent (20%) of all taxes which are allocated to the Agency pursuant to California Health and Safety Code Section 33670 (all section references herein are to the Health and Safety Code unless otherwise specified) for the purpose of increasing, improving and preserving the community's supply of low and moderate income housing available at affordable housing cost to persons and families of low and moderate income, lower income, and very low income; and Pursuant to applicable law, the Agency has established a Low and Moderate Income Housing Fund ("Housing Fund"); and Pursuant to Section 33334.2(e), in carrying out its affordable housing activities, the Agency is authorized to provide subsidies to or for the benefit of very low income and lower income households, or persons and families of low and moderate income to the extent those households cannot obtain housing at affordable costs on the open market; and Pursuant to Section 33334.2(g), City Council Resolution No. 6026 dated June 26, 1989, and Agency Resolution No. 174 dated June 26, 1989, the Agency is authorized to make expenditures from the Housing Fund outside redevelopment project areas if such use will be of benefit to one or more of the project areas; and SF-98Resol:Bridges 1. RLS 98-i 19 08128l98 - 93 U t ) Resolution 290 The Agency is required pursuant to Section 33413 to rehabilitate, develop or construct replacement dwelling units for those units housing persons and families of lower income which have been destroyed or removed from the lower income housing market as part of a redevelopment project; and The Agency has destroyed and removed certain units which housed persons of lower income within the Project Area; and In order to carry out and implement the redevelopment plan for the Project and the affordable housing requirements thereof, the Agency proposes to enter into an Ovmer Participation Agreement ("OPA") with Bridges America Sher Lane, L.P., a California limited partnership ("Developer's, for the rehabilitation of affordable housing on a site located outside the Project Area ("Site"), as described in the OPA; and The Agency has duly considered all terms and conditions of the proposed OPA and believes that the rehabilitation of the Site pursuant to the OPA is in the best interests of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law requirements; and Pursuant to Section 15326 of the Guidelines to the California Environmental Quality Act, the rehabilitation project is categorically exempt under CEQA; and The Agency has considered the report of Agency staff on the proposed rehabilitation project to be carried out pursuant to the OPA; NOW, THEREFORE, the Redevelopment Agency of the City of Huntington Beach does hereby resolve as follows: 1. The Agency finds that the Agreement is categorically exempt under CEQA, pursuant to Section 15326 of the Guidelines to the California Environmental Quality Act. 2 SF-98Resol:©ridges RLS 9S-Sl9 08128198 - N3 Resolution 290 2. The Agency finds and determines that expenditures from the Housing Fund as contemplated by the Agreement will directly and specifically benefit, improve, and preserve the community's supply of lower income housing within the meaning of Section 33334.2. 3. The Agency finds and determines that expenditures from the Housing Fund as contemplated by the Agreement are of benefit to. the Project Area. 4. The Agency finds and determines that the housing units to be rehabilitated by the Agreement which are restricted to persons and families of lower income qualify as replacement dwelling units for those dwelling units in the Project Area which were destroyed and removed pursuant to the Redevelopment Project. 5. The Chairman of the Agency is hereby authorized to execute the OPA on behalf of the Agency. A copy of the OPA when executed by the Agency shall be placed on file in the office of the Secretary of the Agency. 6. The Executive Director of the Agency (or his or her designee) is hereby authorized, on behalf of the Agency, to sign all documents necessary and appropriate to carry out and implement the OPA and to administer the Agency's obligations, responsibilities and duties to be performed under the OPA and related documents. 3 SF-98Resol:Bridges RLS 98-5I9 08R8N8-#3 x. V 1 ` Resolution 290 PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at an adjourned regular meeting thereof held on this 31stday of August _ _ , 1998. Chairman ATTEST: J Agency Clerk 9 /4/p p REVIEWED AND APPROVED: City AdtTinistrator SF98Resol:Bridges RLS 98-5S9 Q8f208 - 0 APPROVED AS TO FORM: Agency Attorne -�� , INITIATED AND APPROVED: Director of Economic velap ment I' 4 : U Res. No. 290 STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF JIUNTINGTON BEACH I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at an adjourned regular meeting of said Redevelopment Agency held on the 31st day of August,1998 and that it was so adopted by the following vote: AYES: Julien, Harman, Green, Dettloff, Bauer, Garofalo NOES: None ABSENT: Sullivan ABSTAIN: None G/reso1utllresbkpgMes.281 4s & )Zz� Clerk of the Redevelopment Agency of the City of Huntington Beach, Ca. The foregoing Instrument Is a correct copy of the original on file in this office. Attest L9 ,lam rrMAY City Clejk and Ex-ofiicia Clem of the -ity Council of the City of Huntington Beach, calAmiaa n 1 t V Owner Participation Agreement Between the Agency and Bridges America Sher Lane L.P. fog the Sher Lane/Parkside Lane Affordable Housing Project ATTACHMENT #4 V OWNER PARTICIPATION AGREEMENT By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic and THE BRIDGES AMERICA SIIER LANE, L.P., a California limited partnership U V TABLE OF CONTENTS Page SECTION 1. DEFINITIONS..................................................................................... 1 SECTION 2. SUBJECT OF TEM AGREEMENT ................................................... 4 2.1 Purpose of the Agreement.............................................................4 2.2 The Redevelopment Plan.............................................................. 5 2.3 Participant.................................................................................... 5 2.4 Prohibition Against Transfers....................................................... 5 SECTION 3. FINANCING AND ACQUISITION OF THE SITE ........................... 6 3.1 Ownership of the Site................................................................. 6 3.2 Agency Financial Assistance....................................................... 7 3.3 Form of Agency Financial Assistance; Purpose of Note and Security...................................................................................... 7 3.4 Escrow....................................................................................... 7 3.5 Agency's Conditions to Closing .................................................. 8 3.6 Participant's Conditions to Closing .............................................. 9 3.7 Broker's Fees............................................................................ 10 3.8 Subordination Agreements........................................................ 10 3.9 Agency Rehabilitation Assistance...............................................11 SECTION 4. DEVELOPMENT OF THE SITE ..................................................... 12 4.1 General..................................................................................... 12 4.2 Construction of the Project........................................................ 12 4.3 Insurance................................................................................... 14 4.4 Indemnification.......................................................................... 14 4.5 Hazardous Substances................................................................ 15 4.6 Security Financing; Right of Holders ......................................... 15 4.7 Release of Construction Covenants ............................................ 16 4.8 Mechanics Liens, Stop Notices, and Notices of Completion ........ 16 SECTIONS. USE OF THE SITE ..............................................................................17 5.1 No Inconsistent Uses................................................................. 17 5.2 Regulatory Agreement............................................................... 17 5.3 Relocation.................................................................................17 5.4 Maintenance of the Site............................................................. Is 5.5 Nondiscrimination..................................................................... 18 5.6 . Form of Nondiscrimination and Nonsegregation Clauses............ is 5.7 Effect and Duration of Covenants...............................................19 5.8 Capital Reserves.........................................................................19 5.9 Payment of Portion of Residual Receipts .................................... I9 5.10 Financial Statements.................................................................. 20 SF-9SAgree:Sher-3 8r23198 - #2 SECTION 6. DEFAULTS AND REMEDIES ................................. 6.1 Participant Defaults.................................................................... 20 6.2 Agency Defaults........................................................................ 20 6.3 Notice of Default....................................................................... 21 6.4 Agency's Remedies.....................................................................21 ' 6.5 Participant's Remedies................................................................21 6.6 Rights and Remedies are Cumulative ......................................... 21 SECTION 7. GENERAL PROVISIONS................................................................. 21 7.1 Governing Law....................................................................... 21 7.2 Attorneys' Fees.......................................................................... 21 7.3 Notices, Demands, and Communications Between the Parties........................................................................................ 21 7.4 Acceptance of Service of Process ............................................... 22 7.5 Conflicts of Interest................................................................... 22 7.6 Titles and Captions..................................................................... 22 7.7 Gender.......................................................................................22 7.8 Modifications.............................................................................22 7.9 Merger of Prior Agreements and Understandings ........................ 23 7.10 No Third Parties Benefited......................................................... 23 7.11 Assurances to Act in Good Faith ................................................ 23 7.12 Warranty Against Payment of Consideration for Agreement....... 23 7.13 Nonliability of Agency Officials and Employees .........................23 7.14 Interpretation............................................................................. 23 7.15 _Counterparts.............................................................................. 23 7.16 Severability.................................................................................23 7.17 Extension of Times of Performance ........................................... 23 7.18 Inspection of Books and Records................................................24 7.19 Waivers...................................................................................... 24 SECTION S. EXECUTION OF AGREEMENT; TMIE FOR ACCEPTANCE.................................................................................... 24 EXHIBIT "A" LEGAL DESCRIPTION OF SITE EXHIBIT "B" SITE MAP EXHIBIT "C" SCOPE OF DEVELOPMENT EXHIBIT "D" SCHMDULE OF PERFORMANCE EXHIBIT "E" RELEASE OF CONSTRUCTION COVENANTS SF-98AV{ee:Sher-3 SnSM - #2 EXHIBIT "F" PROhBSSORY NOTE EXHIBIT "G" SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED EXHIBIT "H" FORM OF SUBORDINATION AGREEMENT FMIIBIT "I" REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS EXHIBIT "J" PROJECT BUDGET/PRO FORMA Sr-98Agce:Shcr-3 $123/98 - b2 V OWNER PARTICIPATION AGREM%ENT THIS OWNER PARTICIPATION AGREEMENT ("Agreement") is entered into as of the 31" day of August, 1998 ("Effective Date"), by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEAM a public body, corporate and politic ("Agency"), and THE BRIDGE$ ANIERICA SHERLANE, L.P., a California limited partnership ("Participant"). RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (California Health and Safety Code Section 33000 el 5eMc . B. Participant has opened an escrow to acquire the "Site" (as such term is defined herein) from the Pham Trust ("Pham Trust") and intends to develop the "Project" (as such term is defined herein) on the Site in accordance with the terms of this Agreement. C. Agency desires to meet its affordable housing goals pursuant to the California Community Redevelopment Law by assisting Participant in the acquisition of the Site to facilitate Participant's rehabilitation -in -place of an existing apartment complex on the Site with the units, after rehabilitation, subject to the terms of this Agreement, rented to tenants whose household incomes do not exceed very low income, low income, and median income as defined by California law. Agency's assistance shall be in the form of a self-liquidating loan in the amount of ONE MILLION SIX HUNDRED TWELVE DOLLARS ($1,000,612) to assist Participant in meeting the cost of acquisition of the Site and rehabilitation of the apartment complex, and additional assistance in the form of a self-liquidating loan of Two Hundred Thousand One Hundred Twenty-two Dollars ($200,122.00) through the HOME Investment Partnership Program or if such HOME Funds are not timely provided as set forth herein, with additional Agency assistance in that same amount as provided herein. The total assistance shall be One Million Two Hundred Thousand Seven Hundred Thirty-four Dollars ($1,200,734.00). NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: AGREEMBL41 SECTION 1. DEFrNMONS The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: SF-98Agree: Sher-1 08r31/98 - 93 U The term "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The term "Agency Deed of Trust" shall mean the Subordinated Deed of Trust with attached hereto as Exhibit "G". The term "Agency Loan" shall mean collectively, (i) the Agency's self-liquidating loan to Participant in the amount of One Million Six Hundred Twelve Dollars ($1,000,612.00), and (ii) the additional assistance from either HON- E Funds or additional Agency Low and Moderate Income Housing Funds in the amount of Two Hundred Thousand One Hundred Twenty Two Dollars ($200,122.00), as evidenced by the Note in the total amount of One Million Two Hundred Thousand Seven Hundred Thirty -Four Dollars ($1,200,734.00), and secured by the Agency Deed of Trust. The term "Agreement" or any reference to this "Agreement" shall mean this Owner Participation Agreement executed by and between Agency and Participant, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "Approved Project Plans and Permits" shall mean all of the plans, permits, and approvals required for the Project, as approved by the Agency and/or the City including, but not limited to, preliminary and final drawings (final drawings shall be in sufficient detail to obtain a building permit), site plans, building plans and elevations, grading plans, landscaping plans, parking plans, material pallets, a description of structural, mechanical, and electrical systems, and all other plans, drawings and specifications that City and Agency customarily require for such a Project, and including all required approvals and findings pursuant the California Environmental Quality Act of 1970, as amended, and regulations promulgated thereunder ("CEQA"), and, if applicable, the National Environmental Policy Act of 1969, as amended, and regulations promulgated thereunder. The term "City" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, Huntington Beach, CA 92648. The term "Construction/Permanent Lender" shall mean one or more lenders of Participant`s choice providing funds for the Participant's rehabilitation of the Units, including any replacement or permanent lender that replaces the construction lender in an amount not to exceed Thirty-five Thousand Dollars ($35,000.00). The term "Days" shall mean calendar days and the statement of any time period herein shall be calendar days and not working days, unless otherwise specified. The term "Effective Date" shall mean the date the Agency approves this Agreement, which date shall be inserted into the preamble of this Agreement. SF-98Agree:Sher-3-1 2 08M /98.3 The term "Eligible Tenant" shall mean any person entitled to rent a Unit as set forth in the Regulatory Agreement. The terra "Escrow" shall mean that certain escrow with Orange Coast Title Company, Escrow Division, which has been established to convey the Site from the Pham Trust to Participant, and into which Agency shall deposit the portion of the Agency Loan funds described in Section 3.2 in accordance with the terms of this Agreement. The term "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency, or authorized designee. Whenever an administrative action is required by Agency to implement the terms of this Agreement, the Agency Executive Director, or an authorized designee, shall have authority to act on behalf of Agency, except with respect to matters reserved under California law wholly for Agency Board determination. The term "First Deed of Trust" shall mean the deed of trust recorded in first position at close of escrow as security for the Ioan obtained by Participant from a lender of Participant's choice in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000)_ The term "Force Majeure" shall mean any war; insurrection; strike; lock -out; labor dispute; riot; flood; earthquake; fire; casualty; Act of God; act of the public enemy; epidemic; quarantine; restriction; freight embargo; unavoidable Iack of transportation; governmental restriction; unusually severe weather,'inability to secure necessary labor, materials. or tools; delay of any contractor, subcontractor or supplier, economic or market conditions; lack of tenant commitments or tenant changes; inability to secure satisfactory financing; act of the other party including act or failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of City or Agency shall not excuse performance by Agency); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. The term "Grant Deed" shall mean that certain Grant Deed that conveys the Site from the current owner, the Pham Trust, to Participant. The term "Note" shall mean that certain Promissory Note Secured by Subordinated Deed of Trust attached hereto as Exhibit "F". The term "Participant" shall mean THE BRIDGES AMERICA SHER LANE, L.P., a California limited partnership, whose address is 18837 Brookhurst Street, Suite 303, Fountain Valley, CA 92708. The Term "Project" shall mean generally the rehabilitation of the existing apartment complex on the Site and the subsequent rental of the Units therein to Eligible Tenants, pursuant to the procedures set forth herein and more particularly described in the Scope of Development. The term "Project Budget/Pro Forma" shall mean the sources and uses of funds for acquisition of the Site and the development of the Project as set forth in Exhibit "J". SF-98Agree: sner-3.1 3 Ox/31.99.3 U V The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions attached hereto as Exhibit "I". The term "Rehabifitation Account" shall have the meaning ascribed in Section 3.9. The term "Release of Construction Covenants" shall mean that release attached hereto as Exhibit "E" issued by Agency to Participant pursuant to the provisions of Section 4.7 below. The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit "D" setting forth the times upon which performance by the parties under this Agreement is due. The term "Scope of Development" shall mean that certain exhibit attached hereto as Exhibit "C". The term "Second Deed of Trust" shall mean the deed of trust recorded in second position at close of escrow as security for the loan obtained by Participant from the Pham Trust as seller financing in an amount not to exceed Eight Hundred Thousand Dollars ($800,000). The term "Site" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California commonly known as 16112 Sher Lane, Huntington Beach, California, and legally described in Exhibit "A" and depicted on the Site Map. The term "Site Map" shall mean the map attached hereto as Exhibit "B" depicting the location of the Site. The term "Subordination Agreement" shall mean the form of Subordination Agreement attached hereto as Exhibit "H". The term "Units" shall mean the sixty-six (66) dwelling units comprising the Project and subject to rent restrictions as set forth in the Regulatory Agreement. SECTION 2. SUBJECT OF TMS AGREEMENT. 2.1 Purpose of the Agreement (a) The purpose of this Agreement.. is to implement the Community Redevelopment Law by providing a loan (the "Agency Loan") to assist Participant to pay a portion of the Project costs, in an amount not to exceed One Million Two Hundred Thousand Seven Hundred Thirty -Four Dollars ($1,200,734.00), as evidenced by the Note secured by the Agency Deed of Trust, which Agency Loan is composed of (i) One Million Six Hundred Twelve Dollars ($1,000,612) in funds from the Agency's Low and Moderate Income Housing Fund, which funds are not federal funds or the proceeds of a tax-exempt bond issue, and Two Hundred Thousand One Hundred Twenty-two Dollars ($200,122.00) [pursuant to a separate contract with City] in HOME SMS.kacc:Sher-3-1 4 081r.9s -3 Program rehabilitation funds or that same amount in additional Agency Low and Moderate Income Housing Funds as provided in Section 3.9. (b) This Agreement is intended to facilitate Participant's acquisition of the Site and rehabilitation of the existing apartment complex located thereon for rental to very low and low income tenants. The Project pursuant to this Agreement and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project has been undertaken and is being assisted. (c) The Project will be used and operated for not less than thirty (30) years as mixed income rental housing, with not less than fifty percent (501/o) of the apartments restricted to occupancy to Eligible Very Low Income Tenants at an Affordable Rent, and the remainder restricted to occupancy to Eligible Special Median Income Tenants (as those terms are defined in the Regulatory Agreement). 2.2 The Redevelopment Plan. This Agreement is made in accordance with the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Site is located outside of the Merged Redevelopment Project. Agency intends this Agreement to meet its obligations pursuant to Health and Safety Code Sections 33413, 33334.2 and 33413(b)(2)(A)(ii). 2.3 Participant. The Participant is The Bridges America Sher Lane, L.P., a California limited partnership, whose address is 18837 Brookhurst Street, Suite 303, Fountain Valley, CA 92708. 2.4 Prohibition A ainst Transfers. (a) The qualifications and identity of the Participant are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Participant. No voluntary or involuntary successor in interest of the Participant shall acquire any rights or powers under this Agreement except as expressly set forth herein (b) The Participant shall not assign all or any part of this Agreement without the prior written approval of the Agency. The Agency agrees to reasonably give such approval if. (1) the change is to a limited partnership formed for financing the Project, in which the original Participant or its general partner is the managing general partner, or possesses not Iess than a 50% interest in the managing general partner, and has control over the management of the partnership; and (2) if in the reasonable determination of the Agency, the proposed reconstituted Participant is comparable in all material respects (ncluding experience, character and financial capability) to the Participant. Any such change (or assignment of this Agreement in connection therewith) shall be by instruments satisfactory to the Executive Director (or his designee), and be subject to the approval by the Executive Director (or his designee) of evidence of the proposed assignee's qualifications to meet the obligations of the Participant under this Agreement_ SF-98Agree:Sher-3-1 5 08rt 1/98 -3 U (c) For the reasons cited above, the Participant represents and agrees for itself and any successor in interest that without the prior written approval of the Agency, there shall be no significant change in the ownership of the Participant or in the relative proportions thereof, or with respect to the identity of the parties in' control of the Participant or the degree thereof, by any method or means. (d) The Participant shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in control of the Participant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by the Agency and the Agency may exercise its remedies pursuant to the Agency Note and Agency Deed of Trust, if there is any significant change (voluntary or involuntary) -in membership, management or control, of the Participant (other than such changes occasioned by the death or incapacity of any individual). (e) Participant shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any right herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Site (referred to hereinafter as a "Transfer"), without prior written approval of the Agency, except as expressly permitted by this Agreement. Consent to a Transfer shall not result in acceleration of the Agency Note. Consent to one such Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Participant. Any such proposed transferee, by instrument in writing satisfactory to the Agency and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Participant under this Agreement and agree to be subject to all conditions and restrictions applicable to the Participant in this Agreement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such Transfer, and if approved by the Agency its approval shalt be indicated to the Participant in writing. (f) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Participant or any other party from any obligations under this Agreement. (g) The provisions of this Section 2.4 shall be of no force or effect as of the expiration of the Regulatory Agreement. SECTION 3. FiNANCTNG AND ACOMSMON OF THE SITE. 3.1 Ownership of the Site. As of the Effective Date of this Agreement, Participant is in escrow to acquire the Site from the Pham Trust and as such Participant qualifies as an "owner - participant" within the meaning of the Community Redevelopment Law (Health & Safety Code §33000-et seq.) Participant's financing of the acquisition of the Site includes Participant's equity, financing secured by the First Deed of Trust, seller financing secured by the Second Deed of Trust, and use of a portion of the Agency Loan. M98A;rer:Sher-3.1 6 08/31 r78 -3 V 3.2 Agency Financial Assistance. The Agency, in accordance with the terms of this Agreement, shall provide to Participant the Agency Loan. Upon satisfaction of all conditions precedent (or waiver by Agency) to Agency's obligation to disburse the Agency Loan under this Agreement, Agency shall deposit approximately Seven Hundred Thirty-five Thousand Dollars ($735,000.00) of the Agency Loan funds into Escrow for disbursement to Participant at Close of Escrow (Participant shall provide Agency's Executive Director with notice of the exact amount Agency is to deposit), with the remainder to be disbursed to pay for the costs of rehabilitation of the Site. 3.3 . Form of Agency. Financial Assistance: PuWse of Note and Security.. The parties hereto expressly acknowledge that the Agency Loan funds to be provided to Participant under this Agreement is intended to be a self-liquidating Ioan, assuming Participant's performance of its obligations hereunder. In the event Participant is in material default of any of its obligations hereunder, including its obligations under the Regulatory Agreement, Agency's sole and exclusive remedy shall be to foreclose under the Agency Deed of Trust. 3.4 Escrow. This Agreement, once deposited in Escrow, shall constitute joint escrow instructions of Agency and Participant. The Escrow agent is hereby empowered to act under the Agreement and upon indicating its acceptance in writing to Agency and Participant within five (5) days after receipt of this Agreement; provided, however, that any undertaking by the Escrow agent of any of the acts or services set forth in this Agreement shall constitute acceptance of the obligation to perform as Escrow agent under this Agreement. Any amendment to the Escrow instructions contained herein shall be in writing and signed by both Agency and Participant. (a) Closing Date. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described in Sections 3.5 and 3.6 and complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the date provided therefor in the Schedule of Performance, either party may terminate this Agreement, by providing notice of termination to the other party. (b) Delivery of Documents and Funds by Participant. On or before twelve noon on the last business day prior to the scheduled Closing Date, Participant shall deposit or cause to be deposited with the Escrow agent the following: (i) the Grant Deed executed and acknowledged by the Pham Trust; (ii) the Note, executed by Participant; (1ii) the Agency Deed of Trust, including the Rider thereto, executed and acknowledged by Participant; (iv) the Regulatory Agreement, executed and acknowledged by Participant; and SF-98Agrce:Shcr-3-1 7 0871M-3 u (v) All funds, documents, and deposits Participant is required to deposit with Escrow agent in order to close the Escrow conveying the Site to Participant. (c) Delivery of Documents and Funds by Agency. On or before twelve noon on the last business day prior to the scheduled CIosing Date, Agency shall deposit or cause to be deposited with the Escrow agent the following: (i) the Agency Deed of Trust including the Rider thereto, executed and acknowledged by Agency; 00 the Regulatory Agreement, executed and acknowledged by Participant; and (iii) the portion of the Agency Loan funds described in Section 3.2. (d) Recordation. Escrow agent is directed, on the Closing Date, to record against the Site the following documents in the following order of priority: (i) the Grant Deed; (ii) the First Deed of Trust; (iii) the Second Deed of Trust; (iii) any deed of trust from the Construction/Permanent Lender; and (iv) the Agency Deed of Trust; (v) the Regulatory Agreement. One or more Subordination Agreements, if required to effect the proper priority of the Agency Deed of Trust and Regulatory Agreement, shall be recorded at the direction of Participant in accordance with the terms of this Agreement. (e) Escrow Agent Duties. The Escrow agent shall (i) record the documents as provided in subparagraph (d); and (ii) at Closing, deliver the original promissory note to Agency and a conformed copy of same to Participant, and upon recordation deliver to Agency the original of the Agency Deed of Trust and the Regulatory Agreement and a conformed copy of same to Participant. (0 Interest Bearing Accounts. Escrow agent shall hold all funds received in an interest bearing account with the interest accrued paid at Closing to the party depositing such funds. (g) Title Insurance. Escrow agent shall deliver to Agency at Closing a CLTA standard form owner's policy of title insurance in an amount not to exceed $1,200,734.00, issued by a title insurer acceptable to Agency, insuring in favor of Agency the priority of the Agency Deed of Trust and Regulatory Agreement in accordance with the priority established by this Agreement. The cost of said policy shall be shared equally between the parties. 3.5 ' Agency's Conditions to Closing. Agency's obligations to deposit the portion of Agency Loan funds described in Section 3.2 in Escrow for. disbursement to Participant at Closing shall be conditioned and contingent upon satisfaction, or Agency's waiver of each of the following conditions precedent (collectively, the "Agency's Conditions to Closing"): SF-98Agree: Sher-3-1 0351198 -3 (a) Participant has deposited in escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow; (b) Escrow agent, at Closing, holds and will deliver to Agency the Note, Deed of Trust, Regulatory Agreement, and Title Insurance Policy. (c) Participant shall deliver evidence acceptable to the Agency Executive Director that Participant has obtained the insurance policies as required by Section 4.3 of this Agreement. (d) Participant shall deliver to the Agency a good standing certificate issued by the California Secretary of State's office indicating that Participant exists in good standing at the time of the proposed Close of Escrow. (e) The Agency shall determine that Participant is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Participant in furtherance of this Agreement. In the event any of the Agency's Conditions to Closing are not satisfied (or waived by Agency), Agency may cancel the Escrow and terminate this Agreement by delivering thirty (30) days prior written notice to Participant and the Escrow agent. Participant may nullify Agency's notice to terminate if, within such thirty (30) day period Participant (at no cost to Agency) cures any unsatisfied Agency's Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Agency shall be returned to it with any accrued interest earned on such funds; (ii) Participant shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.6 Participant's onditions to Closing. Participant's obligations to close Escrow shall be conditioned and contingent upon satisfaction, or Participant's waiver of each of the following conditions precedent (collectively, the "Participant's Conditions to Closing"): (a) The Pham Trust have signed and acknowledged the Grant Deed and have deposited same in Escrow; (b) Participant has obtained the financing secured by the First Deed of Trust, the Second Deed of Trust, any such deed(s) of trust, securing any financing from the Construction/Permanent Lender, and all documents and instruments related to same have been deposited in Escrow as required by the agreements and documents pertaining thereto; (c) Agency has deposited in escrow all df the funds and instruments required of it by this Agreement in order to close the Escrow, including but not limited to the portion of the Agency Loan funds described in Section 3.2, the Agency Deed of Trust, Regulatory Agreement, and such Subordination Agreements as may be required to effect the priority required by this Agreement; sF-98Agree: sher-7-1 9 O S131 rya a V (d) All conditions to Closing set forth in (i) the agreements and any amendments thereto between Participant and the Pham Trust for conveyance of the Site, including; as pertaining to the Second Deed of Trust; and (ii) agreements and financing documents pertaining to Participant's- financing of the acquisition of the Site, including as pertaining to the First Deed of Trust, financing by the Construction/Permanent Lender, have been satisfied (or waived by the appropriate party). In the event any of the Participant's Conditions to Closing are not satisfied (or waived by Participant), and provided Participant has fully performed its obligations hereunder, Participant may cancel the Escrow and terminate this Agreement by delivering thirty (30) days prior written notice to Agency and the Escrow agent. Agency may nullify Participant's notice to terminate if, within such thirty (30) day period Agency (at no cost to Participant) cures any unsatisfied Participant's Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Participant shall be returned to it with any accrued interest earned on such funds; (ii) Participant shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.7 Broker's Fees. Participant and Agency shall each indemnify, defend, and hold Harmless the other from any claims or damages for payment of any real estate commissions or broker's fees or finder's fees arising out of the acts or representations of the other with respect to any of the transactions contemplated by this Agreement. 3.8 Sub rdination _AeTeements. Pursuant to Section 33334.14 of the Health and Safety Code, Agency is permitted to subordinate the Agency Deed of Trust and the Regulatory Agreement to superior deed of trust and regulatory agreements, including but not limited to the First Deed of Trust, the Second Deed of Trust, and Construction)Permanent Lender's deed of trust, and such other and related documents as such lender(s) may require, if certain findings are made and certain written commitments are obtained. In accordance with said Section, the Agency hereby finds that no economically feasible alternative method of financing the Project on substantially comparable terms and conditions without subordination is reasonably available and the Agency has obtained written commitments to protect the Agency's investment in the event of a default. Therefore, the Agency hereby agrees to subordinate the Agency Deed of Trust and the Regulatory Agreement to the First Deed of Trust, Second Deed of Trust, the Deed(s) of Trust of the ConstructiorJPermanent Lender, and such other. and related documents as such Iender(s) may require, not to exceed a total indebtedness of Four Million Two Hundred Thirty -Five Thousand Dollars ($4,235,000.00). Participant may apply to Agency to increase said indebtedness, which approval the Agency shall not unreasonably withhold. The priority of such deeds of trust shall be effected through the order of recordation of documents as set forth in Section 3.4(d). Such subordination agreement shall provide for: (i) A right of the Agency to cure a default on the First Deed of Trust, Second Deed of Trust,,and Deed(s) of Trust of the Construction/Permanent Lender, (ii) A right of the Agency to negotiate with any lenders after notice of default from the lender; (iii) An agreement that if prior to foreclosure of any SF-98Agrcr:Shcr-3-1 10 OW 1/98 -3 of said loans, the Agency takes title to the Site and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the Agency; and (iv) A right of the Agency to purchase the Site from the Participant at any time after a default on the Ioan. If a Subordination Agreement is required to effect the foregoing order of priority, such subordination agreement shall be generally in the form set forth as Exhibit "H". If, from time to time and at one or more times, Participant chooses to refinance any loan secured by a deed of trust which is superior to the Agency Deed of Trust and Regulatory Agreement, Agency agrees to subordinate the lien of the Agency Deed of Trust to the refinancing lender's deed of trust under the same terms and conditions as set forth in the Subordination Agreement, on the condition that Participant's total indebtedness pursuant to the liens of the First Deed of Trust, Second Deed of Trust, and Construction/Permanent Deed of Trust shall not exceed, in the aggregate, the sum of Four Million Two Hundred Thirty -Five Thousand Dollars ($4,235,000.00). 3.9 Agency Rehabilitation Assistance. (a) Immediately upon the Close of Escrow, Agency shall set aside into a separately identifiable Agency account to be used exclusively for the rehabilitation of the Site pursuant to this Agreement (the "Rehabilitation Account') a portion of the Agency Loan equal to (i) One Mullion Six Hundred Twelve Dollars ($1,000,612.00), less (ii) the portion of such One Million Six Hundred Twelve Dollars ($ I,000612.00) that Agency deposited into Escrow pursuant to Section 3.2 [Agency and Participant anticipate the foregoing deposit into the Rehabilitation Account will be Two Hundred Sixty -Five Thousand Six Hundred Twelve Dollars ($265,612.00)]. Pursuant to subparagraph (c) below, Agency later shall deposit the HOME Program funds of Two Hundred Thousand One Hundred Twenty Two Dollars ($200,122.00) into the Rehabilitation Account when City and Participant execute a HOME Program agreement. (b) Participant shall invoice Agency Executive Director the costs of rehabilitation as they are incurred, which invoices the Executive Director shall pay within ten (10) days of receipt. In no event shall Agency pay rehabilitation costs in excess of Four Hundred Sixty- five Thousand Seven Hundred Thirty-four Dollars ($465,734.00). (c) City and Participant shall enter into an agreement for the provision of City assistance to the Project in the amount of Two Hundred Thousand One Hundred Twenty -Two Dollars ($200,122.00) from the United States Department of Housing and Urban Development ("HUD") HOME Investment Partnerships Program ("HOME Program") (42 U.S.C. § 12741 e1 seg.) ("HOME Funds") by no later than October 31,1998. City shall transfer such funds to Agency and Agency shall then deposit the HOME Funds into the Rehabilitation Account. Such HOME Funds shall be part of; and repaid through, the self-liquidating Agengy Loan. If such HOME Funds agreement is not timely executed, Agency shall deposit the same amount into the rehabilitation account from the Agency's Low and Moderate Income'Housing Fund, and in such an instance the parties shall cause the eleven (11) HONE Units described in the Regulatory Agreement to be redesignated as Units for Eligible Very Low Income Tenants. (d) Within 90 days after the Agency issues the Release of Construction Covenants, Participant shall cause to be prepared and shall submit to the Agency for reasonable approval a cost certification (the "Cost Certification"), setting forth all Project Costs, certified by the SF-98AUce:Shcr-3-1 11 08r91198 -3 Chief Financial Officer of Participant. In the event the actual total Project Costs, as certified by Participant and approved by Agency, are less than Five Million Three Hundred Thirty-five Thousand Seven Hundred Thirty-four Dollars ($5,335,734.00), the balance of the Agency Loan shall be reduced by the same amount, and the Agency and Participant will cause a reduced Agency Note, Deed of Trust and related instruments to be executed and recorded. SECTION 4. DEVELOPMENT OF THE SITE. 4.1 General The Project shall consist of rehabilitation of an existing 66-unit apartment complex on the Site and the use of the Site as an affordable rental apartment complex in accordance with this Agreement and the Regulatory Agreement. 4.2 Construction of the Project. (a) Development in Accordance with proved _Project Plans and Permits. Participant shall undertake the Project and rehabilitate the Site in accordance with this Agreement, the Scope of Development, and the Approved Project Plans and Permits and any changes thereto as may be subsequently approved in writing by both Participant and Agency and, if necessary, City. As completed, the Project (a) shall comply with all applicable laws and ordinances of all governmental authorities, including, without limitation, all Federal Housing Quality Standards as set forth at Section 982.401 of Title 24 of the Code of Federal Regulations. All Units must be rehabilitated no later than eighteen (18) months from the close of escrow. (b) Agency Approvals. Participant will furnish to the Agency a list of proposed repairs and improvements to the Site prior to submittal of plans to the City. The Agency will have the right to review and approve the list prior to the start of any rehabilitation work Participant shall provide to Agency an executed construction contract with a contract price that is consistent with the Project Budget. Upon request, the construction contract, together with all other contracts for services necessary to construct the Project shall be submitted to the Agency for approval. The Agency shall approve the contracts if they are consistent with the Project Budget. Participant will furnish copies of all building permits for all items required to be permitted under the Huntington Beach Municipal Code, with proof of inspection by the Huntington Beach Building Department, where applicable. (c) Evolution of Project Plans. On or before the date set forth in the Schedule of Performance, Participant shall submit to City, and shall use reasonable efforts to obtain approval of; the Approved Project Plans as may be required for the rehabilitation work; and Permits. including City approval of, preliminary, and thereafter final drawings and specifications for development of the Site in accordance with the Scope of Development, and all in accordance with the City's requirements. The term preliminary and final drawings shall be deemed to include site plans, building plans and elevations, grading plans, if applicable, landscaping plans, parking plans, material pallets, a description of structural, mechanical, and. electrical systems, and all other plans, drawings and specifications as City and Agency customarily require for such a Project. Final SF-98AUmSher-3-1 12 08131 /98 -3 drawings will be in sufficient detail to obtain a building permit. Said plans, drawings and specifications shall be consistent with -the Scope of Development and the various development approvals referenced hereinabove, except as such items may be amended by City (if applicable) and by mutual consent of Agency and Participant. Participant shall not be in default of this Agreement due to any delay of Agency or City processing any plans or permit applications submitted by Participant. (d) Other Governmental Permits. Participant shall, at its own expense and before commencement of construction or rehabilitation of any buildings, structures, or other work of improvement upon the Site, secure or cause to be secured any and all permits and approvals which may be required by any governmental agency affected by such construction, development, or work to be performed by Participant pursuant to the Scope of Development, including but not limited to, necessary building permits and all approvali required under the California Environmental Quality Act ("CEQA"). In constructing and developing the Project, Participant shall comply with all applicable development standards in City's Municipal Code and shall comply with all building code, landscaping, signage, and parking requirements (except as may be permitted through approved variances and modifications). (e) Approval _by Agency. The Agency shall approve or disapprove any submittal made by the Participant pursuant to this Agreement within ten (10) days after such submittal. Any disapproval shall state in writing the reason for the disapproval and the changes which the Agency requests to be made. After Participant resubmits the corrected submittal, Agency shall have an additional seven () days for the review of the resubmittaI but if the Agency disapproves the resubmittal, then the cycle shall repeat, until the Agency's approval has been obtained. (0 Agency Assistance. So long as Participant is not in material default of any term or provision of this Agreement, Agency agrees to provide reasonable assistance to Participant, at no cost to Agency, in the processing of Participant's submittals required under this Agreement in order that Participant may obtain a final City action on such matters on or before the date set forth in the Schedule of Performance; provided that Agency does not warrant or represent that such approval shall be obtained. (g) Cost of Rehabilitation. Participant (with the assistance of the Agency Loan) shall bear all costs for the Project, including, but not limited to any and all costs for preparing or obtaining the Approved Plans and Permits, environmental remediation, interim and permanent financing, broker's and leasing commissions, and fees or charges for development and building, except as specifically provided herein. (h) Project Budget. Participant shall develop the Project in accordance with the Project Budget/Pro Forma attached hereto as Exhibit "J". (i) Project Schedule. Participant shall commence and complete the construction of the Project within the times set forth in the Schedule of Performance. SF-98Agce:Shrr-3-1 13 08131 /98 -3 V 4.3 Insurance. Participant shall procure and maintain, at its sole cost and expense, until the date that Agency issues or is required to issue the Release of Construction Covenants, the following policies of insurance: (a) Worker's Compensation Insurance. Pursuant to California Labor Code Section 1861, Participant acknowledges awareness of Section 3700 et seq, of said code which requires everyemployer to be insured against liability for workers' compensation. Participant covenants that it will comply with such laws and provisions prior to commencing any work of construction or rehabilitation on the Site. Participant shall maintain such Workers' Compensation Insurance in an amount not less than One Hundred Thousand Dollars ($100,000) bodily injury, each occurrence, One Hundred Thousand Dollars ($100,000) bodily injury by disease, each employee, and Two Hundred Fifty Thousand Dollars ($250,000) bodily injury by disease, policy limit, at all times incident thereto, in forms and underwritten by insurance companies admitted in California, or if not admitted in California then reasonably acceptable to Agency. Participant shall require all subcontractors to provide such Workers' Compensation Insurance for all of the subcontractor's employees. Participant shall furnish Agency with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Participant shall similarly require all subcontractors to waive subrogation. (b) General Liability Insurance. Participant shall carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual Iiability, in an amount not less than One Million Dollars ($1,000,000), combined single limit. Such insurance shall also include automotive bodily injury and property damage liability insurance. All such insurance shall be provided by insurance companies admitted in California, or if not admitted in California then reasonably acceptable to Agency. Such insurance shall name the City and Agency and their officers, agents, and employees acting in their official capacity, as additional insureds pursuant to a pre-1990 CG 20 10 11 85 endorsement form. In the event of aggregate coverage; such limit shall be no less than One Million Dollars ($1,000,000.00). Participant shall require its insurer to waive its subrogation rights against Agency and shall provide certificates of insurance evidencing same. (c) Certificates of Insurance; Additional Insured Endorsements. Prior to performance of any work upon the Site, Participant shall furnish to Agency certificates of insurance and additional insured endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such certificates and endorsements shall be subject to the reasonable approval of the City Attorney and shall provide the name and policy number of each carrier and policy and shall state that the policy is currently in force and shall promise to provide that such policies will not be cancelled without thirty (30) days prior written notice to Agency. 4.4 Indemnification. During ;any period of -construction of any of the Project pursuant to this Agreement and until such time Agency issues or is required to issue the Release of Construction Covenants, Participant agrees to and shall protect, defend, indemnify and hold the Agency and City harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of (i) Participant's failure to perform any obligations as and when required by this Agreement or any document referred to herein, and (ii) the death of any person or any accident, injury, loss, or damage whatsoever caused SF-98Agree:Shcr-3-1 14 08131/98.3 to any person or to the property of any person which shall occur on the Site and which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the Participant -or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Participant shall not be responsible for, and the Agency shall protect, defend, hold harmless and indemnify Participant against any liability, loss, damage, cost, or expense (including reasonable attorney's fees and court costs) arising from or as a result of the active concurrent negligence, sole negligence or 'sole willful misconduct of the Agency or the City or their respective members, officers, officials, employees, agents, representatives, servants, or contractors. 4.5 Hazardous Substances. Participant, from and after the Close of Escrow, and until a transfer, sale, or assignment of the Site upon which the following covenant shall then be the obligation of the transferee, purchaser, or assignee, shall indemnify, defend, and hold harmless Agency and its officers, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities (including penalties, fines, and monetary sanctions) arising from a violation of state or federal law pertaining to (i) the storage of hazardous materials on the Site or (ii) contamination of the Site by a release of hazardous materials. Participant, prior to the Closing Date, shall provide to Agency a copy of any notices, orders, or reports concerning the presence of any hazardous materials on or affecting the Site that is in Participant's possession. For the purposes of the foregoing, the term "hazardous materials" shall mean any hazardous or toxic substance, material or waste which, as of the date of Close of Escrow, is regulated by the State of California, or the United States Government, and including asbestos and any material containing asbestos. 4.6 Security Finaneinz_ ght of Holders. (a) Permitted Encumbrances. Participant, prior to the date Agency issues or is required to issue the Release of Construction Covenants, shall be permitted to enter into mortgages, deeds of trust, conveyances, and leases -back or any other form of conveyance in which the Site is used as security for the purpose of securing loans of funds to be used for the acquisition of the Site and construction of the Project thereon without the consent of the Agency provided such conveyance (i) is for the purposes permitted herein and (ii) is given to a financial or lending institution or other acceptable person or entity capable of performing or causing to be performed Participant's obligations under this Agreement, including without limitation a pension fund, insurance company, or real estate investment trust. Conveyances for financing purposes not meeting the foregoing requirements shall be subject to the prior approval of the Agency's Executive Director, which approval shall not be unreasonably withheld. (b) Holder Not Obligated to _Construct Improvements. The holder of any mortgage or deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; nor shall any covenant or any provision in the Regulatory Agreement be construed to so obligate such holder. (c) Notice of Default to Mortgage. of Trust or Other SecurityInterest Holders* Right to Cure. Whenever Agency shall deliver any notice or demand to Participant with respect to any breach or default by Participant in completion of construction of the improvements, SF-98ACree:Shcr-3-1 15 08/3r198.3 Agency shall at the same time deliver a copy of such notice or demand to each approved holder of record of any mortgage, deed of trust, or other security interest which has previously requested such notice in writing. Each such holder shall (insofar as the rights of Agency are concerned) have the right, at its option within ninety (90) days after the receipt of the notice, to commence and thereafter to diligently proceed to cure or remedy such default and add the cost thereof to the security interest debt and the lien on its security interest. Any holder completing the improvements in accordance with this Agreement shall be entitled to a Release of Construction Covenants upon written request made to Agency. 4.7Release of Construction Covenants. Upon satisfactory completion of the Project, Agency. shall issue to Participant a Release of Construction Covenants. The Release of Construction Covenants shall be, and shall so state, a conclusive determination of satisfactory completion of the Project required by this Agreement, and of full compliance with the terms of this Agreement relating to commencement and completion of the Project. The Release of Construction Covenants is not a notice of completion as referred to in California Civil Code Section 3093. If Agency refuses or fails to furnish a Release of Construction Covenants upon completion of the Project, Agency, after written request from Participant, shall, within fifteen (15) days of Participant's written request, provide Participant a written statement of the reasons Agency refused or failed to furnish a Release of Construction Covenants. The statement shall also contain a detailed description of the specific actions Participant must take to obtain a Release of Construction Covenants. If the Agency shall have failed to provide such written statement within fifteen (15) days. Participant shall be deemed entitled to the Release of Construction Covenants. If Agency refuses or fails to furnish the Release of Construction Covenants for the reason that specific items or materials are not available or landscaping is not complete, Agency shall issue the Release of Construction Covenants upon the posting by Participant with Agency of a cash deposit, bond or irrevocable letter of credit (in a form acceptable to Agency) in an amount representing the fair value of the work not yet completed. 4.8 Mechanics Liens, Stop Notices, and Notices of Completion (a) If any claim of lien is filed against the Site or the Project, or a stop notice is served on any lender or other third party in connection with the Project, then the Participant shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the party entitled thereto a surety bond in sufficient form and amount, or provide other assurances satisfactory to the Agency that the claim of lien or stop notice will be paid or discharged. (b) If the Participant fails to discharge any lien, encumbrance, charge, or claim in the manner required in subsection (a) of this Section 4.8, then in addition to any other right or remedy, the Agency may (but shall be under no obligation to) require the Participant to immediately deposit with the Agency the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The Agency may use such deposit to satisfy any claim or lien that is adversely determined against the Participant. SF-98Agee:Sher-3-1 16 08/31/98 -3 5.4 Maintenance of the Site. All Units must meet Federal Housing Quality Standards (24 CFRS 982.401) while occupied. Further, Participant shall maintain the Site in accordance with the terms of the Regulatory Agreement. 5.5 • Nondiscrimination. 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 Site, or any part thereof, nor shall Participant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof 5.6 Form of Nondiscrimination andNonseeregation Clauses. The Participant shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, religion, ancestry, national origin, sex or marital status of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, that 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 land herein conveyed, nor shall the grantee himself or any person claiming under or through him, 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 land herein conveyed. The foregoing covenants shall run with the land. (b) In Leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, religion, ancestry, national origin, sex, or marital status in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased." (c) In Contracts: "There shall be no discrimination against or segregation of any person, or group of persons on account of race, color, religion, ancestry, national origin, sex, or marital status in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or any person claiming under'or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the lessees, subtenants, sublessees or vendees of the land." SF-93Agree; Shur-3.1 18 nip ;i 1.93.3 5.7 Effect and Duration of Covenants. The Participant has, concurrently with the execution of this Agreement, executed in recordable form the Regulatory Agreement. Every covenant and condition and restriction contained in the Regulatory Agreement shall remain in effect thirty (30) years, except that the covenants against discrimination set forth in Sections 5.5 and 5.6 shall remain in effect in perpetuity. 5.8 Capital Reserves. Participant, commencing with the fiscal year starting on the July 1 that follows the third (Y) anniversary date of the Effective Date of this Agreement, shall deposit from Project revenues at least Two Hundred Fifty Dollars ($250.00) per unit per year into a reserve for capital repairs. Should Project revenues be insufficient to permit Participant to make such a full deposit in any year, the shortfall shall be repaid into the Capital Reserve as soon as economically feasible. 5.9 Payment of Portion of Residual Receipts. (a) Percentage Payment to Agency. Commencing with the fiscal year starting on the July 1 that follows the third anniversary date of the Effective Date of this Agreement, and continuing annually through expiration of the Regulatory Agreement, Participant shall pay to Agency an amount equal to fifty percent (500/*) of the Net Operating Income of the Project, with the other fifty percent (50%) of the Net Operating Income or Two Hundred Fifty Dollars per unit, whichever is more (subject to the terms of Section 5.8) to be deposited into the Capital Reserve Account as described in Section 5.9; provided, however, that once the Capital Reserve Account reaches the cumulative total shown on the Project Budget/Pro Forma (Exhibit'T'), Participant shall pay to Agency one hundred percent (100%) of the Net Operating Income. If a payment is required by Participant pursuant to the terns hereof, Participant shall make such payment no later than ninety (90) days following the end of the reporting year (calendar year or fiscal year). If the first or final payment is based on a portion of a year, the payment shall be pro rats based on a 360 day year. (b) Definition of Net Operating Income. As used herein, the term "Net Operating Income of the Project" shall mean, for any reporting period (calendar year or fiscal year), (a) all income derived by Participant from the Site, including without limitation all tenant rent, but excluding such income to Participant or the Project as may be derived from the acquisition of further income restriction of Units as authorized by Section 3.2 of the Regulatory Agreement, (b) less (i) payments of principal and interest, if any, required to be paid in such year by Lessee with respect to any note, mortgage, or deed of trust with respect to the Site or Project, (ii) all expenses actually incurred (or to be incurred if accounted for on an accrual basis) by Participant in leasing, managing, operating, maintaining, and repairing the Site (iii) all capital expenses incurred pertaining to the Site; (iv) the deposits into the Capital Reserve Account; (v) property management fees, administrative costs, salaries, benefits, overhead costs, and such other and further operating and management expenses incurred in operating the Site. Depreciation expenses shall not be a reduction against income. (c) AdJustment of Payment to Agency. In the event Participant determines that it cannot make the Agency payment as described in subparagraph (a) of this Section and at the same time retain the economic viability of the Project, Participant shall notify the Agency and St:-98AQcc:Shcr-3-1 19 OW 1 /99 .3 request postponement, cancellation, forgiveness, or adjustment of the Agency payment. Participant shall provide financial and other evidence supporting its request. Agency may, in the exercise of its reasonable discretion and in light of its desire to see the Site used as an affordable rental apartment complex and maintained at the level required by the Regulatory Agreement, reduce, suspend, postpone, forgive, cancel, or renegotiate the terms of the Agency payment. 5.10 Financial Statements. Participant shall submit to Agency, on an annual basis, a true and correct copy of Participant's audited financial statement for the Project. After receipt of Participant's audited financial statements for the Project, Agency may, at its cost, request additional financial analyses or obtain a third party review of Participant's financial statement for the Project to verify the accuracy of Participant's payments made to the Agency pursuant to Section 5.9 or the deposits by Participant into the Capital Reserve Account pursuant to Section 5.8. SECTION 6. DEFAULTS AND RENYEDTES. 6.1 Participant Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Participant hereunder if, after receiving written notice from Agency as provided in Section 6.3 below identifying such event, Participant fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within) thirty (30) days, Participant commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Participant• has failed to Close Escrow to acquire fee title to the Site within sixty (60) days after the time set forth in the Schedule of Performance; (b) Participant fails to observe or perform any material term of this Agreement or any agreement incorporated hereunder by reference including, but not limited to, the Regulatory Agreement, the Note, theDeed of Trust, or the Subordination Agreement (if applicable), within the time set forth in this Agreement or any of the documents referred to herein; or (c) Participant knowingly and intentionally makes or delivers to Agency any statement; report, or certificate that is not true or correct in any material respect. 6.2 Agena Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Agency hereunder if, after receiving written notice from Participant as provided in Section 6.3 below identifying such event, Agency fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within thirty (30) days, Agency commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Agency fails to observe or perform any material term of this Agreement within the time set forth in this Agreement, including but not limited to timely deposit into Escrow of the required portion of Agency loan funds; or Si:-98 AQee:Sher-3-1 20 03/31/98 -3 (b) Agency knowingly and intentionally makes or delivers to Participant any statement, report, or certificate that is not true or correct in any material respect. 6.3 Notice of Default. The non -defaulting party shall give written notice of any default under this Section to the defaulting party, clearly specifying the default. Copies of any notice of default given to the defaulting party shall also be given to any permitted lender requesting such notice. Any failure or delay in giving such notice or in asserting any of either party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 6.4 Agency's Remedies. (a) The Agency, at its option, may terminate this Agreement prior to the Close of Escrow in the event of any material default that the Participant fails to cure within the time set forth in Section 6.1(subject to the right of notice and expiration of applicable cure periods). (b) Following the Close of Escrow, in the event of any material default that the Participant fails to cure within the time set forth in Section 6.1 (subject to the right of notice and expiration of applicable cure periods), the Agency's sole remedy shall be to foreclose on the Agency Deed of Trust pursuant to Agency's right and remedies thereunder. 6.5 Partici ant's Remedies. Subject to any applicable cure periods and the general right to notice provided for in this Agreement, upon a default or breach of this Agreement by Agency, Participant may bring an action for specific performance of this Agreement or any term or provision hereog or may terminate this Agreement. Participant may not sue for monetary damages. 6.6 Rights and Remedies are Cumulativ . Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties hereto are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. SECTION 7. GENERAL PROVISIONS. 7.1 Governing Law. The laws' of the State of California shall govern the interpretation and enforcement of this Agreement. •7.2 • Attorneys' Fees. In the event of litigation between the parties arising out of this Agreement each party shall bear its own attorneys' fees, and other costs. - 7.3 Notices. Demands. and Communications Between the Parties. Formal notices, demands, and communications between Agency and Participant shall be sufficiently given if. (i) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt SF-98AQce:Shcr-3-1 21 08131.98 -3 n ' 1 showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: If to Participant: The Bridges America Sher Lane, L.P. 18837 Brookhurst Street Suite 303 Fountain, Valley, CA 92708 Attn: JoAnn Ulvan With a copy to: Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, CA 92626 Attn: Jeffrey M. Oderman If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648, Attn: Executive Director Notices personally delivered or delivered by courier shall be effective shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of (i) receipt of refusal to accept delivery, or (ii) Noon on the second business day following deposit in the United States mail. 7.4 Acceptance of Service of Process. In the event that any legal action is commenced by Participant against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Participant, service of process on Participant shall be made by in any manner provided by law, and shall be valid whether made within or without the State of California. 7.5 Conflicts of Interest, No member, official, or employee of Agency shall have any personal interest in this Agreement, nor participate in any decision relating to this Agreement, that is in violation of any applicable law, regulation or ordinance. 7.6 Titles and Captions. Titles and captions are for convenience only and shall not be construed to limit or extend the meaning of this Agreement. 7.7 Gender. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 7.8 Modifications. Any amendment, alteration, change, or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. SF-98A&ree:Shef-3-1 22 OW 1:98 -3 7.9 Merger of Prior Agreements and Understandin s. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, including but not limited to that certain "Deal Point Memorandum" approved by Participant and the Agency and/or City Council of the City of Huntington Beach, are merged herein and shall be of no further force or effect. 7.10 No Third Parties Benefited. Other than the general and limited partners of Participant, this Agreement shall create no third -party beneficiary rights or any other rights in favor of any persons, firms or corporations, except as may be expressly stated in this Agreement. This Agreement is for the sole use and benefit of the parties hereto and is not for the use or benefit of any other person or entity. 7.11 Assurancez t in Gogd Faith. Participant and Agency each agree to execute all documents and instruments and to take all action, including timely depositing funds as required hereby, and shall use their respective best efforts to accomplish the redevelopment of the Site in accordance with the provisions hereof. 7.12 Warranty Against Payment of Consideration for Agreement. Except as provided in this Agreement, Participant warrants that it has not paid or given, and will not pay or give, any person any money or other consideration for obtaining this Agreement that is in violation of any law. 7.13 Nonliability of Agency Officials and Employees. No member, official, or employee of the Agency shall be personally liable to the Participant or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Participant or to its successor, or on any obligations under the terms of this Agreement. 7.14 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 7.15 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 7.I6 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 7.17 Extension of Times of Performance. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of sF-98 Agree:shcr-3-1 23 OV31/98 -3 r) n Force Majeure shall be limited to the period of such event, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within sixty (60) days of the commencement of the cause. In the event of such delay, the party delayed shall continue to exercise reasonable diligence to minimize the period of delay. Times of performance under this Agreement may also be extended by mutual written agreement by Agency and Participant. In addition, the Executive Director shall have the authority on behalf of Agency to approve extensions of time not to exceed a cumulative total of one (1) year. 7.18 Inspection of Books and Records. The Agency or its designee has the right at all reasonable times to inspect the books, records, and/or other documents of the Participant pertaining to the Site and/or the Project as pertinent to the purposes of this Agreement 7.19 Waivers. The waiver by Agency or Participant of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. SECTIONS. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE This Agreement shall be executed in five duplicate originals, each of which is deemed to be an original. This Agreement consists oflutNfy Fit (25) pages and ten (10) attachments which constitute the entire understanding and agreement of the parties. This Agreement does not take effect until executed by the Participant and Agency. This Agreement, when executed by the Participant and delivered to the Agency, must be authorized, executed and delivered by the Agency within thirty (30) days after the date of signature by the Participant, or this Agreement may be terminated by the Participant on written notice to the Agency. The Agency Executive Director is hereby authorized and directed to take such other and further actions, and sign such other and further agreements and documents on behalf of the Agency as may be necessary or proper to effect the terms of the Owner Participation Agreement on behalf of the Agency. [end - signature page follows] SF-98Agcc:Shcr-3-1 24 08.31.'98 -3 n IN WrfNE.SS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "AGENCY" ATTEST: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic r i Agency Clerk APPROVED AS TO FORM: By: I R-� Agency Counsel SF glil�� "PARTICIPANT" THE BRIDGES AI�IERICA SHER LANE, L.P., a California limited partnership By Its General Partner. THE BRIDGES AT, -,ERICA FOUNDATION, a Delaware N npr At Corporation By: Name: (Type or print) b % ";�C-'otL Its (circle one) (i) Chairman of the Board (ii) President (iii) Any Ysce President AND By: Name: (r)pe or print) Its (circle one) (i) Secretary (ii) Any Assistant Secretary (iii) Chicf Financial Officer (iv) Any Assistant Trcasumr sr--98ACrcc.Shcr-3-1 08r31 r93 -3 25 FROM : ' 1111 111111111111 { �11 1111 PHONE NO. : RESOLUTION OF THE BOARD OF DIRECTORS OF VIE BRIDGES AMERICA FOUNpATION, INC. Sep. 01 19% 04:44P'M PI lb* following resolutions were adopted by the Hoard of Directors of the Bridges America foundation (the "Corporation"} effective as of September 1.1998. RESOLVED. that Garrctt Robinson, President of the Corporation, and or Steve Harrison, a member of the board ofdirectors, be and hereby each are severally authorized to execute and deliver such agreements, documents and inspurnents, and to undertake such acts as they shall deem necessary or advisable to consumrnate the purchasa by the Bridges Sher Lane LP., (a California limited partnership of which the Corporation is the General Partner), of the low-income housing project and rf.4 property located at lb] 12 Sher lane Huruington Beach, Ca. ' Dated as of September 1, 1998. nine Robinson; ccretary CALIFORNIA ALL-PURPO ACKNOWLEDGMENT State of rn4A.- County of 0 On �zow1, 1 q alb' , before me, _ [At + & A &t-btc. Dais Name aM Too of Off— (a-p 'Jvw Dos. ^' ry PWc ) personally appeared STEVW V. HA4Z4U5o1-J S Nvne(B) at SfprM�{:r —74 proved tome on the basis of satisfactory evidence to be the personN whose name(s) (Data subscribed to the within instrument and acknowledged to me that/64eA{-(ey executed the same in 11,& authorized capacity(+esj, and that by (9j"eir signature(s) on the instrument the person(}, LNURA A. NELSON or the entity upon behalf of which the person* acted, carerkon i 106" executed the instrument. Notary Pubae — CCOMia My OpnmmErplr23.19W WITNESS and and official seal. OPTIONAL Though the information below is not required by law. it may prove valuable to persons retying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document _ Title or Type of Document: Document Date: Ff 3/ /q F _ Number of Pages: o25 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Sruv&tr V- 1471?&USo^j_71 ❑ Individual ❑ Corporate Officer Title(s): ❑ Partner — C Limited ❑ General O Attomey-in-Fact ❑ Trustee ❑ Guardian or Conservator Ah 3Z Other. 7i1 /L4Grd9, Top of thumb here Signer Is Representing: Signer's Name: e■ I■ ■ ■ ■ a Individual Corporate Officer Title(s): Partner — C Limited 1 General Attorney -in -Fact Trustee Guardian or Conservator Other. Signer is Representing: Top of thumb here 0 1995 National Notary Assodation - 8236 Rertwnet Ave.. P.O. Box 71 &1- Canopy Park CA 91309.7164 PtO. No. 5907 PsorOer Gar Too -Free 1-600-876.6827 r 1 CALIFORNIA ALL-PURPO aE ACKNOWLEDGMENT State of County of r On %' of before me, t444r,4.A. /✓ ;jv__ Data Name am TAN on OtScu personally appeared ��I e Le-YI& as c�O�t!?,re a�w� VV Nam.P) at swortaf personally known tome — rthu to be the person(o) whose name& is? re subscribed to the within instrument and acknowledge to me that # ems_ executed the same in • r ei authorized capaci �e ), and that by LAMA A. NELSON hisfhe tie signatureQ on the instrument the persorQ convrission 9 1056263 or the entity upon behalf of which the persorE] acted. Holory Pubic -- Cavorria I oronpe county executed the instrument. My Carrxa Lvke6 M 23.1999 WITNESS my hand and official seal. Srgrutaa d Notary Pobw OPTIONAL Though the information below is not required by law, it may prove valuable to persons retying on the document and could prevent fraudulent removal and reattachment of this fort to another document. Description of Attached Document Title or Type of Document: DWneeJ" Y�Alici l- / v Document Date: �Lr 3 l ! of _ Number of Pages: Signer(s) Other Than Named Above: r as ✓r Capacity(ies) Claimed by Signer(s) Signer's Name, " Individual Corporate Officer Title(s): Partner — 0 Limited ❑ General Attorney -in -Fact Trustee Guardian or Conservator Other: _CG1GLtrwlyt.tn Signer Is Representing: i •r Top of thumb We • Signer's Name:�1erOG�utic e Individual Corporate Officer Title(s): Partner — G Limited Attorney -in -Fact Trustee Guardian pr Consery Other. Aagmcq C O General Signer Is Representing: - of thumb here O 1995 NalaW Notary 4sopatron • 8236 RernrW Ave, P.O. Box 7184 • Canoga Park CA 91309-7184 Prod. No. 5907 Reorder. Cal Tots -Free I.8MB76-W7 EXHIBIT A ` EXHIBIT "A" PARCEL 1: 'THAT PORTION OF THE 14ORM EAST QUARTEn OF SEJCTION 23, TO;n'NSHIP 5 S=l, RAiM 11 WEST, PARTLY IN MS RAN M LA BOLSA CHIC h AND PARTLY IN THE RANCHO IAS BOLSAS, IN onE CITY OF HUNTItUIc1 BEACH, AS PER MAP RECORDED IN BOOK 51, PAGE 13 OF MISCEIIANEOUS MAPS, IN THE OFFICE OF THE Ct7UNIY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLIOWS: BEX;INNING AT THE .INTERSECTION OF TTE SOUTH LINE OF THE NORTII 50.00 FEET OF THE SOUTHEAST' QUARTER. OF 7M NORTHWEST QUARTER OF SAID NORTHEAST QUARTER 14ITH THE EAST LINE OF SHER• LANE AS DESCRIBED 114 THE DEED TO 7HE CITY OF HUNTINMN BEACH, RECORDED DEMQER 7, 1961 IN BOOK 5937 PAGE 35, OFFICIAL RECORDS; THENCE NORTH 180.00 FEET AUDNG SAID EAST LINE; THENCE EAST 346.00 FEET PARALLEL, WITH THE NORTH LINE OF SAID SOLnITAST QUARTER OF THE NO7IW4MT QUARTER OF THE NORTHEAST CX.L mER; T m4m SOUTH 100.00 PEEP PARALLEL WITH SAID FAST LINE; THENCE EAST 90.00 FEET PARALLEL WITH• SAID NORTH LINE; THENCE SOUTH 80.00 FEET PARALLEL WITH SAID EAST LINE TO THE SOUTH LINE OF THE NORTH 50.00 FEET OF THE SOUIf VZST QUARTER, OF THE NORTIMAST QLTAf M OF SAID NORTHEAST QUARTER; 7104C_E WEST 436.00 FEET 70 THE POINT OF Sa3INNING. SAID LAND IS INCLUDED WITHIN THE AREA S4" CN A PAP FILED IN BOOT{ 23 PAGE 17 OF RECORD OF SURVEYS, IN THE OFFICE OF ME COUNTY RDCORDJR OF SAID CUIM. EXCEPT u REFRa4 ALL OIL, GAS, MINERALS AND OTHER I YDROCARSONS, BEIZ4 A DEPTH OF 500 FEET, WITfiOLTr IRE RIGHT OF SURFACE ENTRY. AS RESERVED IN DEMS OF RECORD. PARCEL 2: THAT PORTION OF THE NORIIIFJW QUARTII3 OF SECTION 23, TUINSHIP 5 SOUTH, RANGE 11 WEST, IN THE RF+NX ID LA BOLSAS, IN THE CITY OF HUNTINa'"M4 BEACH, AS PER MAP RECORDED IN BOOK. 51, PAGE 13 OF MISCELLANEOUS 14ADS, IN THE OFFICE OF THE COUNTY RECDRDER OF SAID C17UMY, DESCRIBED AS FIOLTZ;S: BEGR,NI:NG AT THE INTERSECTION OF 7HB SUM LIP:E OF THE FORTH 50.00 FEET 'OF THE SOUTHEAST 9.VRM OF THE NORINWEST QUARTER OF SAID NORTHEASr QUARTER WITH THE FAST LINE OF SHER LANE AS DESCRIBED IN ME DEED TO THE CITY OF HUNTMN BEAC H, E RECORDED DCEDER 7, 1961 IIJGIN BOOK 5937 PAGE 35, OFFICIAL RECORDS; THENCE NORTH 180.00 FAT ALONG SAID FAST LINE; THENCE FAST 346.00 FEET PApALLEi, WITH THE NORTH LINE OF SAID SCUhIFAST QLiAFiTFR OF THE MA794EST QUAR7EJt OF THE NORIHMSr QUARTIM; T1JfIXE SOUTH 100.00 FEET PARALLEL WITH SAID EAST LINE; TM4CE EAST 90.00 FEET PARALLEL WITH SAID NORTH LINE 70 A POINT WHICH POINT IS THE TRUE POINT AND PLACE OF BEGINNING; THENCE SOUTH 80.00 FEET PARAMEL WITH SAID EAST LINE TO THE SOUTH LINE OF THE NORTH 50.00 FEET OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF SAID NORIITEAST QUARTER; THENCE 408.96 FEET EAST PARALLEL WITH THE NORTH LINE OF SAID S=Mz ST QUARTER OF 11E NORTHWEST UPRIFR OF THE NORTHEAST U JAR= TO THE WEST LINE OF PARKSIDE LANE AS DESCRIBED IN THE DEED TO THE CITY OF HUNTINGIW BEACH, RECORDED SEVM BER 20, 1968 IN BOOK 8727 PAGE.541 OF OFFICIAL RECORDS; 7VENCE NORTH 80.00 FELT ALCNG SAID WEST LINE TO A LINE THAT IS PARALLEL WITH THE NORTH LINE OF SAID SOUTHEAST QLL4R'IfR OF THE NORTHWEST QUARTER OF THE' NORTH AST QUARTER, AND WHICH PASSES 'INZOUGH AND TRUE POINT' AND PLACE OF BEGINNING; THENCE WEST 408.96 FEET, ALONG SAID LAST M NI`ICNM PARMM LINE, TO THE TRUE POINT AND PLACE OF SE)GRNING. Mrd" T, DCSCRIT?TICT1 C>`TMNUED) I,L�Ghi� DE-smPTICN 0airnL EXCEPT TEEREFRCM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBONS, BELGW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN DEEDS OF RECORD. SAID LAND IS INCZUDED WITHIN THE AREA SHOWN ON A MAP FILED IN BOOK 23 PAGE 17 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXHIBIT B S In fj 1 � 9 -9 .._ H - 'jKYVi�W ii Yi ��77IUNi I Bf £BONN/ygi VW 1 iE41MOCINI AM 5 Ll" RE7 � RFQRD NJtr 1► B,9EED t i i �I NYAl+jZJ1 ��gTONEW000 1 MURDY LAUAELIIUR T CwQ4E ` "IGHTj DOVOUET 6 lFF!�Yfti?T AUBURN I LOYQLA • } ,u�rrrwE. ROA01 OEFUiTIE mwo OA!OPE, ATF I } 1 �QNNIE ' VERLE PALM 4AISATUR n� J � ; ••i tip, ;����� t� ,CENTER i E AkD Lu SUBJECT at• r10LI rr AN[TA, • 1µc, I I ' JUL1E T T E L mCCEI+COE ;NANCY iHEIL �us�w�� _ . > j• MO PRNCEI OUSE WASHING ON ff W. 0 ... � �FLIG►,Y, I i 1 INGRM 'r • � `� _�L FlIR6UN 11J► A A-i A LL — xRRcc . vsl ow .I �... i IIE in Ew M 71 1 SITE ANALYSIS FO? N.112. SEO2,3. r5S, R.HIV ,rcmL PAar m2-l19 foR FEE TITLE QSSEss,*f&vT BELOW SURFACE • 07 dl j' N S PARCEL A44P FM 3-34 169,V. NOTE - ASSESSWt3 atocK a P";m Wslec" 37 ASSESSOR'S bOOKfd2lAGf 11 � L1 W4y 04 O&ANGE { 1 n SCOPE OF DEVELOPMENT Participant's rehabilitation of the existing 66-unit apartment complex located at 16112 Sher Lane in the City of Huntington Beach shall be undertaken as follows: 1. The rehabilitation shall be in substantial conformance with the Approved Plans and Permits. In the event of any conflict between the description of the Project and rehabilitation work described in this Agreement and in the Approved Plans and Permits, the Approved Plans and Permits shall control. Notwithstanding the above, the rehabilitation of the Units shall result in Units meeting, at a minimum, federal housing quality standards as existing on the Effective Date of this Agreement; said standards are set forth at Title 24 of the Code of Federal Regulations, Section 982.40I. Participant shall provide Agency with copies of all required permits under the City Municipal Code and proofs of City inspections. 2. Participant, prior to undertaking any work of rehabilitation on the Site (other than repairs immediately needed for habitability or removal of waste, debris, and general clean-up) shall submit to Agency for review a rehabilitation work list that describes the nature and order of the rehabilitation work. 3. The parties hereto acknowledge that the Site, as of the Effective Date, has received City code violation notices. Participant shall have a reasonable period to effect corrections of those conditions to which the code violation notices relate. Participant shall provide Agency with confirmation that the conditions to which the code violation notices relate have been corrected. 4. Participant shall be responsible for remediating any asbestos and any lead -based paint where the levels of those substances are found to be in violation of applicable law. Copies of all test results, tenant notifications, and remediation plans shall be provided to the Agency or its authorized representatives or consultants. 5. Agency shall have the right to inspect the progress of the rehabilitation work, including both interiors and exteriors of the Units, upon forty-eight (48) hours prior notice to Participant; provided that such inspections shall not interfere with Participant's rehabilitation work. 6. Subject to Section 4.2(a) and Exhibit D of the OPA, Participant shall complete the rehabilitation work within eighteen (18) months after the Closing Date. SF-Agee:Sha-3:Lxh-C 0813IM .0 (Exhibit "C" — Scope of Devclopment — Page t or 1 0,0116.100 SCHEDULE OF PERFORMANCE ITEM OP PERFORMANCE 111ME FOR PERFORMANCE REFERENCE 1. Participant and Agency each execute all documents Not later than twelve noon on the §3.4(b); §3.4(c). and deposit aU documents and funds into Esavw as business day immediately prior to the required by this Agreement scheduled Closing Date, 2. Closing Date. Not later than September 15,1998 §3.4(a). 3. Participant obtains the Approved Plans and Pewits Within sixty (60) days after the §4.2(a)-(e). for the Project and commences the rehabilitation Closing Date. work on the Site, 4. Participant submits a Management Plan to the Within sixty (fib) days after the §4.4 of F_xhibit 1 Agency. Closing Data 5. Participants completes the rehabilitation of the Site. Within eighteen (18) months after §4.2(1). commencement of the work. 6. Agency issues Release of Construction Covenants. Upon completion by Participant of the §4.7 rehabilitation work on the Site~ It is understood that this Schedule of Performance is subject to ail of the terms and conditions of the text of the Agreement. The summary of the items performance in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by both the Participant and the Agency. The Executive Director of Agency shall have the authority to approve extensions of time without action of the Board of Directors of Agency not to exceed a cumulative total of one (1) year. The foregoing instrument is a correct copy of the original on file in this office. Attest &— l CbNNIE BROCKWAY City Clerk and Ex•cflicio Clerk ;,f tote City Council of the City of Hurziingt n Beach, California. SF-99ASme- Sher-3:Exh-D-1 By - ._--�epc"y oivl t/98 [EXH113fr "D" - SCIIEDULE- OF PERFORMANCE - PAGE 1 1l n RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Sher Lane/Parkside Lane Affordable Housing Project I COUNCIL MEETING DATE: March 19, 2001 RCA ATTACHMENTS I STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution wlexhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Atfome Attached Subleases, Third Party Agreements, etc. _(Approved as to formby Cit Atfome Not Applicable Certificates of Insurance (Approved by the Uty Atfome Not Applicable Financial Impact Statement Unbud et, over $5,000 Not Applicable Bonds if applicable) Not Applicable Staff Report if applicable) Not Applicable Commission, Board or Committee Report If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff Q Assistant City Administrator Initial City Administrator Initial City Clerk—LTE/7'] EXPLANATION FOR RETURN OF ITEM: a ; }� s1. RCA Author. HOLTZ (3901 ) G.Ad&AeW_ tD cj 8,cras- .Ebb Council/Agency Meeting Deferred/Continued to: R/Approvedi ❑ Congitionaly Approved ❑ Denied Council Meeting Date: August 3, 1998 6Ao.30 Clerk's Signature Department ID Number: ED 98-30 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY MEMBERS SUBMITTED BY: RAY SILVER, Executive Director W PREPARED BY: DAVID C. BIGGS, ECONOMIC DEVELOPMENT DIRECTOR SUBJECT: Bridges America Deal Point Memorandum For The Acquisition and Rehabilitation of 16122 Sher Lane Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: A deal point memorandum between the Redevelopment Agency and Bridges America is submitted for approval. The agreement provides up to $1,001,000 in redevelopment housing set aside for the acquisition and rehabilitation of a sixty-six (66) unit project at 16122 Sher Lane. Additional HOME funds in the amount of $200,122 will be committed to the project at a later date for rehabilitation costs. Funding Source: Budgeted funds in Account No. E-TX-ED-968-6-10-00 Recommended Action: Motion to: 1. Direct staff to return to the August 17, 1998, or to the next available regular meeting of the City Council -Redevelopment Agency, for consideration of a final agreement between the Redevelopment Agency and Bridges America for the acquisition and rehabilitation of 16122 Sher Lane, which reflects the Deal Point Memorandum dated July 22, 1998. Alternative Action(sl: Do not approve the loan agreement, or modify the proposed terms and conditions. ri 1 REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: August 3,1998 DEPARTMENT ID NUMBER: ED 98-30 Analysis: For many months, staff and Bridges America (Bridges) have been negotiating over Agency financial assistance for the acquisition and rehabilitation of a sixty-six unit rental property located at 16122 Sher Lane. Staff and Bridges have concluded negotiations (a complete outline of deal points for both agreements is included as Attachment No. 1) and have agreed to the following terms: Redevelopment Agency Responsibilities • The Agency will provide $1,000,612 in redevelopment housing set aside funds and up to $200,122 in HOME Investment Partnership funds as a loan to Bridges America (Bridges). These funds will be used to acquire and rehabilitate a sixty- six (66) unit rental property located at 16112 Sher Lane. • The HOME funds will be used exclusively for rehabilitation costs and will be administered through a separate agreement. Developer Responsibilities • All sixty-six (66) units will be subject to income and affordability restrictions, which can be defined as follows: Sixteen (16) one bedroom and six (6) two bedroom units must be rented to households earning less than 50% of the county median income. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053. Eleven (11) two -bedroom units must be rented to households earning less than 50% of the county median income. These units will be designated as HOME units and at no time will the rents for any unit exceed the "low" HOME rent as defined by HUD. Seventeen (17) one -bedroom units and sixteen (16) two -bedroom units must be rented to households earning less than 110% of the county median income. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053. • Bridges agrees to guarantee the amount of capital reserves that it shows on the final approved pro forma that is to be submitted to the Redevelopment Agency. Beginning in the third year of the agreement, and continuing annually through the thirtieth year, Bridges will forward the proceeds of a residual receipts account to the Redevelopment Agency as a means of repayment of the redevelopment set aside funds. The minimum amount of the annual repayment will be fifty percent (50%) of the available cash flow. The remaining fifty percent (50%) will be used for a Capital reserve account until said account reaches an amount equal to an amount determined by the Agency and Bridges to be appropriate. After the d1ptraa .2- 07/24198 8:34 AM n r) REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: August 3,1998 DEPARTMENT ID NUMBER: ED 98-30 Capital Account has reached the agreed balance, one hundred percent (100%) of the available net cash flow will be used for repayment. i The Agency Loan Note shall not bear interest except from and after a default. That potion of the principal amount of the Agency Loan Note will be converted from a loan to a grant to Bridges in the following manner. 1: On the first anniversary after approval of the Agency Loan Note, provided that the Note has not been accelerated and all amounts due and payable, and Bridges is not in default, approximately three and three quarter percent (3.333%) of the original loan amount shall automatically convert from principal under the Agency Loan Note to a grant to Bridges. Project Description The proposed project consists of a sixty-six unit building located on adjacent parcels. Together, the property was appraised at $4.5 miIlion in January of 1998. The project is located south of Edinger Avenge, between Sher Lane and Parkside Lane. (see Attachment No. 2). There are 34 one bedroom and 32 two bedroom units. The units are 725 square feet and 900 square feet respectively. Rents for the units are as follows: Unit Size Income Level Pro acted Rent One Bedroom Very Low $658 Two Bedroom Very Low $740 One Bedroom Moderate $695 Two Bedroom Moderate $825 With the income restrictions proposed by the Agency ranging from very low income (50% of median income) to moderate income (110% of median income), the project will be mixed income. Because the properties are located outside the redevelopment area, the Agency will be able to count thirty-three of the very low income units toward its production housing requirements. The balance of the units can be counted toward any replacement housing obligations the Agency will incur through the Waterfront development. A minimum of $350,000 in rehabilitation is needed, as there has been deferred maintenance on both properties. Agency staff is working with Bridges to refine the cost estimates and will continue to work closely throughout the rehab process. Bridges America Bridges America is a Houston -based nonprofit that was formed to improve the distribution of food stuffs to Third World countries, primarily Haiti. Bridges also distributes food in the d1ptraa -3- OT124198 8:34 AM r) REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: August 3, 1998 DEPARTMENT ID NUMBER: ED 98-30 Houston area on a weekly basis to needy families. Bridges has a local affiliate in Fountain Valley. In the last few years, Bridges has expanded its mission to include the development of affordable housing. More information is included as Attachment No. 3. In 1996, Bridges acquired a troubled eighty unit apartment project in Huntington Beach. Since that time, the property has vastly improved under the ownership and management of Bridges. Forty-two of the units are restricted for affordable rents by covenant by Holly- Seacliff developers who needed to fulfill affordable housing conditions placed on single family projects approved by the Planning Commission and City Council. Bridges also has an acquisition and rehab project underway in the City of Corona. Further, Bridges has entered discussions with the City of Santa Ana over possible affordable housing projects. While the Agency has focused on assisting nonprofit developers acquire and rehab small properties in the Oakview redevelopment project subarea, this project offers an opportunity to meet Agency housing requirements on a larger scale and in more diverse areas of the city. On July 15, 1998, the Council's Economic Development Committee (EDC) heard a presentation on the project by Agency staff and Bridges America. The EDC directed staff to move forward with the project to the full Council (Agency). The Agency's involvement with this project is consistent with the City Council's established goal of providing for a diverse housing stock throughout the community (City Goal #7). Environmental Status: Exempt under the California Environmental Quality Act (CEQA) Attachment(s): 1. 1 Proposed Deal Point Memorandum 2. 1 Location Map 3. 1 Bridges America RCA Author. G. Brown dlptraa 4. 07/30198 8:24 AM DEAL POINT MEMORANDUM ATTACHMENT #1 J� 10) DEAL POINT MEMORANDUM July 20, 1998 Acquisition of 16112 Sher Lane The Redevelopment Agency of the Redevelopment Agency of Huntington Beach and Orange County Bridges America (Bridges) Deal Points: 1. The Huntington Beach Redevelopment Agency will provide $1,000,612 in redevelopment housing set aside funds and up to $200,122 in HOME Investment Partnership funds as a loan to Bridges America (Bridges). These funds will be used to acquire and rehabilitate a sixty-six (66) unit rental property located at 16112 Sher Lane. a. The HOME funds will be used exclusively for rehabilitation costs and will be administered through a separate agreement. 2. All sixty-six (66) units will be subject to income and affordability restrictions, which can be defined as follows: a. Sixteen (16) one bedroom and six (6) two bedroom units must be rented to households earning less than 50% of the county median income. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053. b. Eleven (11) two -bedroom units must be rented to households earning less than 50% of the county median income. These units will be designated as HOME units and at no time will the rents for any unit exceed the "low" HOME rent as defined by HUD. c. Seventeen (17) one -bedroom units and sixteen (16) two -bedroom units must be rented to households earning less than 110% of the county median income. The maximum rent can not exceed the standard established by California Health and Safety code Section 50053. n Sher Lane Dcal Points, continued r) 3. Bridges agrees to guarantee the amount of capital reserves that it shows on the final approved pro forma that is to be submitted to the Redevelopment Agency. Bridges will submit its audited financial statements to the Redevelopment Agency annually after acceptance and certification of such statements to Bridges' Board of Directors. The Redevelopment Agency will review the statements and may choose to require further analysis or review by an third party, but must do so at its own expense. 4. Beginning in the third year of the agreement, and continuing annually through the thirtieth year, Bridges will forward the proceeds of a residual receipts account to the Redevelopment Agency as a means of repayment of the redevelopment set aside funds. The minimum amount of the annual repayment will be fifty percent (50%) of the available cash flow. The remaining fifty percent (50%) will be used for a Capital reserve account until said account reaches an amount equal to an amount determined by the Agency and Bridges to be appropriate. After the Capital Account has reached the agreed balance, one hundred percent (100%) of the available net cash flow will be used for repayment. Should the economics of the project not allow for the minimum repayment as described above, then Bridges will have the right to appeal to the Redevelopment Agency and request that the minimum repayment be reduced, suspended or forgiven. Bridges agrees to bear the entire burden of proving its inability to meet the minimum payment. The Redevelopment Agency will reserve the right to reduce, suspend, forgive or renegotiate the terms of repayment based on the evidence submitted by Bridges. The Redevelopment Agency further reserves the right to audit the financial statements of Bridges to determine or verify the balance of the residual receipts account at its own expense. 2 n Sher Lane Deal Points, continued 50 a. The Agency Loan Note shall not bear interest except from and after a default. That potion of the principal amount of the Agency Loan Note will be converted from a loan to a grant to Bridges in the following manner. On the first anniversary after approval of the Agency Loan Note, provided that the Note has not been accelerated and all amounts due and payable, and Bridges is not in default, approximately three and three quarter percent (3.333%) of the original loan amount shall automatically convert from principal under the Agency Loan Note to a grant to Bridges. Relocation 1. A relocation plan must be submitted to the Redevelopment Agency for approval for to the relocation of any tenants from the property. Name, gender, age, ethnicity, household income, and amount of relocation payment must be furnished in the relocation plan. Further, copies of all notices required by the Uniform Relocation Act must be furnished to the tenants as part of the relocation and official copies must be given to the Redevelopment Agency for its records. Bridges must keep original copies in its files as required by HUD. 2. Bridges must agree to indemnify the Redevelopment Agency against any relocation obligations and expenses that arise from the acquisition or rehabilitation of the subject properties beyond those obligations identified in the relocation plan, at Federal Housing Quality Standards or higher as required in the Affordable Housing Agreement; and also from any relocation and expenses that arise after the acquisition and rehabilitation activities are complete. Rehabilitation 1. Bridges will rehabilitate the subject properties to conform with (at a minimum) federal housing quality standards. Bridges agrees to maintain the properties for the duration of the affordable housing agreement and will allow the n Sher Lane Deal Points, continued Redevelopment Agency to inspect both the interiors and exteriors of the subject properties on an annual basis. 2. Bridges will furnish a list of proposed repairs and improvements to the Agency for informational purposes priorto rehabilitation. Bridges is funding the rehabilitation work with HOME Investment Partnership (HOME) funds, and the Agency will have the right to review and approve the list prior to the start of any rehabilitation work. 3. The Agency will conduct progress inspections once rehabilitation work has started. The Agency reserves the right to independently inspect the units and Bridges agrees to provide access to the Agency with forty-eight (48) hours notice. 4. Bridges will furnish copies of all building permits for all items required to be permitted under the Huntington Beach Municipal Code, with proof of inspection by the Huntington Beach Building Department, where applicable. 5. Because the property has been cited for numerous code violations, Bridges will provide the Agency with evidence that the violation notices have been complied with and that no other violations remain outstanding. All units must, at a minimum, meet Federal Housing Quality Standards while occupied. Further, all units must be rehabilitated no later than eighteen (18) months from the close of escrow. 6. Bridges will test for the presence of asbestos and lead -based paint as required by HUD regulations. Bridges will remediate any asbestos or lead -based paint hazards where the level of those substances is found to be in excess of acceptable thresholds. Copies of all test results, tenant notifications, and remediation plans must be provided to the Redevelopment Agency, or to authorized representatives of the Redevelopment Agency. Environmental Issues 1. The Redevelopment Agency will conduct an environmental review of the site in accordance with the California Environmental Quality Act (CEQA) and HUD 4 Sher Lane Deal Points, continued regulations at 24 CFR Part 58. Using those regulations as a guide in past projects, the Redevelopment Agency will probably determine that the project is considered "categorically exempt" from CEQA and NEPA (the National Environmental Policy Act of 1969) and is not subject to further, more complicated assessment. 2. This review, while thorough, cannot be considered as exhaustive or all-inclusive as a Phase I due diligence exercise. Because of this, Bridges agrees to indemnify and hold the Redevelopment Agency harmless from all liabilities (including penalties, fines, and monetary sanctions) arising from hazardous materials storage on the subject properties, or hazardous materials contamination of the subject properties. Bridges agrees to provide any notices, orders, or reports concerning environmental matters that may affect the subject properties to the Redevelopment Agency prior to the funding of the acquisition loan. Property Management Issues 1. Bridges will maintain the sites during the affordability period in accordance with a restrictive covenant that will be secured against the properties. Should Bridges fail to adequately maintain such areas, and any problems identified by the Redevelopment Agency are not corrected within sixty (60) days from the date of written notice from the Redevelopment Agency, the Redevelopment Agency may perform the necessary maintenance and Bridges will pay all reasonable costs for that maintenance. Further, if any conditions are identified as health and safety violations that pose a danger to life and limb, the violations must be corrected within three (3) days. Environmental Issues 1. Bridges agrees to the default provisions contained within the draft Redevelopment Agency loan agreement and subsequent HOME program funding agreement. To summarize, the default provisions involve the immediate repayment of the set 5 Sher Lane Deal Points, continued aside and HOME assistance, with interest, should any default by Bridges occur during the affordability period (30 years). 2. Reverter clauses will also be included in the loan agreement. This language will allow the Agency to take over the ownership and management of the project in the event of a major, uncured default by Bridges. Accepted: Bridges America 22 Title Date: LOCATION MAP ATTACHMENT #2 0 5 4 T Ew I I EW i - 6REE 0 9 m ALDRICH SUBJECT %OLGA. AMAZON m -st - FIOLT ANITA I 1JULIETTIE L kk MACDOKAJ NANCY GLENCOE ALHALIBRA.... �11111HEIL ETERS XWT. ., 1 4CARNEGM VILLA LA YORS PEWAYY 10 SAK Mp L PALOSVERDES soNNNE L "o' WADDO MARS LENISi ,/3:1 VERLIE DON ORYAML i- Cyr PAW t7i SATUR VJAAR tL ARV 1'.." Vf- I 1� _LAMBERT1 z JPR A PR 7 EARL �ERRY % Hil— MOONSH OW �COR�m DAMASK ARNETT• -I Ll NORTMME RDBIDOUx C - I I I j" . Totj OUSE TAMARtj WASHING ON A B I SUBJECT- 16121 Parkside W16112 Sher Lane, Huntington Beach, 92647, Page & Grid 827 A u� NVA"?A STONE i MVRDV 6LAFAYETTE CANDLEJKWIT BOLIOMT STARLIGHT AUFtqRN LOY9LAL 1ROM I Qff"CIE SUNM&t- r I)ROAD U A VA I SITE ANALYSIS Plat %,lap RW. N.112, SEA2.3. US, R1/W YCIAL PkGE 142-119 FOR FEE TITLE ASSESSMENT BELOW SURf•ACE 07 PAAM MAP i4A[ •!-SC; 189%V- "Of E - ASSESSOn 8t= 8 FARC,. ALMOND" X=142 SAGE I f COUWV CO CWANGf m 37 BRIDGES AMERICA ATTACHMENT #3 OLNUM F-4 0 % eN"Mw I' 20. 4 i A Kla F4... -On wit If BRIDGES distributes food weekly to needy families in Houston, Texas. In what will be a truly unique program when fully developed, this ;;`( Srowring effort will help the community meet a real need, by providing f' food free of charge to local churches and organizations who in tum give ` this food to the people in their area that require this specific assistance thru their transition to self sufficiency. The donations arrive from many sources: individuals who have a few r small items to corporations with large quantities. We receive food, medicine, medical supplies and equipment, clothing, toys, building supplies, etc., and occasionally the transportation to bring these items to our warehouses. Many corporations have assisted BRIDGES AMERICA FOUNDATION as reflected by the enclosed list. Many other relief organizations have benefited from BRIDGES' uniquely postured transportation and housing opportunities. 1.4 BRIDGES next food distribution program will be in Orange County, California. An area so often thought of as "above the fray" and yet is still clearly impacted by the less fortunate. BRIDGES will not merely provided "handouts" but will continue to support programs that encourage, better yet, require ultimate self sufficiency. As excited as we are at BRIDGES about our distribution programs and their success, we are equally certain that our affordable housing and related programs %rill be enthusiastically received by those in need as they progress to self reliance. It is with confidence that we at BRIDGES looks to new goals and even greater challenges. clbridgcslbio �rT�:��%l�'_'��.'�?��°,��7{�'f�$�i/.�'.'`L}'�f �`�r���JMd+���ii�'_iS• :i�Irls�wi�•3i�'!!i �.j�. r) _ 2 1 1rt f T. I ag=l , Graduated from the University of New Mexico. Was an aid to a United States Congressman and subsequently a Special Assistant to the Secretary of Energy of the United States. Director of the International office for an Garrett Robinson oil company in Washington D.C.. Head of land acquisition and lease development for McColluch Oil Company. Purchased, developed and leased real estate projects with the Cardinal Company prior to becoming Executive Director of Bridges. Received his law degree from Georgetown University. Currently specializes in international business and corporate law as a partner with Williams, Mullen, Christian and Dobbins in Washington D.C.. Dejoie has Loui foie been involved in the representation of international Conglomerates purchasing U.S. Companies including Pillsbury Company by Grand Metropolitan and Holiday Inns by Bass. Dejoie has been a frequent speaker on international trade and has written articles for such publications as the New York Times and Miami Herald. Graduated from the University of Arizona. Spent 22 years in the Navy, retired as Commander. Was a pilot in the Vietnam war and a computer Al Parkin logistic designer working in development for logistic air support. Now in CEO and President of Hal Inc., a computer software company which markets project materials, management software to freight forwarders, packers and the oil industry. CAbridgm\boardir THE BRIDGES AMERICA ARTICLES OF INCORPORATION (AS AMENDED) SEMESARr OF STATE rrNION OF COPFORA;IO11S F. -J 09:00 An 0610911394 544104815 - 2373S90 AXED A" RZSTATED OF THE BRIDGES AMERICA FOUNDATION The Bridges America Foundation was originally incorporated in the State of Delaware on January 13, 1994. By unanimous approval of the Board of Directors, the corporation hereby amends and restates Its certificate of incorporation, pursuant to sections 242 and 245 of the Delaware Corporation Laws, as follows: 'Tr"T: The name of the corporation (hereinafter called the "corporation') is THS BRIDGES AYARRICA FOUNDATION. LIZ=: The addreaa, including street, number, city and county of the registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of Kent, Delaware 19902; and the name of the registered agent of the corporation in the State ^f Delaware at such address is the Prentice -Hall Corporation System, Inc. THTP-D: The nature of the proposed business to be conducted by the corporation is &a. follow: To operate an entarprise exclusively for charitable, educational and scientific purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code, including the provision of humanitarian relief of the poor and distressed or of the underprivileged. Notwithstanding any other provision of these articles, the corporation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or (b) by a corporation, contributions to which are deductible under section 170(c)(2) of the Internal Revenue Code, or corresponding section of any future federal tax code. Upon the dissolution of the corporation, asset© shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal" government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed of by -a Court of Competent Jurisdiction of the county in which the principal office of the corporation is then Located, exclusively for such purposes or to such organization or rqN r) organizations, as said Court shall determine, which are organized and operated exclusively for such purposes. The corporation shall have the authority to exercise all of the powers conferr©d upon corporations organized not for profit and without authority to iesue-capital stock u:der the provisions of the General Corporation Law of the Sate of Delaware, provided, that the exercise of any such powers shall be is furtherance of any one or more of the aforesaid exempt purposes of the corporation. EQUR : The Corporation in not to have authority to issue capital stock. : Th3 name and the :trailing address of the incorporator are as follows: NA:= P s 444I em", ITOM3 Louis A. Dejoie Williams. Mullen, Christian a Dobbins 1575 Bye Street, NH Washington, DC 20005 RTZXH: The duration of the corporation is to be Perpetual. BEVEL=: The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subaection (b) of 5102 of the General corporation Law of the State of Delaware, as the same may be amended and supplemented. RIGHT*. For the management of the business and for the conduct of the affairs of the corporation, and for the creation, definition, limitation, and regulation of the powers of the corporation and of its governing body and the member or members thereof. as the case may be, it is hereby provided: 1. After the original or other Bylaws of the corporation have bean adopted, amended. or repealed, as the case may be. by the incorporator, the power to adopt, amend or repeal the Bylaws of the corporation may be exercised by the Board of Directors of the corporation. 2. The activities and affairs of the corporation shall be managed by or under the direction of its governing body, which in thie certificate of incorporation is referred to as a Board of Directors, although said Board -my consist of only one member, and although the member or members of said governing body may be designated as a trustee or tzusteea, a :Tanager or managers, a governor or governors# or otherwise under any provision of the Bylaws. 3. The number of directors constituting the Initial whole Board of Directors shall be the number fixed in the original or initial Bylaws. Thereafter, the number of directors constituting the whole Board shall be fixed from time to time in the manner prescribed in the Bylaws. The phrase "whole Board" shall be deemed to mean the total.number of directors Which the corporation would have if there were no vacancy or vacancies. 4. A director shall have auch qualifications as may he prescribed in the Bylaws. The initial Board of Directors shall be elected by the incorporator. S. Any person who is or was a director, officer, agent, or employee of the corporation or is or was serving, at the request of the corporation, as a director, officer, agent or employee of another. corporation, trust, or enterprise shall be entitled to be indemnified by the corporation upon the same terms, under the same conditions, and to the same extent as though he were a present or past director, officer, agent, or employee of a corporation of any type or kind organized under the General Corporation Law of the State of Delaware; provided that his conduct or action wac in furtherance of, or in connection with, the exempt purposes of the corporation. NUM From time to time, and in furtherance of the purposes for which the corporation is being organized, any of the provisions of this certificate of incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the members of the Board of Directors of the corporation by this certificate of incorporation are granted subject to the provisions of this Article NIIUH. Sinned on June 9. 1994. !/VU' G re Robi son P7esident/Executive Director attest: •�tc�-- uis�' ecretary Iirrr " P.SVZiNUE SERVIC= D25TRICT DZrE_T0% Z UFrNIA CIRC_E t7C:.TIF.Ea PARK, CA 51755-7406 . Date: Vug Z 0 IP94 TH- SKID =5 AMERICA FOUNDATICel C/O BRIDGES 962 WEST OLIVE STREET SAN DIEGO, CA 93103 Deor Applicant: DErA Tt•:IMT OF THE TP.raS .,-P.V EmPlcrer Identi(iCatian Can: lAa � 541 072 Contact Rerscn: JOSEPH FAN Contact Telephone Nu-0)at•: (218) 443-6841 Accounting Period End.in-y: Dectmbtr 21 nadendum Applies Yea Based on information zupplied, and assumingr yo;;r• epeYaciszs -dill 2:e a9 stated in your application for recognition o:�exempticn, we have dezcrmined you are exemptfromFederal incore tax under section 501(a) of th+ Internal Revenue Code as an organization described in section Sol(ei(31. ale have further decsr1rined treat, 86 indiCated in your u:prrl%cation, ycu art a private fckindat In wirhin- tha traaning o! 3-:lion 549 (n) of the Code. In thi•6 leLter 're are not determining uliather you are an oper3t.inq foundaCiott as defined in zection 4932(j) (3) . If you: sourcee of euppz t, or your p-jrpc2sz. character. or neviod ,:t optration chang4t, ple&3e let us know oo ue can CCn•ider the etfr.=t oC the change on your -?x:•mpt etatue and foundation ctatuu. in the case of sty a4(&-n:d- ment to your U_'u.atii zza tienal document or byl;.Ws. p14:psa send us a c_py of the amended docume::t or bylaws, Alzo, you should inform us c. all changZ3 in yrur name or a.ddre3 s . ;%a of JAnuary 1, i2e4, you are liable fcr taxes under_ 1.1;4 r,�dexai Insur- ance Ccntribucions Act itso_ial. security taxes) oft remuneration of ZIZO or Mort you nay to each of your employees during a calendar year. Vou are not liable for the tax imposed order the Fedtrdi Unemplofiart Tax :.ot !FUT!!. Rcw¢ver. siz=_ you are a private foundation. you are subject zo exeive =ar-s; undo_ Cyan- trz 42 of the Cede. You also may be eublict to other Feder?1 excjze tarts. If Imu rave any questic:,"r ahcuc exci.4A, employment, or otherLa%ew. CiEi,52 la: us 1:ttcu. Donors may dcdu--t Concribuzi=2 to you as prtvip.ad :n te:t:cn 1"C of the Codes E_4uents, legatees. dev'se5. transfers. or g4jtr t- ::•u .r fer y_sr use :arc •dzductible for-FtJv.rnl iltat= a;:d gift tax rur=o!es it zi ey 1-.2et the applicable previsions of neetion tom 210E, alid M-2 zr the Czdt. Contribution eajuczic•rs ere al_0wab2_ t_ donorz crli t:• tite e-tent that their- contriburions arc gifts. il.11 t,o ct-sidzratic% rec:iv:•cl. T:-'=t pur- chftner and similar pat•rr:_:'Its -r: cenjunc=ion a12h f_nd aisl-:J !'!!l:;�-m��• not n_zessarily qualify az deduc=_b1a coraCri t�t_o::a. •j_p:::ii: S*tl th4s. tl.rum stances. See Re-e; us Puling 67- 4d, rublia�,hed iz C-xrula=_:�: _��) !: _•:: 11G7 on psgc 104, which sot:+ :crza g_,idaiiaes r_garding z s chari- table de^u• ; tt:li'y. ahari- table contributions, t= pa�ircnta mAro by ta:cpa,t.S :Z.2' z. cth: '. From : BRIDMS AP1ERICA FOU2. FFXE No. : 7136721423 � r tar. 13 19% 12:59MI Pea r� ' - o tt•1 IP.S IbYITEM-o P:, 1•. a c_i:72:0:5 C. ttd:.� FQj flee_+ ~ • . ._.- . LtA..,.0 • , .2. in SAIDCES AMPRICA MMIDATIC`Il peat%tipatior, in 1%1ndsaisinJ sctiVities for cho-riry. you sr: required to fit% Form 990-aF, Aot.isrl Of ri•lvat.: ioundlti.41 O1• Soccivn 4931(a) (1) Truac irentud as a Privat6 Foundation. N-I'M oao-Pr I.urt bt filed by the xath rJe*y of the fifth dsenth after t21e enA „t ,our 3s.n01 ACCCunt- ing period. A penalty of $to a day ie charged when A raturn is filed iAtt. unless there is vesrvnoble Lnuss for thtr dolap. Ilowever, the MAXIM.ur. pr»alt.t charged carumt: rxoaod ;54000 ur 3 peteent of your gwown rrTaluta fhr Fhij scar. whichnv*r is lcrv. Thir pennity may slate be charged If n return iR not eomplats, no plenues be attre your return is cowplekte before ;scut Clly I.t. You are not required to the federal incotnc tax returns .itilfi4a you a1•8 ,,tt,jcr,t to trio pax cm unrelated butoineaa income undtr 511 0: the C•1de. If you &to Dub jtet to thi E tax. you a,uat f 1lo an incomt: tax return on Form 9t%.i•. rxao�nt Organisxtion Bunillons InCOTO Tex !return. In this letter ke are not dstsin.inino whether any of your pr:aant or prop0es:4 a•.tivit:Rs are %uixalated trade or business As defined in section Z13 of th_ Code. 7cu n:ed an omployor identification number evrtn if y^u ttl.e ro employ -ea. if an employer identification number was not entered on your application. a number will he namigned to you and you will be advited of it. Please use that numrbsr en all returellr you 913c and in call eorrerpondenee• wlttl the Internal R!vtnut Service. This dal.armination is ba: d on evidences U18t -foul: funds :are dedicAted to th4 I Irtcd in section 501(cl (3) of the C6de. To ,rasure yttst continued erempLion. you should mttintair: records to 611e4 that !Mdl 414 expend-,%ct only tar those purposes. If you di.trM,e 4 Kads to rtfitr .V49^n1%j%t1ona, your records ah�-uld show whether they Ar4 e:teug3t• under section 50110 13) . In case$ where tho recipient; organizatict, is hot exompt uneer section 501 tc, (3). there should ba evidence that the Wid4 will rtm;ij:1 dedicated to the required yulposee and t?rat they will ba used f%5r thosi purposes by'the reciplene. If dittributiona are made tT individuals, case histories regarding thi recipeants Should bt kept Snowing names, addresses, purponez -A *wArds, Manner of aalection. relationship (if any) to membera, oMkCNrs, truaLsets mr donsrn of fur,da to you, so that Any And all distribut:ione mie4* to Indlvidt a cart he sub:tantlated upon request by the 111tetnal RaVe11ti9 Sozvit•Y. (1Eer0tlu6 Rulislg 54-194, C.B. 1956-2, r,age 306.) If we have indicat9d in the heading of tltia letter thnt -in Addendum applies, tilt addendum enoloatd is an integral part of Uils lv%ttr. Because this letter could help resolve any qusations ttbomt your erampt status and foundatLo=l status. you should keep it in your pile-unant reet!rda. -From BRIDGES AMERICA FOUN. PHONE No. : 7136721423 • Jl0 J -:,4• ` �J 1 1 : Q3 l [�: 1 G' i•irA ITEF'E'i f'i �1: i ' I i i a°A776 .3- THF. RRIDGES !.,'4ERICA FOUIMIMOV 11ar.13 19% 1:00P11 PO4 114:F PCJ if you have any qu4Stiono• plence contact the person whose narteh and tal:•ylloslo number are ahown in the healing _5F. this latter. Sincerely yveara, r _? �Oa, Richard R. Oraveo District virector Enclosure: Addendum ;From BRIDGES Pt ERICA FOLH. PHO aE tic. : 7136721423 May.23 1996 5:51P11 P02 r BY-LAWS OF THE BRIDGES AMERICA VOVNDATION (a► Delaware corporation riot -for -profit and without capital stock) ARTICLE I Offices and Agent The Corporation may have such offices, either within or without the State of Delaware, as the Board of Directors may designatc or ao the business of the Corporation may require from time to time. The regiotered office of the Corporation required by the Delaware. Nonprofit Corporation Act but the Corporation may have such places of business as designated by the Doard of Directors. The address of the registered office or the identity of the registered agent may be changed from time to time by the Board of Directors. ARTICLE II Board of Directors SECTION 1. Ge6gral Power.The business and affairs of the Corporation shall be managed by its Board of Directors except as the Board of Directors shall delegate certain powers to so manage to the Executive Committee or other committees of the Board of Directors. SECTION 2. Number. Tenure and Ouali€icatioaa. The number of directors composing the Board of Directors shall be not less than one (1) nor more than seven (7). Upon resolution of the Hoard of Directors the number of directors may be increased or decreased, but no decrease shall have the effect of shortening the term of any incumbent director. The initial number of directors shall be three (3). The term of office for all directors shall be for a period of one (1) year, and each director shall serve until the election and acceptance of a duly qualified successor. The initial Board of Directors shall consist or the directors named the incorporator of the Corporation. Directors shall be nominated and elected by the majority bote of the Board of Directors at the regular annual meetings of the Board of Directors, except as provided in Sections 8 and 9 below. Each director shall be a person at least eighteen (18) years of age. A director need not be a resident of the State of Delaware. SECTION 3. Eroular Meetinoa. The regular annual meeting of the Board of. Directors shall be held each year at such time and Crom : 8R I DIES AMER I CA FOUN. _ PHONE No. : 7136721423 'ow) IUIJ- 23 1996 5: 52P11 P03 place determined by the Board of Directors, for the purpose of electing directors and for the transaction ut such other business act may come before the meeting. If the day fixed ror the annual meeting shall be a 2ega) holiday in the State. of Delaware, sisrh meeting shall be held oil the next succeeding business day. The Board of Directors may provide, by resolution, 1-he ti.mA and place, either within or without+ the State of Dal aware, for the holding of additional regular meetings without notice othrir than the inoticP provided by such resolution. SF rT,C)N 4. Ueei' 1 Special meetings of the Board of Directors may be called by or at the request of one-third iu1 of the members of the Board of Directors. The pert3un ar parsons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting called by them. SECTION 5. Notice. Notice of any special meeting shall be delivered personally or mailed to each director at his business address, or by telegram, telex, telecopy or similar means of visual data transmission. If mailed, such notice bhall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram , telex, telecopy or similar means of visual data transmission, such notice shall be deemed to be delivered when transmitted for delivery to the reelpient. The notice of any special meeting shall set forth the purpose, time and place of such meeting. Any directory may waive notice of any meeting. - The attendance of a director at a meeting shall constitute a waiver of notice of sucri meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because that meeting is not lawfully called or convened. whenever any notice of the Corporation under Articles of Incorporation laws, a waiver thereof in entitled to such notice, therein, shall be deemed is required to be given to any director the provisions of these By -Laws, the or the Delaware Nonprofit Corporation writing signed by the person or persons whether before or after the Lime stated equivalent to the giving of such notice. SECTION 6. .uorum. A majority of the number of directors fixed in accordance with Section 2 of this Article shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if leas than such majority is present at a meeting, a majority of the directors present nay adjourn the meeting from time to time without further notice. - 2 - From t BR 1 DGES AMER 1 CA FOUN. � PHONE No. : 7136721423 l�1 May. 23 1996 5: 56PM Pol SECTION 7. Manner of Act.. (a) Actiono at a Meeting. 8xcept as provided in Paragraph (b) of this Section 7, the act of the majority of tho directors present at a inecting at which a quorum is present shall be the act of the Board'of Directors. (b) Ac ions Without a Meeting. Any action required or pertitI.ted to be taken at a meeting of the Board of Directors or the Executive Committee' or other committees, as the case may be and such written consent is filed with the minutes of proceedinga of the Board of Directors, Executive Committae or other commUttees. Such consent shall havo the came force and effect as a unanimous voto at a meeting. Such writing, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, teiecopy, or similar means of visual data transmission. (e) Telephgnie Mggtinas. Any or all directors may participate in a meeting of the Board of Directors or a committee of the Board by means of conference telephone or by any means of communication by which all persons participating in the meeting are able to hear one another, and such participation shall constitute presence in person at the meeting. SECTION 8. Vacancies. Any vacancy occurring in the Board of Directors for any reason other than an increase in the number of directors may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors. A vacancy occurring due to an increase in the number of directors shall be tilled by unanimous consent of the remaining directors. A director elected to fill a vacancy shall be elected for the unexpirea term of his predecessor in office. A vacancy shall be deemed to exist by reason of the death or resignation of the person elected, or upon the failure of the existing directors to elect directors to fill the unexpired term o directors removed in accordance with the provisions of Section 9 of this Article. SECTION 9. Removal. At any meeting of the Directors called expressly for the purpose of removal, any airector may be removed, with or without cause, by a vote of a majority of the remaining Board of virectors, whether or not a quorum. Removal of directors with or without cause may also be accomplished by the unanimous written consent of all members of the Hoard of Directors who are not the subject of removal. In case one or more of the directors are so removed, new directors may be elected at the same meeting, or by the same written consent, for the unexpired term of the director or directors so removed. 3 - From :'BRIDGES AMERICA POCN. PHDJS No. : 7136721423 � Kay.23 1996 5.56PH P92 Failure to elect directors to fill the unexpired terra of the direc:Lors eo removed shall be deemed to create a vacancy or vacancies in the Hoard of. Directors. SECTION 10. PresumRt on of _Aon2nt. A director of the Corporatiors who is present at a meeting of the Board of Directors in:which action on any corporate matter is taken shall be presumed to have aseerrLed to the action taken unleaa hia ai.aaent: Shall'be entered in the minutes of the meeting, or unleee ho shall file hisiwriLLen dissent to such action with the person acting as Secretary of the mccting before the adjournment thereof, or shrill forward ouch dissent by regiatered mail to tkm uecretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 11. Executive and Other Committees. There may be established an Executive Committee, and one or more other committees, composed of two or more directors designated by resolution adopted by a majority of the full number of directors of the Board of Directors as fixed in accordance with Section 2 of this Article. The Executive Committee or ouch other committees may meet at stated times, or on notice to all members by any one member. Vacancies in the membership of the Executive Committee or such ocher committees shall be filled by a majority vote of the full number of directors on the Board of Directors at a regular meeting or at a special meeting called for that purpose. During the interval between meetings of the Board, 'the Executive Committee, if it shall have been Established, may advise and aid the officers of the Corporation in all matters concerning its interest an the management or As business, and shall generally perform such duties and exercises such powers as may be directed or delegated by the Board of Directors from time to time. The Board of Directors may delegate to the Executive Committee or such other committees the authority to exercise all the powers of the Board of Directors. The de uignaLion of and delegation of power to the Executive Committee shall not operate to relieve the Board of Directors, or any members thereof, of any responsibility imposed upon it or him by law. ARTICLE YII Board of Advisors The Board of Directors may appoint a Board of Advisors of the Corporation. The purpose of the Board of Advisors shall, be to provide guidance and assistance to the Board of Directors in conducting the activities of the Corporation; however, the Board of Advisors shall not: have any authority to manage the business and affairs of the Corporation nor to ungage in other acts on behalf of the Corporation unless so authorized by the Board of Frcxn -BR 1 DGES PVER 1 CA FOUN. � F"DNE No. : 7136721423 � May. 23 1996 5:57MI P03 Directors. The members of the Board of Advisors shall serve for terms as prescribed by rcoolution of the Roard of Directors. ARTICLU IV officers SECTION 1. NuMj2r. . Tho officers of the Corporation shall be a Prcaidcnt, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Such other officer& and as3iotant officcra ac may be deemed neccouary may bo cicctcd or appointed by the Board of Directors, including a Chairman and one or more Vice -Chairmen of the Board and one or more Vice Presidents. Any two or more offices may be held by the same person except the offices of President and Secretary. SECTION 2. Election and Term of Officg. The officers of the Corporation shall be elected at the first regular meeting of the Board of Directors preceding the expiration of such officer's terms of office. SECTION 3. Removal. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION S. President. The President shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, shall generally supervise and control the management of the business and affairs of the Corporation. He shall perform all duties incident to the position of chief executive officer of a corporation and such other duties as may be prescribed from time to time by the Board of Directors. At the Board's determination, the President may instead be given the title of "Executive Director," which title shall not in any way diminish his power as President. SECTION 6. Mice -President. in the absence of the President or in the event of his death, inability or willful refusal to act, the Vice President (or should there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation then in the order of their election) shall perform the duties of - 5 - Frc+m : 'BRIDGES AMER I CA FOU4. PHONE No. : 7136721423 Ma g. 23 1996 5: 56PM PO4 Preeident. and when so acting, shall have all the powers of an be subject to all the restrictions upon the Prceident. The Vice President, shall, in general, perform all duties incident to the office of Vice President snd ouch other duties as from time to time may be assigned to him by the President or the Board of Directors. SECTION 7. The 5ecretarv_. The Secretary shall have the responsibility and authority to: (a) keep the minutes of the meetings of the Board of Directors in books provided for that purpose; (b) give, or cause to be given, all notices that are required by law and by these Bylaws;•(c) be custodian of the corporate recordo and of the seal of the Corporation, and see that the seal of the Corporation is affixed to all documents as my be necessary or appropriate; and (d) in general, perform all duties incident to the office of Secretary, and such other duties as from time to time may be designated to him by the President or the Board of Directors. SECTION 8. 1he Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum, and with such surety or sureties, as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of, and be responsible for, all funds of the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies, or other depositories as shall be selected by the Board of Directors; (b) shall disburse the funds of the Corporation, as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the directors an account of all his transactions as Treasurer and of the financial condition of the Corporation; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. SECTION 9. Assistant ReCre- ttaries and Ua atant Treasurers. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. The Assistant Treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. 6 - 'rc FR I LOGES AMER I CA FOUN. � PHONE No. : 713G721423 n May.23 1996 5:59M POS ARTICLE V Deeds and Contracts All deeds and contracts of the Corporation shall be signed by the President, unless the Board of Directors c1hall otherwise provide by duly adopted resolution. ARTICLE VI Checks All checks or dcmanda for money and notes of the Corporation shall be signed by such officer or officcra o£ the corporation, and in such manner, as shall from time to time be determined by resolution of the Board of Directors. ARTICLE VZI Fiscal Year The Hoard of Directors shall, by resolution, fix the fiscal year of the Corporation. ARTICLE VIII Seal The Board of Directors shall provide a corporate seal, which shall be circular in form and shall have inscribed thereon the name of the Corporation and the designation of the State of Delaware as the place of incorporation of the Corporation. ARTICLE IX Books and R©cords The Corporation shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of the Board of Directors and committees having any of the authority of the Board of Directors. . 7 . From BR I LOGES AME'Zi 1 CA FOUN. r PME No. : 7136721423 � Ma y. 23 IS% 5: 59R1 Po5 ARTICLZ X Participation of Directoro and Officers in Related Business ultless vttierwioe providc& by contract, officers and direcrnrs of this Corpuration may ]gold publiLiona as officHrg and directors or u0ter c0rp0rtLL1Q1►8, wheLlter for profit. nr not for profit, irrespective of t}iu business purposcn and bucineea operatiusis of such ether corporations, and their wffort4 to advance the interest of those other corporations will noL create a breach of ffduciazy duty to this Corporation in the absence of bad faith. ARMME XI Gender When required by the context, each gender shall include all genders. ARTICLE XII Amendments The power to alter, amend, or repeal the By -Laws or :1-pt new By -Laws shall be vested in the board of Directors. I HEREBY CERTIFY that the foregoing is a full, t'ru�., and correct copy of the Bylaws of The bridges America Foundation, a nonprofit corporation of the State.of Delaware, as in effect on the date. hereof . WITNESS my hand and Beal of the Corporation. Dated: February 15, 1994 w %wmcdhb%k-Aedyl0111196.01 —_- -;- �—i �"_r /W - _'. e - 0, —P- (1, /kz� ae r rviand DO oie, ssi a1 1L Sedrra -a. STATE OF DELAVARE t 1 SEVIVARY OF STATE -.. DIVISION OF CORPORATIONS `1: FILED 09100 An 071031199C SSOTS6070 - 2373S90 STATE OF DELAWARM CERTIFICATE OF AMEM14ENT OF CERTIFICATE Off' INCORPORATION OF 7119 BRIDGES AMERICA FOUIMATZON i a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware; t • DOES ESREST CSRTIFYI • .j r1RST! That at a meeting of the Board of Directors of ThL6 Bridges( America Foundation, a non -membership+ not -for -profit corporation, resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of chid corporation, declaring said amendment to be unanimously adopted. The reoolution getting Earth the amendment is an follows: i ;zr,sOLV=. that the Certificate of rncorporation of thin corporation be amended by changing the fourth paragraph of section "Third" so that, as amended, said paragraph chael]. be and read no followat ! "The property of this corporation in irrevocably dedicated to charitable or religious purposes; and upon liquidation, dissolution or abandonment of the owner. a;ter providing for the debts and obligations thereof+ the remaining assets will not inure to the benefit of any private person but will be distributed to d non-profit fund, foundation or corporation which is organized and operated exclusively for charitable or religious purpose and which has establisheds; its tax exempt btatu$ under Section SOL(c)(3) of the Internal Revenu6 Code," 9SCOUD That said amendment was dulyadopted in accordance with the prgvieion9 of Section 242 of the Geeral Corporation Lair of the State of Delaware. , THrRDt I That the capital of said corporation shall not bt reduced under or by reason cf said Amendment& • ZN ?!17=9S $WAtoF, said corporation hag caused Ehid cestiticsto to be sigped by Louis A. Dejoie, an Authorized 01fic4ri this 3rd day of July, 1996. � ccr airy i ZO/Z.0'd rssr ZZ�zL tfl-t�'966L aors tca tic Dees r ra 434 sotrrarr Wtrrki•t saaJ a+i wa,o TAX EXEMPTION LETTERS FROM THE STATES OF DELAWARE AND TEXAS ra-1 �rJJ •.�-�! 4% SECRETARY OF STATE 1978403 CERTIFICATE OF QUALIFICATION 1, BILL JONES, Secretary of State of the State of California, hereby cerrify: That on the 3RD day of SEPTEMBER .19 96 THE BRIDGES AMERICA FOUNDATION a corporation organized and existing under the laws of DELAWARE complied with the requirements of California law in effect on that date for the purpose of qualifying to transact intrastate business in the State of California, and that as of said date said corporation Became and now is qualified and authorized to transact intrastate business in the State of California, subject however, to any licensing requirements otherwise imposed by the laws of this State IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this 6TH dayof SEPTEMBER, 1996 BAS r) State of Delaware Office of the Secretary of State PAGE 1 I. EDWARD J. FREEL, SECRETART OF STATE OF THE STATE OF DELAWARE. DO HEREBT CERTIFT THE ATTACHED IS A TRUE AND CORRECT COPT OF THE CERTIFICATE OF AMENDMENT OF "THE BRIDGES AMERICA FOUNDATION% FILED IN THIS OFFICE ON THE THIRD DAT OF JULT; A.D. 1996, AT 9 O'CLOCK A.M. . \ A CERTIFIED COPT OF THIS CERTIFICATE HAS BEEN,FORWARDED TO THE NEW CASTLE COUNTT RECORDER OF DEEDS FOR RECORDING. 1 .. i - i - t i i f h4.1 o; V a�. • Edivard 1. Fire[, Secretary of State AUTHENTICATION: 2373590 8100 DATE: 8016804 960196078 07-05--96 ' LSY—CA Wil (VIC p fife pf Zans �4trCr�tiC�f Df �tlS�t C"T I Ti 4A M-Mr- OF A; 0 G tt*W � MCA.. �•`U'tib7�` iqr� THE UHDERSICNED9 AS SECRETARY OF STATE OF THE STATE OF TEXASi r r, HEREBY CERTIFIES THAT THE�ATTACHED APPLICbTtOK OF THE ABOVE ENTITY FOit A CERTIFICATE OF AUTHORITY TO TRANSACT BUSINESS IN THIS STATE HAS 11EEN RECEIYED IN THIS OFFICE AND IS FOUND TO CONFORM TO LAM. ACCORDINGLY THE UNOERSIGNEOf AS SUCH SECRETARY OF STATE# AND by YIRTUE OF THE AUTHORITY YESTED III THE SECRETARY BY LANs HEREBY ISSUES THIS CERTIFICATE OF AUTHORITY TO TRANSACT BUSIIIESS IN THIS STATE FROM AND AFTER THIS OATFP FOR THOSE PURPOSES SET FORTH IN THE APPLICATIOlI1 UNDER THE NAME OF DATED ,TUNE 15e 1999 �v is "',r,�.l � �1 s ,••`_.,, BRIDGES AMERICA FOUNDATIOM sects tnry a -1sw PURCHASE ESCROW INSTRUCTIONS t. 2. 3. 4. 5. e. 7. A 9. IQ tL 12. 13. 14. is Is, 17, Is. 19. 20. 21. 22. 21 24. 21 26. 27. 28. 29. 30. 31. 32, 33. 34. 35. 3R. 37. 38. 39. 40. 41. 42. 43. 1. 43. 48, 4 F. 4a. 4% 50. 51. 52. 53. 54. 55. 56. 57. So. 59. 60. 61. 02. 63. 64. 63. 56. 67. 68. ORANGE COAST TITLE COMPANY ESCROW DIVISION 640 N. Tustin Ave., Suite 208 Santa Ana, CA 92705 (714) 558-0222 ` (B00) 4164622 • FAX (714) 285-0506 SALE ESCROW INSTRUCTIONS Escrow Officers T£RRI AUSBROOKS Escrow No.s 102518-TA Dates October 21, 1997 ESCROW SUIMARi Initial Deposit •S5.000.00 Deposit prior to COE •S695,000.00 *TOTAL CASH THRU ESCROW •$700,000.00 New Encumbrance - lot TO $3,300,000.00 New encumbrance - 2nd TO $800,000.00 TOTAL CONSIDERATION S4eB001000.00 Buyer(*) will hand you prior to close of escrow the sum of 700.000.00 of which 50000.00 HAS BEEN deposLted herein. Buyers) shall also deposit sufficient funds and/or documents necessary to comply with instructions herein, prior to the close of escrow. Buyer shall deliver to you any instruments and/or funds required from Buyer to enable you to comply with these instructions, all of which you are authorized to use and/or deliver on or before (as more fully set forth herein), and when you are in a position to obtain a standard Policy of Title Insurance through Orange Coast Title Company, provided that said policy has a liability of at least the amount of the above total conaideration, covering the following described property in the City of HUNTINGTON BEACH, County of Orange, State of California) SEE ATTACHED EXHIBIT -A- MADE A PART HEREOF AND INCORPORATED HEREIN. Property Addresss 16112 SHER LANE, HUNTINGTON BEACH, CA (NOT VERIFIED BY ESCROW HOLDER) SHOWING TITLE VESTED IN1 BRIDGES AMERICA FOUNDATION, L.P.. A CALIFORNIA LIMITED PARTNERSHIP AHD/OR ASSIGNEE FREE FROM ENCUMBRANCES EXCEPTS (1) Ali 1997-98 installments of the General and Special County, and city (if any) taxes, including any special district levies, payments which are included therein and collected therewith, for current fiscal year, not delinquent, Including taxes for ensuing year, if any, a lien not yet due and payable. (2) Covenants, conditions, restrictions, reservations, rights, rights of way, easements and exception■ of minerals, oil, gas, water, carbons and hydrocarbons on or under said land, now of record, and in deed to file, if any, affecting the use and occupancy of said property. (3) Assessments and bonds of record, if any, not delinquent. (4) New First Used of Trust, to record, shall be in favor of LENDER OF BUYER'S CHOICE, in the amount of $3,300,000.00, at prevailing rates and terms. Borrowers execution of said loan documents shall deem their approval of the terms and conditions contained therein and your instructions to comply with same. (5) A New Purchase Money Second Deed of Trust to record, on your company's usual short form, executed by Buyer's named herein, to secure a note in the amount of $800,000.00, In favor of CO D.L. P11AM AND TIIUY T.L. BUI PRAM, TRUSTEES OF THE PHAM TRUST DATED MAY 20, 1987■ or order, payable at a place designated by beneficiary with interest from the close of escrow on the unpaid principal at the rate of 7.0% per annum payable as more fully set forth in the Addendum to Real Estate Purchase Contract and Receipt for Deposit attached hereto as ExhibLt -C-: (SAID NOTE SIIALL BE PREPARED IN THE FORM ATTACHED HERETO AS EXHIBIT -B-. ' 7 ESCROW Not 10251E-TA PACE No.t 2 DATE1 20/11/97 1. 2. 3. 4. a. 7. e. 10. 11. 12. 13. 14. rs. 16. v. 1 a. 19. 20. 21. 22. 23. 24. 2S. 26. 27. 25. 29. 30. 31. 32. 33. 34. 35. 36. 3F. 36. 39. dD. 41. 42. 43. 44. 45. 46. 47. 48 49. 50. 51. 52. 53. 54. 55. 56. 57. 56. 59. 60. 61. 62. 63. 64. 6S. 66. 67. K ESCROW INSTRUCTIONS (CONTINUED) TO: Orange Coast Title Company CONTINGENCY REMOVAL$ All parties herein agree that the date of acceptance of the Purchase Agreement Offer Is October 3, 1997. 1. Buyer shall have the right, at Buyer's expense, to select a licensed contractor and/or other qualified professional(@), to make "Inspections" (including tests, surveys, other studies, inspections, and investigations) of the subject property, including but not limited to structural, plumbing, sewer/septic system, well, heating, electrical, built-in appliances, roof, soils, foundation, mechanical systems, pool, pool heater, pool filter, air conditioner, if any, possible environmental hazards such as asbestos, formaldehyde, radon gas and other substances/products, and geologic conditions. Buyer shall keep the subject property free and clear of any liens, indemnify and hold Seller harmless from all liability, claims, demands, damages, or costs, and repair all damages to the property arising from the "Inspections." All claimed defects concerning the condition of the property that adversely affect the continued use of the property for the purposee for which it is presently being used shall be in writing, supported by written reports, if any, and delivered to Seller within 30 calendar day■ FOR "INSPECTIONS" OTHER THAN GEOLOGICAL, and/or within 15 calendar days FOR GEOLOGICAL "INSPECTIONS." of ACCEPTANCE OF THE OFFER. Buyer shall furnish Seller copies, at no cost, of all reports Concerning the property obtained by Buyer. when such reports disclose conditions or Information unsatisfactory to the Buyer, which the Seller is unwilling or unable to correct. Buyer may cancel this agreement. Seller shall make the premises available for all Inspections. BUYER'S FAILURE TO NOTIFY SELLER IN WRITING SHALL CONCLUSIVELY BE CONSIDERED APPROVAL. 2. PERSONAL PROPERTYs A complete inventory of all personal property of Seller currently used in the operation of property and included in the purchase price shall be deliverd to Buyer within 15 calendar days of acceptance of the offer. Buyer is allowed 15 calendar days after receipt to notify Seller in writing of disapproval. Seller shall deliver title to the personal property by Bill of Sale, free of all liens and encumbrances, and without warranty of condition. 3. PEST CONTROLt Within 60 calendar days of acceptance of the offer, Seller shall furnish Buyer at the expense of Seller a current written report of an inspection by a Licensed Structural Pest control operator showing property to be free and clear of all wood-deetroying insects, dry -rot, and/or fungus in visible, accessible area■ (Section I and ii). Said report and work completed, If any, is to be paid from Sellers funds at close of escrow, upon presentation of bill. 4. RENTAL/SERVICE AGREEMENTS$ within 15 calendar day■ of acceptance of the offer, Seller shall make available to Buyer for inspection and reviews All current leases, rental agreements, service contracts and other agreements as more fully set forth in the Purchase Contract item / 17K. Buyer shall be allowed 10 calendar days after receipt to notify Seller in writing of disapproval. S. INCOME/EXPENSE STATEMENTSt Within 15 calendar days of acceptance of the Offer, Seller shall make available to Buyer for inspection and review original books and records of Income and expense as more fully met forth in the Purchase Contract, item 0 17L. Buyer shall have 25 calendar days after acceptance of the offer. Seller shall send to all tenants written requests for estoppel certificates. 6. GOVERNMENT APPROVALS - See the Addendum to Real Estate Purchase Contract and Receipt for Deposit is attached hereto as Exhibit 'C' and made a part hereof. upon the Government Approvals and waiver by the Buyer or satisfaction of the conditions described above the increased deposit of 20,000.00 shall be deposited into escrow Immediately. At such time as the increased deposit is deposited into escrow then Escrow Holder is instructed to immediately release all funds on deposit including the initial deposit of $5,000.00 to seller without further approval from the Buyer. z 3. 4. L 0. a. 9- 10. 11. 12. 13. 14. ts. tee. 17. IL 12. 20. 21. 22. 23. 24. 25. 26. 21. 2L 29. 30. 31. 32. 33. 34. 35. 30. 37. 30. 39. .40. 41. 42. 43. 44. 45. 40. 47. 40. 49. 50. 51. 52. 53. 54. 53. 56. 57. 59. 59. 60. 61. 62. 63. 64- 65. 66. ke, ESCROW NO$ 102S1B-TA PAGE NO.t 3 ESCROW INSTRUCTIONS (CONTINUED) TO: Orange Coast Title Company - DATEt 10/11/97 CLOSE OF ESCROW DATE$ Upon the removal of all Contingencies as not forth above said closing shall occur 30 days thereafter and Escrow Holder will notify all parties in writing an to the exact close of escrow date. OUTSIDE CLOSING DATEt See the Addendum to Real Estate Purchase Contract and Receipt for Deposit attached hereto as Exhibit 'C'. Prior to close of escrow, Seller will hand you for delivery to Buyer at close of escrow unrecorded, a Bill of Sale executed by CO D.L. PHAM, TRUSTEE and THUY T.L. BUI PHAM. TRUSTEE in favor of BRIDGES OF AMERICA FOUNDATION, covering inventory of furniture and furnishings as approved by Buyer and Sailer, situated on the premises known as 16112 SUER LANE, HUHTINGTON BEACH, CA. The consideration for the personal property being conveyed I* included in the total consideration set out herein. No report as to the condition of title to the aforesaid personal property is to be procured from either the County Recorder's records or the Secretary'of States records. IF BUYER FAILS TO COMPLETE SAID PURCHASE AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF BUYER, SELLER SHALL BE RELEASED FROM OBLIGATION TO SELL THE PROPERTY TO BUYER AND MAY PROCEED AGAINST BUYER UPON ANY CLAIM OR REMEDY WHICH HE/SHE MAY HAVE IN LAW OR EQUITY; PROVIDED, HOWEVER, THAT BY PLACING THEIR INITIALS HERE BUYERt( I SELLERI( ) AGREE THAT SELLER SHALL RETAIN ALL DEPOSITS AS LIQUIDATED DAMAGES. IF THE DESCRIBED PROPERTY IS A DWELLING WITH NO MORE THAN FOUR UNITS, ONE OF WHICH THE BUYER INTENDS TO OCCUPY AS HIS/HER RESIDENCE, SELLER SHALL RETAIN AS LIQUIDATED DAMAGES THE DEPOSIT ACTUALLY PAID, OR AN AMOUNT THEREFROM, NOT MORE THAN 3% OF TILE PURCHASE PRICE AND PROMPTLY RETURN ANY EXCESS TO BUYER. BUYER AND SELLER AGREE TO EXECUTE A SIMILAR LIQUIDATED DAMAGES PROVISION, SUCH AS CALIFORNIA ASSOCIATION OF REALTORS RECEIPT FOR INCREASED DEPOSIT (RID-11), FOR ANY INCREASED DEPOSITS. (FUNDS DEPOSITED IN TRUST ACCOUNTS OR IN ESCROW ARE NOT RELEASED AUTOMATICALLY IN THE EVENT OF A DISPUTE. RELEASE OF FUNDS REQUIRES WRITTEN AGREEMENT OF THE PARTIES, JUDICIAL DECISION OR ARBITRATION). The parties hereto fully understand the total responsibility and agency authority of Escrow Holder is limited to those actions requiring the performance and compliance by the Principals that are identified as conditions precedent to the recording of the documents and delivery of the instruments to the respective parties entitled thereto, and the disbursement of funds in escrow as a consequence of said closing. The parties hereto, by execution of these Instructions acknow3edge that Escrow Holder assumes NO responsibility or liability for the supervision of any, act or the performance of any condition which is a condition subsequent to the closing of this transaction. All parties are aware that Escrow Holder will NOT be required to determine the default of any party hereto. Therefore, in the event of any termination of this escrow. Escrow Holder will require mutually signed instructions from all parties, or will terminate this by following the guidelines listed in the General Instructions attached hereto. surer will obtain new fire Insurance with mortgagee clauses in favor of applicable Trust Deed holders. In the event Buyers have not deposited a paid receipt for the insurance premium into escrow, Escrow Holder is hereby instructed to pay the premium from funds deposited by Buyer. Make the following prorations and adjustments as of CLOSE OF ESCROW. prorate taxes on real property, based on information furnished by seller/Title Company. Prorate rents based on statement to be furnished by seller and approved by buyer. Security Deposits if any 67. BUYER AND SELLER HAVE READ AND AGREE TO THE GENERAL PROVISIONS ATTACHED HERETO AND MADE 68- A PART HEREOF THESE INSTRUCTIONS. ESCROW NOS 102516-TA PAGE NO.s 4 DATE: 10/11/97 ESCROW INSTRUCTIONS (CONTINUED) TO: dranfl4 Coast Title Company 1. 2i . 4•.• Buyer and Seller agree to the foregoing instructions and prior to the said date will hand L you any funds and instruments necessary for me to comply therewith provided you hold the d funds and instruments deliverable to me. Pay any encumbrances necessary to place title �• in the condition called for. 9- All parties signing this agreement hereby acknowledge receipt of a copy of these 10. instructions. 11. 12. BUYEA'S SIGNATURES 13. 14. 1'3- BRIDGES AMERICA FOUNDATION. L.P., 16. A CALIFORNIA WHITED PARTNERSHIP 17- SYS BRIDGES AMERICA FOUNDATION, INC. to a Delawa Corporation 19. 20- By 21. Garrett Robinson, Exec. Director 22. 23. 24• MAILING ADDRESS: 10837 BROORHURST ST / 303, FOUNTAIN VALLEY, CA 92708 25. 26. 2t SELLER'S SIGNATURE: 25. 29. 30. 31. Co D.L. PHAH, TRUSTEE THUY T.L. BUI PHAN, TRUSTEE 32. 33. MAILING ADDRESSs C/O Bole& Medical Group 34. 10362 Bolea Avenue, west Hinister, CA, 92683 35. 36. 37. 36. END OF INSTRUCTIONS. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 51 54. 5S. 56. 57. 5e. 59. 60. 61. 62. 63. 64. 6L 68. 67. 66. Escrow No. t 102510-Ta GENERAL PROVISIONS 1) Ail parties are swats that AS 512. which became effective January 1, 19W. mandates that all funds with respect to an escrow MJST be conecled and available for withdrawal PRIOR TO DISBURSEMENT OR RECORDATION, i.e.. dose of escrow. Delays In dosing this escrow WILL occur If deposit of funds by either party or lender are by other than bank wire, cashier'$ check or teller check. 2) Ail parties are aware that effective July 1. 1985, pursuant to a Slate Law, Section 480.3, Revenue and Taxation Code, all deeds and other documents that reflect a change of ownership In real properly when presented for recording, must be accompanied by a'Preliminary Change of Ownership Report'. Escrow Holder will furnish the parties with such forms for their completion prior to dose of escrow, and/or In the event that the form Is not returned to Escrow Holder and/or the County Recorder should reject said form for any reason, all Parties are aware that the dosing of the escrow will NOT be affected; however, an additional recording fee of $20.00 as charged by the County Recorder. as required by said taw, will be assessed to the account of the Party not retumktg or completing said form. All parties hereby release, relieve, and IndemnIfy and agree to hold harmless Escrow Holder from any and all liability aril/or responsibility In connection with said law, other than to hand sold 'Preliminary Change of Ownership• form to the Parties for completion prior to dose of escrow and other than Escrow Holder's responsibility to transmit said completed form to the County Recorder's office together with other documents as caned for In these Instructions. (A) INFORMATION PURPOSES ONLY: After dose of escrow. new owner may receive an additional request for the `Change of Ownership' Information which must be returned to the Assessoes Office. If not completed as required, you may be charged a penalty, as required by this law. Escrow Holder has no Involvement In this fling and Is providing this for Information purposes only. 3) Seller represents and warrants to Buyer and you that It Is not, and as of the date of dose of escrow, will not be a foreign person within the meaning of Internal Revenue Code Section 144S and that It will execute and deliver to you prior to dosing, a Non -Foreign Affidavit on your standard form. The princlpals are advised to seek an attorneys, accounlant's or other tax specialist's opinion regarding conformity with the Foreign Investment In Real Property Tax Act of 1980. as amended by the Tax Reform Act of 1984. 4) Purchaser Is aware that the recording of the Deed In consummation of this escrow may result In a reassessment of the real properly taxes and/or supplemental tax bill pursuant to the provisions of Chapter 498, Statutes of 1903. State of California. All assessments not shown on the Tax Rolls are to be adjusted outside of escrow. Supplemental Taxes will NOT be proraled unless otherwise stated herein. The title policy will contain an exception for the lion of any assessment of Supplemental Taxes assessed pursuant to Chapter 49% Statutes of 1983. 5) SELLER Is aware that on January 1, 1987. Internal Revenue Code Section 6045(e) became effective, which mandates all proceeds from the safe of property shag be reported to the Federal Government. Seller is responsible to Escrow Holder who In turn Is responsible for the processing of the form to be supplied to Financial Processing Systems. 1815 E. Wilshfre Avenue Suite 910. Santa Ana. California 92705. Seller acknowledges receiving said form to be completed by Seiler and submitted Into escrow prior to the dose of said escrow. Escrow Holder Is authorized and Instructed to Insert the amount of Seller's proceeds, over Seller's signature. II there are any factual Inaccuracies, or missing factual Information in the Form 1099, Seller shag notify Orange Coast Title Company In writing immedWely of the changes required In the Form 1099. Upon its receipt of such notice, Orange Coast Tgle shag promptly prepare and forward to Seller a revised Form 1099. containing the changes specified by Seger. It is the responsibility of Orange Coast Title, utilizing Financial Processing Systems, to report this transaction to the Federal Government and Issue to the Seller a Form 1099 for reporting same to the Internal Revenue for income tax purposes. ALL INFORMATION CONTAINED IN THIS REPORT SHALL REMAIN CONFIDENTIAL OTHER THAN THE REPORTING OF THE INFORMATION TO THE INTERNAL REVENUE SERVICE IT IS UNDERSTOOD ESCROW HOLDER CANNOT CLOSE THIS ESCROW WITHOUT THE PROPER DOCUMENTATION BEING PROVIDED BY THE SELLER. LIMITATION OF LIABILITY: Orange Coast Title Company, as Escrow Holder, Is held harmless from any liability In as much as the law has not yet been defined and shag report the sale of the property proceeds as set forth above. ACKNOWLEDGED AND AGREED: SELLER'S INITIAL(S)t BUYER'S INITIAL(S)s/10,- Escrow No.: 102518—TA GENERAL INSTRUCTIONS Buyer, Seller and/or Flrst and Second Parties after sometimes referred to collectively as the 'Princpals' and . separately as the principal'), jointly and severally, hereby appoint and designate you, as escrow holder, to perform escrow services In connection with the transaction which Is the subject of this escrow in accordance with written Instructions accepted by you In this escrow. As used herein, the term 'Instructions" shall mean and refer to the Instructions set forth on page f hereof and Incorporated by reference herein, any written amendments and supplements thereto as many hereafter be given to you and the terms, conditions and provisions herein below set forth. THE PRINCIPALS HEREBY AGREE, JOINTLY AND SEVERALLY, AND HEREBY AUTHORIZE, EMPOWER AND DIRECT YOU, AS ESCROW HOLDER AS FOLLOWS: 1. Principals acknowledge that escrow companies are not authorized to give legal advice and understand that If a Principal desires legal advice such Principal should consult an attorney. 2. A Principal's signature on any document or Instruction which arises, related to or results from this escrow shall indicate and evidence such Principal's unconditional approval of same. 3. 11 there Is no action taken on this escrow within six (6) months after the "time limit date' as net forth In the escrow Instructions or written extension thereof, your agency obligation shall terminate at your option and all documents, monies or other Items hold by you shall be returned to the parties depositing same. In the event of cancellation of this escrow, whether it be at the request of any of the principals or otherwise, the fees and charges due Orange Coast Title Company Including expenditures Incurred and/or authorized shall be borne equally by the parties hereto (unless otherwise agreed to specifically). 4. All funds received in this escrow shall be deposited with other escrow funds In an escrow trust account In any State or National Bank and may be transferred to any other escrow trust account. All disbursements shall be made by your check. 5. Your duties in this escrow shalt be limited to the safekeeping of such funds and documents as may be received by you as escrow holder and for the disposition of same In accordance with these Instructions. You shall not be liable to the Principals or any successor or assign of either Principal for or on account of any claim, demand, toss or damages which may arise, related to or resulting from your ads or failure to ad In any manner or for any reason except for willful misconduct or gross neglect. Without limiting the generality of the foregoing you shall not be responsible or liable In any manner whatever for any of the following matters: Is) with respect to any writing or Instrument deposited In escrow and any document of record, the sufficiency, correctness, genuineness, validity, form, content or manner of execution of any such writing, instrument or document, or the Identity, authority or right of any person executing some; (b) to notify or disclose to any person. Including, without limitation, either Principal, any fact or circumstance that may come to your attention that is outside the scope of these Instructions, Including, without limitation, any Information regarding any sate, loan, exchange or other transaction concerning the real property Involved In this escrow; (c) to give any disclosure required by Slate or Federal law, Including, without limitation, the Federal Truth In Lending Act and Regulation Z; (d) examination as to the applicability, amount, validity or payment of any tax, including, without limitation, any transfer tax Imposed by any local, city or county ordinance, any personal property lax and business or license tax; and (a) to perform any duty or service as escrow holder, that is not expressly required of you and specifically set forth in the Instructions. 6. You shall make all adjustments and prorations In this escrow on the basis of a 30 day month and in accordance with the following provisions unless otherwise stated herein; (a) prorate real property taxes for current fiscal tax year on the basis of the most recent official Information furnished to you by the title company; (b) prorate premiums on transferable Insurance policies as handed to you; (c) prorate Interest on trust deeds of record on the basis of any beneficiary statement received in escrow Of Impounded funds are held by the lender Buyer shall be charged and Seller credited with the full amount as disclosed by said Beneficiary statement): and (d) prorate rent and charge Seller and credit Buyer with any deposits paid In advance on the basis of a statement furnished by Seller (Seller represents and you shall be fully protected In assuming that Seller has collected all rents which fall due prior to the close of escrow. Make no adjustment against Buyer on uncollected rents). 7. Seller represents and you shall be fully protected In assuming that as to any Insurance policy handed to you, each policy Is In force, has not been hypothecated and all premiums have been paid In full. The Principals hereby appoint and designate you as agent and attorney -In -fact to assign any fire Insurance policy handed to you In this escrow. 8. Any assignments of funds In escrow shall be In writing signed by the Principal to be charged and shall be Irrevocable and unchangeable without the written consent of the assignee. If the Seller unilaterally assigns or orders the proceeds of this escrow, to be paid to any person other than a Principal such assignment shall be subordinated to the expense of this escrow, encumbrances and liens of record on the subject property, and payments directed to be made by the funds to close, then you are directed to dose this escrow and to pay such assignments, In the order In which they are received by you. 9. You are hereby expressly authorized and empowered to do each of the following acts in connection with this escrow; (a) to complete, fill In and arrange for execution of any note or writing or acknowledgement of any document or instrument as required herein; (b) If either Principal obtains a loan on the subject property during the pendency of this escrow, to furnish the lender or person acting on behalf of the lender any information concerning this escrow, Including, without limitation, a certified copy of instructions; - (c) to deposit any funds or documents received In escrow with any duly authorized sub -escrow agent subject to your order at or prior to the close of escrow; (d) to record any Instrument delivered through this escrow If necessary or proper In the Issuance of a policy of the title Insurance and to pay all required fees and costs of documentary transfer tax; and (a) to require any Principal, as a condition precedent to your dosing this escrow, to deposit funds and monles you deem requisite to pay (I) all encumbrances, claims, demands or assessments of record necessary to place title to the subject property In the condition called for In these Instructions and (t) any costs or charges of this escrow or fees to which you are entitled. 10 Unless otherwise agreed In writing the following provisions shall apply to payment of charges In escrow; (a) Buyer shall pay one hall of the escrow fee, your customary charges to Buyer for document -drafting, recording, and miscellaneous charges and the title Insurance premium to the extent that it exceeds the premium for standard coverage; (b) Seller shall pay one half of the escrow fee, your customary charges to Seller for document -drafting, recording, and miscellaneous charges(tnciuding documentary stamps required by the internal Revenue Code In the amount you determine to be required)and the title Insurance premium to the extent that it does not exceed the premium for the standard coverage; (c) each Principal will pay reasonable compensation to you for extraordinary or unusual services rendered to or for that Principal, plus costs and expenses Incurred In connection with those services; (d) each Principal agrees to pay on your demand all closing costs properly attributable to such Principal If funds to such Principal's credit In your hands are not sufficient for that purpose; (a) you are hereby given a lien by each Principal upon all the rights, title and Interest of each Principal In all escrowed documents, funds, monies or property for any and all charges, expenses, attorney's fees, losses and other liabilities caused you In this escrow; and (Q No refund will be given for under $5.00. (g) In the event of failure to pay fees or charges due you in this escrow each Principal agrees to pay reasonable attorney's lees paid or Incurred by you In connection with the collection of such fees or charges, whether or not suit Is glad. 11. If by the date specified herein, this escrow Is not In a position to dose you shall nevertheless close as soon as possible thereafter unless either principal instructs you to cancel this escrow. You shall within two (2) working days thereafter mail, by certified mail, one copy of such notice to each principal at the address stated in this escrow, AT ESCROW HOLDERS OPTION UNLESS WRITTEN OBJECTION TO CANCELLATION IS FILED IN YOUR OFFICE BY A PRINCIPAL WITHIN TEN (10) CALENDAR DAYS AFTER DATE OF SUCH MAILING, AS EVIDENCED BY A CERTIFIED MAIL RETURN RECEIPT FORM, YOU ARE AUTHORIZED TO COMPLY WITH SUCH NOTICE AND DEMAND PAYMENT OF YOUR CANCELLATION CHARGES. If written objection Is filed, you are authorized to hold all money and Instruments in this escrow and take no further action until otherwise directed, either by the principals' mutual written Instructions, or final order of a court of competent jurisdiction. (a) IN THE EVENT ESCROW HOLDER RECEIVES DISAPPROVAL OF CANCELLATION AND PRINCIPALS CANNOT RESOLVE THE MATTER WITHIN THIRTY DAYS, ESCROW HOLDER MAY HAVE A HOLDOVER FEE OF $20.00 per month until such matters have been resolved and mutual Instructions to Escrow Folder. 12 All notices, demands and Instructions must be In writing, If conflicting demands are made or notice served on you or any dispute or controversy arises between the Principals or with any third person relating to this escrow, you shall have the absolute right, at your election, to withhold and stop all further proceedings in this escrow without liability and without determining the merits of the demands, notices or litigation: or sue in interpleader; or both. The Principals, jointly and severally, hereby promise and agree to pay promptly on demand, as well as to Indemnify you and hold you harmless against and In respect of any and all litigation and Interpleader costs, claims, losses, damages, recoveries, judgments, and expenses, including, without limitation, reasonable attorney's fees that you may Incur or suffer, which arise, result from or relate to this escrow. 13. Close of escrow means the time when Instruments ere recorded. As soon after dose of escrow as Is convenient to you, deliver funds and documents, Including without limiting, assurances of title and insurance policies, If any, to the parties respectively entitled to receive them. In the closing statement you may adjust estimated amounts. 14. You are hereby authorized to destroy or otherwise dispose of these Instructions and all other writings and accounting or disbursement records in this escrow at any time after five years from date of these escrow Instructions. 15. These Instructions shall be binding on, and shall Inure to the benefit of each Principal and his respective heirs, legal representatives, successors and assigns 16 As used In these Instructions, the masculine, feminine or neuter gender, and the singular or plural number shall be deemed to Include the others whenever the context so indicates. 17. These Instructions may be executed in any number of counterparts, each of which shag be deemed to be an original. Initials: Escrow No.: 102518-TA NOTICE TO BUYER ON DISPOSITION OF CALIFORNIA REAL PROPERTY Buyer Is hereby noViled of withholding provlslons of California Revenue and Taxation Code sections 1131305, 10815. and 26131, applicable to certain safes of California real estate by nonresident sellers. Where applicable, the buyer Is required to withhold 3 1/3% of the sales price of California real property obtained from nonresident sellers. Buyer understands that In no event will escrow holder undertake to advise buyer and/or buyer's representative(s) on the possible application of the above code sections to this specific transaction. Buyer understands that, unless expressly Instructed by the seller and buyer herein. escrow holder will not assist In the withholding of seller's funds and remlitance of same to the Franchise Tax Board. Buyer understands that penalties may be Imposed by the State of California for failure to comply with withholding laws. In the event that the parties request escrow holder to withhold funds due the seller. the parties hereto shall submit to escrow the completed and necessary tax forms In addition to Instructions as to the proper disbursing of funds. At that time. the buyer and seller shall agree to cooperate fully In providing necessary Information and to Indemnify escrow holder and hold escrow holder harmless In the event of noncompliance resulting from Information supplied by the undersigned. A fee of $25.00 for this service will be charged. For additional Information concerning the withholding provisions referenced above. please contact the Franchise Taus Board Withholding at Source Unit at 916-369.4900 or write to them at P.O. Box 641, Sacramento, California 95812-0651. Recelpt acknowledged October 16, 1997 Seller's Signature(s)s Buyer's Signature(s)s CO D.L. PHAH, TRUSTEE THUY T.L. BUI PRAM, TRUSTEE BRIDGES AMERICA BRIDGES AMERICA FOUNDATION, L.P., A CALIFORNIA LIMITED PARTNERSHIP BYr BRIDGES AMERICA FOUNDATION, INC. a Delawa Corporation BY: Garrett Robinson, Exec. Director EXIIIBIT "A" ' f 'THAT PORTION WEST, PARTLY THE CITY OF MISCELLANEOUS DESCRIBED AS OF 'TILE NORMT-AZr QLW= OF SECTION 23, TOWNSHIP 5 SOUTH, RANGE 11 IN THE RANCHO LA BOLSA CHICA AND PARTLY IN THE RANCHO LAS BOLSAS, IN MJDTTINGION BEACH, AS PER MAP RECORDED IN BOOK 51, PAGE 13 OF MAPS, IN MIE OFFICE OF THE aXJNTY RECORDER OF SAID 00[ M, FtOLLIOWS : BEGINNING AT 771E IN=ECTION OF MIE SOUTH LINE OF THE NORTH 50.00 FEET OF MIE SOUTH AST QUARTER OF 711E NORTHWEST QUA= OF SAID hKXZU FAST QUARTER WITH THE FAST LINE OF SI OZ- LANE AS DESCRIBED IN M IE D® TO THE CITY OF MUIITU� BEACH, RECORDED DECEMBFR 7, 1961 IN BOOK 5937 PACE 35, OFFICIAL RECORDS; 7104M NORTH 180.00 FEET ALDZ SAID EAST LINE; 7BENCE EAST 346.00 FEET PARALLEL WITH THE NORTH LINE OF SAID SOU111EAS'r QLmRTER OF THE tlORnMEST C7CDMM OF THE NORTIMASI' QiUARIER; ME2KE SOUTH 100.00 FEET PARALLEL WITIi SAID EAST LINE; T1;FNCE FAST 90.00 FEET PARALLEL WITH- SAID NORTH LINE; MENCE SOUTH 80.00 FEET PARALLEL WITH SAID EASE LINE TO THE SOUTH LINE OF THE NORTH 50.00 FEET OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTE3Z OF SAID IXXMMASr QLIARIIR; METJCE WEST 436.00 FEET TO THE POINTr OF BEGINNING. SAID LAND IS IN=ED WITHIN T1iE AREA -qKM CN A MAP FILED IN BOOK 23 PAGE 17 OF RECORD OF SURVEYS, IN MIE OFFICE OF 711E COUNIY RECORDER OF SAID ODCRM. EXCEPT TI IEREFRCM AL T, OIL, GAS, MINERALS AND OTHER HYDROCARBONS, BEZCJW A DEP111 OF 500 FEET, WITHOUT MIE FLIGHT OF SURFACE ENTRY, AS RESERVED IN DEEDS OF RECORD. PARCEL 2: TIIAT PORTION OF THE NORTHEAST QLW= OF SECTION 23, IMMiIP 5 SOUT11, RAI CAE 11 WEST, IN THE PRIUI0 IA BOLSAS, IN THE CITY OF IIUIITINGTON BEACH, AS PER MAP RECORDED IN BOOK 51, PAGE 13 OF MISCUUUIDOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS I:OLIU4S: BEOIMING AT ME ITMRSECrICJ OF THE SCUM LINE OF THE NORTH 50.00 FEET OF THE SOUIHEAST QCIARTER OF THE NORTH gFSr QCTF1RrIIt OF SAID NORTHEAST QCIARIIR WITH THE FAST LINE OF SFIFR LANE AS_DESiRIBED IN 711E DEED TO THE CITY OF =ING'IW BEACH, RECORDED DECE14BER 7, 1961 IN BOOK 5937 PAGE 35, OFFICIAL RECORDS; 'THENCE NORTH 180.00 FEET ALONG SAID EAST LINE; THENCE EAST 346.00 FEET PARALLEL EL WITH MIS NORTH LINE OF SAID SGJIH AST QUARTER OF THE 14C)RI1rvWT 9MTrM OF THE NOMEAST 9-PRIER; THENCE SOCTII{ 100.00 FEET PARALLEL WITH SAID EAST LINE; TfiE XE EAST 90.00 FEET! PARALLEL WITH SAID NORTH L111E TO A POINT WHICH POINT IS THE TRUE POINT AND PLACE OF BEIGINNING; THIIICE SOUTH 80.00 FEET PARALLEL WITH SAID EAST LINE TO THE SOUTH LINE OF THE NORTH 50.00 FEET OF THE 90UTIMM QUAExI'ER OF THE NORTHEAST' QUARTER OF SAID NORTHEAST' QUARTER; TF-TXE 408.96 FEET EAST PARALLEL WITH 'THE NORTH LINE OF SAID SOUTIiFAST QUARTER OF THE NORTHST QUARIM OF THE NORTHEAST QCIARTnZ TO THE WEST LINE OF PARKSIDE LANE AS DESCRI13ED IN 710 DEED TO T13E CITY OF HUATIINZ;TUN BEACH, RECORDED SEPTEMBER 20, 1968 IN BOOK 8727 PAGE 541 OF OFFICIAL. RECORDS; THE14 E IMMi 80.00 FFEr ALCIIG SAID WEST LINE TO A LINE TART IS PARALLEL WI7E1 THE IUMI LINE OF SAID SOUTHEAST` QCTARTER OF THE NORT"4EST QUARTER OF THE NORTHEAST QUARTER, AND MACH PASSES MiROUG I AND TRUE POINT AND PLACE OF BEGINNING; 71IINCE WEST 408.96 FE1T, ALANG SAID LAST MENTIONED PARALLEL LINE, 70 711E TRUE POINT AND PLACE OF BEOINIING. (LMU, Dr.,QZ MCid CQTrITX=) (IBCAL DMCRIPTICINT OJ= 7} EXCEPT TI]EREFRCM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBONS, BII,0W A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN DEEDS OF RECORD. SAID LAND IS INCLUDED WITHIN THE AREA SHOW ON A MAP FILED IN BOOK 23 PAGE 17 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID W]IM. EXNIn "B" TO ESCROW INSTRUCTIONS F, EXlilE31T `I' S FORM OF NOTE ATTACIIED TO ADDENDUM TO REAL ESTATE PURCIIASE AGREEMENT fluntington beach, California ' . 1997 FOR VALUE RECEIVED, jointly and severally (collectively, 'Maker') promise to pay to ilia order of ('Payee'), or his or her assigns, at or at such other place as the holder or holders hereof may from time to time designate in wrlting; the principal sum of Dollars (S 1, or so much thereof as remains unpaid from time to time (the "Principal Balance'). together with Interest on the Principal Balance at tiie rate hereinafter specified. In legal tender for payment of public and private debts in the United States of America, all in accordance with the terms hereinafter set forth. From and after the date hereof, and until this note Is fully paid, interest on the Principal Balance shall be computed at a rate, compounded monthly, equal to the lesser of the highest rate of interest permitted under applicable law or ilia rate of percent (_%) per annum. Any interest which is due and payable but unpaid from time to time shall be deemed added to ilia Principal Balance and shall bear Interest at the Default Rate, as defined below. A partial payment of interest only shall be made on the date horeol in advance for interest accruing on the Principal Balance from the date of this Now through the ninth (9th) day of the second full calendar month after the date of this Note. Thereafter, commencing on ilia tenth 1101h) day of the third (3rdl full calendar month after ilia date of this Note and continuing on ilia tenth (101 day of each full calendar month thereafter, interest only on ilia Principal Balance shall be payable in arrears for the period commencing on ilia tenth (10th) day of the preceding calendar month through the ninth (9th) day of the calendar month to which such payment 1s due, and all unpaid interest, principal, and other amounts due and payable hereunder but not then paid shall be paid on or befere , 20_. All payments received hereunder shall be applied first to any late charge due Hereunder, second to any Interest accruing hereunder at ilia Default Rota, as defined below, third to any amounts due hereunder other than penalties, Interest (including Default Rate Interest), and tine principal balance, fourth to interest accruing hereunder at the interest rate described herein above, and fifth to any principal balance owing hereunder. if at any time any of the payments required hereunder are not made when due, or any other default under this Note or under any dead of trust or other security Instrument securing this Note occurs, without any grace period or notice, the Interest rats applicable under the terms of this Note automatically shall be Increased six (6) percentage points per annum over the above -stated Interest rate or the maximum lawful rate, 11 any, whichever Is less (the "Deloult Rota'). from the date of such event until payment In full of ail sums due under this Note. All interest payable hereunder shall be computed on ilia basis of a 360-day year and a 30-day month, but shall be charged for ilia actual number of days principal Is unpaid. In the event that any required payment of principal, interest, or other amount payable hereunder Is not made when due Maker shall pay, without notice or grace period. a fate charge of five cents WOW for each dollar (51.00) so overdue for the purpose of defraying a portion of the expense incidental to handling such overdue payment. 4 Notwithstanding any provision herein which may be construed to provide to the contrary, the total liability of Maker for payments In the nature of interest hereunder shall not exceed Interest at the maximum rate permitted by the laws of the State of California, If any, and any amount paid as Interest in excess of said maximum rate shall not be deemed to be a payment of interest and shall be refunded to the Maker. Time Is of the essence hereol. Notwithstanding any provision herein which may be construed to provide to the contrary. In the event of any default In Ilia payment of any principal or Interest hereunder when duo, or In the event of any default In the performance of or compliance with any other covenant or condition of this Note or any deed of trust or other security instrument securing this Note, then, In any such case, the entire principal balance, with all accrued Interest, any late charges and other amounts payable hereunder shall automatically and without notice or cure period, become Immediately due and payable. Except as hereinafter expressly provided, no modification or amendment of the terms of this Note shall be effective unless made in a writing signed by the parties hereto. Maker hereby waives demand, presentment, notice of nonpayment, protest, notice of prvlost. dishonor, notice of dishonor, diligence In collection, and non-payment of this Note. Maker agrees to pay all costs of collection, Including, but not limited to, collection agency costs, fees, and expenses, and court costs and reasonable attorneys' fees (Including, but not limited to, court costs and attorneys fees on appeal) In case any payment shall not be made whop due hereunder, and all costs. fees, and expenses, Including, but not limited to, court costs and reasonable attorneys' fees (including, but not limited to, court costs and reasonable attorneys' tees on appeal), incurred in Interpreting this Note, or In exercising or defending, or In obtaining the right to exercise, any of the rlglits and remedies of Payee hereunder, whether suit be brought or not, and whether In probate, bankruptcy. Insolvency, arrangement, reorganization, receivership, or other Judicial, non -Judicial, adjudicative, or arbitration process, whether or not the holder heroof prevails therein, together with Interest thereon at the Default halo from and after the date of on which said holder hereof Incurs any such costs, tees, or expenses through the date of payment of such costs, expenses, or fees by the Maker. This Note Is made with reference to and shall be construed In accordance with and governed by the laws of the State of California. This Note Is secured by that certain deed of trust of and assignment of rents even date hereof by In favor of And recorded In the Official flecords of the County of Orange, State of California on as Instrument No. "Maker' 5 FORM OF RIDER ATTACHED TO ADDENDUM TO REAL ESTATE PURCHASE AGREEMENT EXHIBIT "A" 1 • 0 VFW$! r'1 EXHIBIT '13' (Additional Property Secured By Deed of Trust) (a) SLrj:cts, ctc- All the rlpht, title, and interest of Trustor In and to all streets, roads, and public places, opened or proposed, ad)olninQ the land described In Exhibit 'A" attached to the Form Deed of Trust, as defined In the attached Addendum to Dead of Trust With Assignment of rents (the 'Land"), and all easements and rights of way, public or private, now or hereafter created or used In connection with the Land. (b) )improvements. etc. All Improvements (the 'Improvements') of every kind and description now or hereafter erected or placed upon or made to the Land. (c) Uxtures and Persona) Property. All materials, supplies, fixtures, fittings, appliances, apparatus, equipment, machinery, furnishings, furniture, carpets, drapes. Inventory, chattels, and other articles of personal property of any description, and replacements of any thereof, now or at any time hereaftor owned by Trustor and affixed to or attached to or used in construction upon or used In any other way in connection with or located upon, under or within said Land and Improvements Isuch Items as are affixed to and deemed a part of the Land or improvements being hereinafter collectively referred to as the "Fixtures' (such portion of the Fixtures as can be removed without damage thereto br structural damage to the Improvements being hereinafter referred to as the 'removable Fixtures'), the remainder of the foregoing property being the 'Personal Property". (dl Reversions. Rents, Cic. All reversions, remainders, rents, security deposits, issues, profits, and other benefits arising or Issuing from, and all leases of, all or any portion of said Land, Improvements, Personal Property and Fixtures. (e) Awa_rds.-e . All awards, damages, payments, and other compensation (including but not limited to Insurance and condemnation proceeds) received by or payable to TrUStor, and all claims of Trustor therefor and rights of Trustor thereto, which may result (i) from any condemnation of all or any of the Property, (111 from any damage, Injury. or destruction In any manner caused to ilia Land. Improvements, Personal Property or Fixtures, or (Hi) from any change of grade or vacation of any street abutting ilia Land. All of the loregoing are to be deemed to be part of the real estate, such that all right, title, and interest of the Trustor thereto shall pass absolutely to the purchaser at any trustee's sale or foreclosure sale. (f) Certificates. etc. All Certificates of Occupancy, other governmental permits, and all water stock appurtenant to the Land or any portion thereof. (g) Insurance —etc. All of Trustor's right, title and interest in and to all Insurance policies required to be maintained under the terms of this Deed of Trust, or otherwise carried by Trustor covering the Property or any portion thereof, together with all unearned premiums paid thereon and all other benefits received or to be received therefrom. (h) Tax Refund,, All refunds of taxes, assessments, levies, and other charges, whether governmental or nongovernmental, and Including but not limited to water and sower rents and assessments on appurtenant water stock (collectively, the "Tax refunds"). 7 ADDENDUM TO DEED OF TRUST WITH ASSIGNMENT OF RENTS 1. hag. This Deed of Trust secures, in addition to the other obligations stated to be secured hereby, all obligations under the terms of all of the note of even date herewith in ilea aggregate original principal amount of S by Trustor (as maker) in favor of Beneficiary (as" payee), and all amendments, modifications, extensions, and renewals from time to time thereof (the 'Note'). Anything to the contrary In the Nato or In any other Instrument, document, or agreement notwithstanding. any default or event of doloult under the Note shall be doomed to be an event of default hereunder. 2, Prohibitign on officrn i g_andJransfers. (A) Without the prior written consent of the Beneficiary, which consont may be withhold for any reason or no reason In the beneficiary's sole and absolute discretion (i) Trustor sleall not at any time, sell, assign, transfer, convey, lease with option of sale or for other than actual occupancy by a residential tenant, or dispose of (each, a 'Transfer') all or any part of any Interost in the Property. V3 Trustor shall not at any time suffer or permit any Transfer by operation of law or otharwise of all or any part of any interest In lice Property. (iii) No person or entity shall at any time Transfer or suffer or permll any Transfer (including, without limitation. a Transfer by operation of law or otherwise), mortgage, pledge, or encumber all or any part of any direct or indirect legal or beneficial interest in Trustor of any nature whatsoever or in any entity owning any direct or indirect Interest in Trustor of any nature whatsoever, (iv) no person or entity shall at any time assign or delegate, or accept the assignment or assumption of, any right or obligation hereunder or under the Note; and Trustor shall not suffer or permit any such assignment or assumption (each, an "Assumption`), and (v) Trustor shall not at any time encumber ilea Property or any part thereof or any interest therein with any mortgage, deed of trust, security interest, pledge, lien, or other encumbrance other than this Deed of Trust or suffer or permit by operation of law or otherwise any of the foregoing. Without limiting the generality of the provisions of this Section 2. the Beneficiary shall not be obligated to subordinate ilea lien hereof to the lien or charge of any other person or entity, except for (insert reference to first lien loan at tlee close of escrow}. 3. Assinnabflity. All of ilia Beneficiary's rights and obligations under any Note and this Deed of Trust shall be assignable to any other person or entity without the consent of Trustor. 4. jnUrLanCe. Rcnair. Use. and Related, Matters. Trustor at all times shall keep In effect with respect to the Property policies of Insurance (Al against loss or damage by fire and such other perils as are included In a standard "all-risk" extended policy, I$) comprehensive public liability Insurance, (C) worker's compensation insurance with respect to any employees of Trustor from time to time on the Property. and (D) and any other Insurance or endorsement thereto reasonably required from time to time by the Beneficiary. Each of tlee foregoing insurance and policies shall be for tfee benefit of Trustor and the Beneficiaries with a tender's loss payable endorsement In favor of the Beneficiaries and an endorsement requiring written notification to be delivered to the Beneficiary no later than thirty (301 days prior to ilea effect of any modification, reduction, or cancellation of tire policy, and each shall be otherwise In form, amount. and substance and with policy limits and deductibles reasonably acceptable to the Beneficiaries. Trustor shall not demolish. destroy, or remove, or suffer substantial damage. destruction, or removal of. any of the Property without the prior written approval of the Beneficiary, which approval shall not be unreasonably withheld, and Trustor shall keep, maintain, and restore ilia Property In good condition and repair, ordinary wear and tear excepted. Trustor shall not do, and shall not suffer or permit, any of the following: (1) change the use of the Property from the use in effect as of ilia date of recording of this Deed of Trust in tiee ollicial records of the county In which t)te Land Is located (ilea 'Recording Date'), III) abandon or vacate substantially all of (fee Property, or (lit) lease any space within tfee Property ext:ept in the ordinary course of business and at fair market rents. a e) 5. Definij;qns and lnlQrpretation. The term 'Beneficiary" as used In this Hider shall mean each person or entity Identified in this Deed of Trust as a Beneficiary. Jointly and severally with the other Beneficiaries: Any reference to any party under the Note or this Deed of Trust shall be deemed to mean such party and all of its successors and assigns from time to time. The term "Form Deed of Trust" as used herein shall moan the printed form Deed of Trust With Assignment of Dents to which this Rider is attached. The term 'Deed of Trust' as used herein, to the Form Deed of Trust, and In the Note shall mean the Form Deed of Trust and all exhibits and rlders attached thereto. The term "property, "said proporty,' and "Pt6berty" as used In the Deed of Trust shall mean all of the property described Exhibits "A" and 'B" attached to the Form Deed of Trust. Tile terms of the Notes are hereby Incorporated herein. The terms of the Form Deed of Trust and all exhibits and riders thereto shall be interpreted as complimentary and cumulative, however, to the extent that the terms of the Form Deed of Trust and any exhibit or rider thereto conflict, the terms of 111e exhibit or rider. as applicable, shall control. 6. Indemnification. Trustor hereby agrees to Indemnify, defend, and hold the Beneficiarles harmless with respect to all damages, fines, penalties, losses, costs, and expenses. Including, without limitation, reasonable attorney's fees and court costs, arising directly or Indirectly from the Property or any violation of any of the terms of this Deed of Trust or any Note. Without limiting the generality of the foregoing, the terms of this Section 6 shall be deemed to be an "environmental provision' for the purposes of California Code of Civil Procedure Sections 726.5 and 736 and otherwise governed thereby, to the extent that this Section 6 deals with environmental matters. 7. Cross -Default. Security. _and _A_dvances. Any breach or default under any prior or subordinate lien or encumbrance from time to time encumbering part or all of the Property (each, an 'Other Loan'), without Implying any obligation on the part of the Beneficiary to approve or consent to such lien or encumbrance, after the giving of any notice and the passing of any cure period required in such lien or encumbrance, shall be a default hereunder and under ilia Note. This Dead of Trust shall secure repayment of all amounts advanced by the Beneficiary to the lender or secured party with respect to any such Other Loan or otherwise paid to any party which may be required, In the Beneficiary's solo and absolute discretion, In order to protect the security of this Deed of Trust or . the Beneficiary's interest In any of the collateral encumbered by this Deed of Trust (each, an "Advance"), which Advances the Beneficiary Is entitled to make by the terms hereof. All Advances shall be due and payable by the Trustor within ten (10) days of notice to the Trustor, shall be added to the Principal Balance of the Note, and shall bear Interest until paid at the Deitault Fate, as defined in the Note. Any failure of the Trus(or to repay any such Advance when due shall be a default hereunder and under the Note. 9 EXHIBIT "C" ADDENDUM TO REAL ESTATE PURCHASE CONTRACT AND RECEIPT FOR DEPOSIT THIS ADDENDUM TO REAL ESTATE PURCHASE CONTRACT AND RECEIPT FOR DEPOSIT is dated for reference purposes only as of September 23, 1997 and Is made with reference to that certain Real Estate Purchase Contract and Receipt for Deposit dated as of September 15, 1997 (the "Agreement") by and between Bridges America Foundation, L.P. (the "Buyer") and Co bang Long Pham and Thuy T. L. Sul Pham (collectively, the "Seller"). The Agreement is hereby amended as follows: 1. The Buyer. The Buyer shall be Bridges America Foundation, L.P. ("BAF"), subject to the following qualification. Anything to the contrary in the Agreement notwithstanding, BAF shall have the right prior to the close of escrow, one time only, to assign Its Interests In the Agreement, hereunder, and under all related documents, instruments, and agreements (the "Sale Documents") to an entity (the "Assignee") in which BAF serves as and shall remain as the sole managing general partner, managing member, or controlling shareholder, If the Assignee has assumed in writing all of the obligations under the Sale Documents, has presented to the Seller certified financial statements, business references, evidence of creditworthiness, a litigation search, and an operating history of the Assignee and each of its principals satisfactory to the Seller in its sole and absolute discretion, and If BAF shall remain liable for all obligations of the Buyer under the Sale Documents. Anything to the contrary in the Agreement notwithstanding, the vesting upon closing shall only be In the name of BAF or the Assignee. 2. Government Aoorovals. The Buyer shall, In good faith, use Its best efforts to obtain from the City of Huntington Beach (the "City") all approvals of the City, Its departments, the City's city counsel, and all other applicable governmental agencies of an Investment In the Property (the "Government Approvals") in the amount not less than $700,000 (the "City Investment") through the City's affordable housing program (the "Program"). Within 45 days of the acceptance of tiie offer, the Buyer shall obtain and deliver to the Seller a letter from the City In form and substance acceptable to the Seller stating that the Buyer has completed its application for the City Investment and has provided all Information required by the Program, and that the City is considering the City Investment for the Program. If at the end of such period the Buyer shall not have received the City Letter, then the Selfbr or, if the Buyer has sought the City Letter and the Government Approvals diligently and in good faith, the Buyer, may by written notice to the other terminate the Agreement and this 4ddendum (the "Termination Notice"). If the Government Approvals have not been obtained prior to the Outside Closing Date, as defined below, the Seller or, if the Buyer has sought (lie Government Approvals diligently and in good faith, the Buyer, may by a Termination Notice to the other terminate the Agreement and this Addendum. If any party delivers to the other a Termination Notice In accordance with this Section 3 above, then the deposits (including, without limitation, the Deposit and the Increased Deposit, the "Deposits") shall be returned to the Buyer (except to the extent that_the Buyer is in breach under the terms of the Agreement or this ,Addendum, In which case the sum of the Deposits shall be deemed liquidated damages and shall be paid to or retained by the Seller); thereafter, the Agreement and this Addendum shall automatically terminate, and the parties shall have no further obligation to each other under the Agreement or this Addendum. In no event shall the Seller bo required to undertake or subject the Property to any obligation associated with the Government Approval, the Program, or the City Letter. The Buyer shall deliver to the Seller copies of all applications, correspondence, agreements, and other documents related to the Government Approvals, the City Investment, or the Program substantially concurrently with its receipt or dispatch of such. 1 A ~, 3. DeoQslt. Contingency Removal and Closina Date. Anything to the contrary in the Agreement J.1i" notwithstanding (a) the Increased Deposit described In Section 1,B shall be paid into escrow upon ' issuance of the Government Approvals and waiver by the Buyer or satisfaction of the cpnditions described in Sections 13, 17, A. E, F, K, and L of the Agreement (collectively, the "Contingency Removal"), (b) upon the occurrence of the Contingency Removal, the Deposits shall be released by escrow to the Seiler, and (c) tho sale of the Property shall be consummated and the escrow shall close on or before thirty (30) days triter the Contingency Removal. 4. Outside Closing Date. If for any reason, the escrow does not close on or before 120 days after the date of acceptance of the offer (the "Outside Closing Date"), then any party not then in default of Its obligations under the Agreement or this Addendum shall be entitled to terminate the Agreement and this Addendum by a Termination Notice to the other, and, upon such notice, the Deposits shall be returned to the Buyer (except to the extent that the Buyer Is In breach under the terms of the Agreement or this Addendum, in which case the sum of the Deposits shall be deemed liquidated damages and shall be paid to or retained by the Seller); and, thereafter, the Agreement and this Addendum shall automatically terminate, and tite parties shall have no further obligation to each other under the Agreement or this Addendum. 5. Financing and Seller Carry -Back. Anything to the contrary in the Agreement notwithstanding, (a) the note to be carried back by the Seller shall be in the original principal amount of $800,000 with Interest only payable monthly in arrears at the rate of 7% per annum (the "Interest Rate"), with all principal due and payable on the fifth (5th) anniversary of the closing of the escrow (the "Maturity Date") and otherwise in the form attached hereto as Exhibit "I" (the "Seller Note") and shall be secured by a deed of trust with assignment of rents encumbering the Property substantially in the standard long form issued by First American Title Insurance Company with a Rider substantially In the form attached hereto as Exhibit "if," (b) the Seller shall, In good faith, use Its best efforts to ensure that the financing to be secured by the new first deed of trust described on page one of the Agreement (the "First Loan") Is in an amount exceeding $3,300,000, (c) for every full Increment of $1000 by which the original principal amount of the Seiler Note may be reduced from $800,000 at the close of escrow (whether by the increase of fire First Loan or by the payment of cash to the Seller at the closingl, tire Maturity Date of the Seller Note shall be extended by 3.65 days (the final product of which shall be rounded up to the nearest whole number), not to exceed a total of 730 days, (d) in addition, for every Lull increment of $25,000 by which the original principal amount of the Seller Note may be reduced from $800,000 at tire close of escrow (whether by the increase of the First Loan or by the payment of cash to the Seller at the closing), the Interest Rate shall reduced by one -eighth (1/8) of a percent, not to exceed a maximum reduction in the Interest Rate of one percent (1%), and (e) none of the foregoing shall reduce or otherwise affect the purchase price of the Property as stated In the Agreement. 6. Acceptance and Buyer's Signature. Anything to the contrary in the Agreement notwithstanding, the Agreement and this Addendum shall be deemed accepted and binding if this Addendum and the Agreement are fully executed on or before October 6, 1997, and, upon such execution, the offer shall be deemed to have been accepted. The party signing the Agreement and this Addendum ("Robinson") shall be deemed to have signed the Agreement and this Addendum as president of BRIDGES AMERICA FOUNDATION, INC., a Delaware corporation (the "Corporation"), the general partner of the Buyer, and on behalf of the Buyer. Each of the Buyer, the Corporation, and Robinson represent and warrant that Robinson's signature alone Is sufficient to bind tiie Buyer, the Corporation, and Robinson to the Sale Documents, that each has the appropriate power and authority to enter into the Sale Documents, and that all authorizations and other matters have been obtained to allow the Buyer, the. Corporation, and nobinson to enter Into the Sale Documents. IN WITNESS WilEnEOF, the parties hereto have executed this Addendum on the dates described below. 'Seiler` Dated: October, 1997 Co Dang Long Priam 17% L ' Dated: October, 1997 Thuy T.. Bui Pham 'Buyer' MIDGES AMEnICA FOUNDATION, L.P.. a California limited partnership By: BnIDGES AMEniCA FOUNDATION, INC., a Delaw,arre corporation By: 11(9—d—gM� Dated: October 3, 1997 Garrott Flobinson, Its pfeaident fx. ors 3 In CITY OF HUNTINGTON BEACH INTER -DEPARTMENT COMMUNICATION "U1WT1 GroN BEACH Connie Brockway, City Clerk Office of the City Clerk Maybrice Ilenry Deputy City Clerk II 0 To: C£r_kN-\ LQW Date: —-IS 2,, Meeting Date: fr- 3- Agenda Item: jae. Q Pc441t i1�, ,. _0 Cal Proposed City Co - uncil : The City Clerk's Office/City Administrator's Office must return your agenda item due to the follo%%ing requirements that have not been met. When your Agenda Item is ready to resubmit, please return to: Pat Dapkus, Management Assistant, City Administrator's Office. 1. Signature(s) Needed A On RCA B On Agreement r� 1( C Other nay <MJ 4)1 Pr_o,.,eJ Q CV,_ h4,4iP fi� C� ,, Nt3l,u'�c3C fl4�Y.-► ., 2. Attachments A Missing B Not identified C Other 3. Exhibits A Missing B Not identified C Other 4. Insurance Certificate (Proof Of Insurance) A Not attached B Not approved by City Attorney's Office C Signed form notifying City Clerk that department will be responsible for obtaining insurance certificate on this item. (See form attached) 5. 1 Wording On Request For Council Action (RCA) Unclear A Recommended Action on RCA not complete B CIarification needed on RCA C Other X 6. City Attorney Approval Required rr ,�1.+, th i1,1 iLti,,.i--F..[JPh t'hnrX.ly a L f� c2a v ci 7. Agreement Needs To Be Changed A Page No. 8. Other