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HomeMy WebLinkAboutMatthew M. Harward - Kiersty N. Harward - 2010-10-08This Document was electronically recorded by Stewart Title RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of Huntington Beach P.O. Box 190 Huntington Beach, CA 92647 Attn: City Clerk 14WiV — /s3 - 063 - 63 kecorded in Official Records, Orange County 'Tom Daly, Clerk -Recorder > IIIIIIIII IIIIIIIII�II IIIIIIII IIIIIII NO FEE 2010000517383 04:23pm 10/13/10 06 406 D11 S02 24 0.00 0.00 0.00 0.00 69.00 0.00 0.00 0.00 GOVERNMENT CODE SECTION 6103 / HEALTH & SAFETY CODE SECTION 27383 FEE EXEMPT DEED OF TRUST AND SECURITY AGREEMENT (Homebuyer Down Payment Assistance Program) THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made this day of pCTO)�GZ_ , 2010, by Trustor Matthew M: Harward and Kiersty N. Harward, husband and wife, as joint tenants, ("Borrower"), whose address is 8252 Grant Drive, Huntington Beach, California 92646, and Stewart Title of California, Inc. ("Trustee"), for the benefit of the Huntington Beach Redevelopment Agency, as beneficiary ("Agency"). FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited, the receipt of which is hereby acknowledged, Borrower, hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Agency, under and subject to the terms and conditions hereinafter set forth, Borrower's fee interest in the property located in Orange County, California, described in the attached Exhibit "A" and more commonly known as: 8252 Grant Drive, Huntington Beach, California (APN 153-063-03) (the "Property"). TOGETHER WITH all easements, rights -of -way and rights used in connection therewith or as a means of access thereto; TOGETHER WITH any and all buildings, improvements and landscaping of every kind and description now or hereafter erected thereon, and all property of the Borrower now or hereafter affixed to or placed upon the Property (sometimes collectively referred to as the "Improvements"); TOGETHER WITH all right, title and interest of Borrower, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property; TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all oil, gas and mineral rights (including royalty and leasehold rights relating thereto), all water and water rights and shares of stock relating thereto, and any and all awards 10-2663/53421 1 made for the taking by eminent domain or by and proceeding or purchase in lieu thereof of the whole or any part of such property; and TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are, or shall be attached to said building or buildings in any manner. All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever. , TO SECURE to Agency the performance of the covenants and agreements of Borrower contai ed in that certain Loan Agreement with Covenants and Restrictions dated IN f ?4 1 0 , along with any exhibits attached thereto ("Covenant Agreement"), inco or`ated herein by this reference, executed by and between Borrower and Agency as of the date of this Deed of Trust. TO SECURE to Agency the repayment of the sums evidenced by that certain promissory note executed by Borrower in favor of Agency as of the date of this Deed of Trust, along with any exhibits attached thereto ("Note"), incorporated herein by this reference, in the original principal amount of one hundred thousand dollars ($100,000.00), which shall be due and payable as provided in the Note, until paid or canceled; TO SECURE to Agency the performance by Borrower of all agreements and adherence to all conditions set forth in the Covenant Agreement and the Note; TO SECURE all renewals, extensions, supplements and other modifications of any of the foregoing, including without limitation modifications that are evidenced by new or additional documents or that change the rate of interest on any obligation; and TO SECURE the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of Borrower herein contained, as well as in the Covenant Agreement and the Note. TO SECURE the payment of an Equity Share Payment calculated as a percentage of the Appreciation Amount that shall be paid to the Agency pursuant to the Note. All of the foregoing obligations, as well as those identified hereafter, are referred to collectively herein as the "Homebuyer Covenants." 10-2663/53421 2 TO PROTECT THE SECURITY OF THIS DEED OF TRUST, BORROWER AND AGENCY COVENANT AND AGREE AS FOLLOWS: 1. Purpose. The Agency is providing financing for the Homebuyer Down Payment Assistance Program ("Program") from the Agency's Low and Moderate Income Housing Funds ("Set Aside Funds") to provide mortgage assistance in the form of a shared appreciation second loan to low-income and moderate -income households to benefit the City of Huntington Beach. The purpose of the Program and to ensure that the Agency receive a portion of the Appreciation Amount as an Equity Share payment, and to ensure that the Borrower complies with any other Program requirements and the requirements of Health and Safety Code Section 33334.2 and 33334.3. The Loan, and all associated loan documents is intended to implement the requirements of Health and Safety Code Section 33334.2 and 33334.3, which governs the use of these Agency Funds. 2. Definitions. The terms set forth in this section shall have the following meanings in this Deed of Trust. Any capitalized terms not defined in this Deed of Trust shall have the same meanings as defined in the Covenant Agreement and the Note, the terms of which have been incorporated into this Agreement. a. "Borrower" is defined in the first paragraph of this Agreement. b. "Deed of Trust" shall mean this Deed of Trust and Security Agreement. "Hazardous Substance" shall mean: (a) any oil, flammable substance, explosive, radioactive material, hazardous waste or substance, toxic waste or substance or any other waste, material, or pollutant that: (i) poses a hazard to the Property or to persons on the Property or; (ii) causes the Property to be in violation of any Hazardous Substance Law; (b) asbestos in any form; (c) urea formaldehyde foam insulation; (d) transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls; (e) radon gas; (f) any chemical, material, or substance defined as or included in the definition of "hazardous substance," "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or ."toxic substances" or words of similar import under any applicable local, state, or federal law or under the regulations adopted or publications promulgated pursuant to those laws, including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure §564, as amended from time to time, Code of Civil Procedure 10-2663/53421 3 §726.5, as amended from time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code §2929.5, as amended from time to time; (g) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any governmental authority or which may pose a hazard to the health and safety of the occupants of the Property or the owners or occupants of property adjacent to or surrounding the Property, or any other person coming on the Property or any adjacent property; and (h) any other chemical, material, or substance that may pose a hazard to the environment. d. "Hazardous Substance Claim" shall mean any enforcement, cleanup, removal, remedial, or other governmental, regulatory, or private actions, agreements, or orders threatened, instituted, or completed pursuant to any Hazardous Substance Law together with all claims made or threatened by any third party against Borrower or the Property relating to damage, contribution, cost -recovery compensation, loss, or injury resulting from the presence, release or discharge of any Hazardous Substance. e. "Hazardous Substance Law" shall mean any federal, state, or local law, ordinance, regulation, or policy relating to the environment, health, and safety, any Hazardous Substance (including, without limitation, the use, handling, transportation, production, disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air conditions or the environmental conditions on the Property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS §§960 1 et seq.], as amended from time to time; the Hazardous Substances Transportation Act [49 USCS §§1801 et seq.], as amended from time to time; the Resource Conservation and Recovery Act [42 USCS §§6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33 USCS §§1251 et seq.], as amended from time to time; the Hazardous Substance Account Act [Health and Safety Code §§25300 et seq.], as amended from time to time; the Hazardous Waste Control Law [Health and Safety Code §§25100 et seq.], as amended from time to time; the Medical Waste Management Act [Health and Safety Code §§25015 et seq.], as amended from time to time; and the Porter -Cologne Water Quality Control Act [Water Code §§13000 et seq.], as amended from time to time. £ "Property" shall mean that certain real property legally described on Exhibit "A," attached to this Agreement and incorporated herein, together with all Improvements, and fixtures now or hereafter constructed, placed or located on the Property. g. "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping; leaching, dumping, or disposing into the environment, including continuing migration, of Hazardous Substances that goes into the soil, surface water, or groundwater of the Property, whether or not caused by, contributed to, permitted by, acquiesced to, or known to Borrower. 3. Borrower's Estate. Borrower represents and warrants that it is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust and the Homebuyer Covenants, the Security is encumbered only by the First 10-2663/53421 4 Lender Deed of Trust, securing the First Lender Note executed by the Borrower in favor of the First Lender, to assist in the purchase of the Property. The Borrower agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the Agency's interest in the Security. 4. Repayment of Sums Owed on the Note. Borrower will promptly repay, when due, the Loan, and any amounts due under the Loan Documents, where applicable. The Note contains the following provisions concerning repayment of the loan under certain conditions: No Assumption of Note by Subsequent Buffs_ Borrower acknowledges that this Note is given in connection with the purchase of the Property as part of a program of the Agency to assist in the purchase of Homes by low and moderate -income Eligible Homebuyers. Consequently, this Note is not assumable by transferees of the Property. 5. Homebuyer Covenants. Borrower will observe and perform all of the covenants and agreements of the Homebuyer Covenants, as outlined above, and more specifically contained herein, as well as in the Note. 6. Transfer of Property by Borrower. Prior to repayment of the Note, and the expiration of the Term, which may not occur concurrently, Borrower agrees that Borrower shall not sell or transfer the Property or any interest therein or sell or transfer all or substantially all of the interest of Borrower except as may be provided in the Note. 7. First Lender Loan. The Borrower will observe and perform all of the covenants and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender loan documents. 8. Liens. a. Borrower shall not cause, incur suffer or permit to exist or become effective any lien, encumbrance or charge upon all or any part of the Property, or any interest therein other than (i) easements, rights of way, covenants, conditions, restrictions, liens and other title limitations approved in writing by Agency prior to the execution of this Deed of Trust, and (ii) immaterial easements and rights of way which are required by governmental authorities as a condition to the use of the Program which are approved in writing by Agency after the execution of this Deed of Trust ("Permitted Encumbrances"). Borrower shall pay and promptly discharge, at Borrower's cost and expense, all liens, encumbrances and charges upon the Program, or any part thereof or interest therein other than the Permitted Encumbrances. If Borrower shall fail to remove and discharge any such lien, encumbrance, or charge, then, in addition to any other right or remedy of Agency, Agency may, but shall not be obligated to, discharge the same, without inquiring into the validity of such lien, encumbrance or charge nor into the existence of any defense or offset thereto, either by paying the amount claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by depositing in court a bond or the amount claimed, or otherwise giving security for such claim, in such manner as is or may be prescribed by law. Borrower shall, immediately upon demand by Agency, pay to Agency an amount equal to all costs and expenses incurred by Agency in connection with the exercise by Agency of the 10-2663/53421 5 foregoing right to discharge any such lien, encumbrance or charge, together with interest thereon from the date of such expenditure and, until paid, such sums shall be secured hereby. b. Borrower will not be required to discharge the lien of the First Lender Deed of Trust securing the First Lender Note or any other lien described in this paragraph so long as Borrower will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Agency, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Program or any part thereof. 9. Charges and Taxes. Borrower will pay, at least thirty (30) days prior to delinquency, all taxes, assessments, general and special, and other charges, fines and impositions attributable to the Program which may attain a priority over this Deed of Trust, by Borrower making any payment, when due, directly to the payee thereof. Borrower will promptly furnish to Agency all notices of amounts due under this paragraph, and in the event Borrower makes payment directly, receipts of such payments. In the event that Borrower shall fail to pay any of the foregoing items required to be paid by Borrower, Agency may (but shall be under no obligation to) pay the same, after the Agency has notified the Borrower of such failure to pay and the Borrower fails to fully pay such items within seven (7) business days after receipt of such notice, given pursuant to Section 25, hereafter. Any amount so advanced by Agency, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become an additional obligation of Borrower to the Agency and shall be secured hereby, and Borrower agrees to pay all such amounts as requested by Agency. 10. Environmental Covenants of Borrower. a. Disclosures by Borrower. Except as disclosed in writing to, and acknowledged and accepted in writing by Agency, Borrower represents and warrants that: (1) during the period of Borrower's ownership of the Property: (a) there has been, and will be, no use, generation, manufacture, storage, treatment, disposal, discharge, Release, or threatened Release of any Hazardous Substance by any person on or around the Property except in such small quantities as are customary and usual in the ordinary course of using and operating a dwelling on the Property and in strict compliance with all Hazardous Substances Laws, and, (b) there have been, and will be, no Hazardous Substances transported over or through the Property; (2) after diligent inquiry, Borrower has no knowledge of, or reason to believe that, there has been: (a) any use, generation, manufacture, storage, treatment, disposal, Release, or threatened Release of any hazardous waste or substance by any 10-2663/53421 6 prior owners or prior occupants of the Property or by any third parties onto the Property, or (b) any actual or threatened litigation or claims of any kind by any person relating to these matters; (3) no Hazardous Substances in excess of permitted levels or reportable quantities under applicable Hazardous Substance Laws are present in or about the Property or any nearby real property that could migrate to the Property; (4) no Release or threatened Release exists or has occurred; (5) no underground storage tanks of any kind are or ever have been located in or about the Property; (6) the Property and all operations and activities at, and the use and occupancy of, the Property comply with all applicable Hazardous Substance Laws; (7) Borrower is now in strict compliance with, every permit, license, and approval required by all applicable Hazardous Substance Laws for all activities and operations at, and the use and occupancy of, the Property; (8) to the best of Borrower's knowledge, after diligent inquiry, there are no Hazardous Substance Claims pending or threatened with regard to Property or against Borrower; (9) the Property has not been nor is it within 2,000 feet of any other property designated as "hazardous waste property" or "border zone property" pursuant to Health and Safety Code §§25220 et seq., and no proceedings for a determination of this designation are pending or threatened; (10) to the best of its knowledge after diligent inquiry, there exists no occurrence or condition on any real property adjoining or within 2,000 feet of the Property that would cause the Property or any part of it to be designated as "hazardous waste property" or "border zone property" under the provisions of Health and Safety Code §8 25220 et seq., and any regulation adopted in accordance with that section; (11) that the current use of the Property is residential housing; (12) any written disclosure submitted by or on behalf of Borrower to Agency concerning any Release or threatened Release, past or present compliance by Borrower or other person of any Hazardous Substance Laws applicable to the Property, the past and present use and occupancy of the Property, and any environmental concerns relating to the Property, was true and complete when submitted and continues to be true and complete as of the date of this Deed of Trust. b. Covenants of Borrower. Borrower agrees, except in the ordinary course of business and in strict compliance with all applicable Hazardous Substance Laws, as follows: 10-2663/53421 7 (1) not to cause or permit the property to be used as a site for the use, generation, manufacture, storage, treatment, Release, discharge, disposal, transportation, or presence of any Hazardous Substance; (2) not to cause, contribute to, permit, or acquiesce in any Release or threatened Release; (3) not to change or modify the use of the Property without the prior written consent of Agency; (4) to comply with and to cause the Property and every invitee or occupant of the Property to comply with all Hazardous Substance Laws; (5) to immediately notify Agency in writing of and to provide Agency with a reasonably detailed description of: (a) any noncompliance of the Property with any Hazardous Substance Laws; (b) any Hazardous Substance Claim; (c) any Release or Threatened Release; (d) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that would cause the Property or any part of it to be designated as "hazardous waste property" or "border zone property" under the provisions of Health and Safety Code §§25220'et seq., and any regulation adopted in accordance with that section; (6) if Borrower discovers a Release or the presence of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law, to: (a) notify Agency of that discovery together with a reasonably detailed description; (b) engage promptly after a request by Agency, a qualified environmental engineer reasonably satisfactory to Agency to investigate these matters and prepare and submit to Agency a written report containing the findings and conclusions resulting from that investigation, all at the sole expense of Borrower, and (c) take, at Borrower's sole expense, all necessary actions to remedy, repair, clean up, or detoxify any' Release or Hazardous Substance, including, but not limited to, any remedial action required by any Hazardous Substance Laws or any judgment, consent, decree, settlement, or compromise in respect of any Hazardous Substance Claims, these actions to be performed: 10-2663/53421 8 (i) in accordance with Hazardous Substance Laws, (ii) in a good and proper manner, (iii). under the supervision of a qualified environmental engineer approved in writing by Agency, (iv). in accordance with plans and specifications for these actions approved in writing by Agency, and (v). using licensed and insured qualified contractors approved in writing by Agency; (7) immediately furnish to Agency copies of all written communications received by Borrower from any governmental authority or other person or given by Borrower to any person and any other information Agency may reasonably request concerning any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law; and (8) keep Agency generally informed regarding any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law. C. Rights of Agency. Upon Agency's reasonable belief of the existence of a past or present Release or threatened Release not previously disclosed by Borrower in connection with the making of the Loan or the execution of this Deed of Trust or upon Agency's reasonable belief that Borrower has failed to comply with any environmental provision of this Deed of Trust or any other loan document and upon reasonable prior notice (except in the case of an emergency) to Borrower, Agency or its representatives, employees, and agents, may from time to time and at all reasonable times (or at any time in the case of an emergency) enter and inspect the Property and every part of it (including all samples of building materials, soil, and groundwater) and perform those acts and things that Agency deems necessary or desirable to inspect, investigate, assess, and protect the Security of this Deed of Trust, for the purpose of determining: (1) the existence, location, nature, and magnitude of any past or present Release or threatened Release, (2) the presence of any Hazardous Substances on or about the Property in violation of any Hazardous Substance Law, and (3) the compliance by Borrower of every environmental provision of this Deed of Trust and every other loan document. In furtherance of the purposes above, without limitation of any of its other rights, Agency may obtain a court order to enforce Agency's right to enter and inspect the Property under Civil Code §2929.5, to which the decision of Agency as to whether there exists a Release, a threatened Release, any Hazardous Substances on or about the Property in violation of any Hazardous Substance Law, or a breach by Borrower of any environmental provision of this Deed of Trust or any other loan document, will be deemed reasonable and conclusive as between the parties. 10-2663/53421 9 All costs and expenses incurred by Agency with respect to the audits, tests, inspections, and examinations that Agency or its agents, representatives, or employees may conduct, including the fees of the engineers, laboratories, contractors, consultants, and attorneys, will be paid by Borrower. All costs or expenses incurred by Trustee and Agency pursuant to this Section (including without limitation court costs, consultant's fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest from the date they are incurred until those sums have been paid in full. Except as provided by law, any inspections or tests made by Agency or its representatives, employees, and agents will be for Agency's purposes only and will not be construed to create any responsibility or liability on the part of Agency to Borrower or to any other person. Agency will have the right, but not the obligation, to communicate with any governmental authority regarding any fact or reasonable belief of Agency that constitutes or could constitute a breach of any of Borrower's obligations under any environmental provision contained in this Deed of Trust or any loan document. d. Waiver and Indemnity. Borrower hereby: (1) releases and waives any future claims against Agency for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any Hazardous Substance Laws or under any Hazardous Substance Claim; (2) agrees to reimburse Agency, on demand, for all costs and expenses incurred by Agency in connection with any review, approval, consent, or inspection relating to the environmental provisions in this Deed of Trust together with interest, after demand; and (3) agrees to indemnify, defend, and hold Agency and Trustee harmless from all losses, costs, claims, damages, penalties, liabilities, causes of action, judgments, court costs, attorney fees and other legal expenses, costs of evidence of title, cost of evidence of value, and other expenses (collectively, "Expenses"), including, but not limited to, any Expenses incurred or accruing after the foreclosure of the lien of this Deed of Trust, which either may suffer or incur and which directly or indirectly arises out of or is in any way connected with the breach of any environmental provision either in this Deed of; Trust or in any loan document or as a consequence of any Release or threatened Release on the presence, use, generation, manufacture, storage, disposal, transportation, Release, or threatened Release of any Hazardous Substance on or about the Property, including the soils and groundwater, caused or permitted by Borrower, any prior owner or operator of the Property, any adjoining landowner or any other party, including, without limitation, the cost of any required or necessary repair, cleanup, remedy, or detoxification of any hazardous Substance and the preparation of any closure, remedial action, or other required plans, whether that action is required or necessary by reason of acts or omissions occurring prior to or following the recordation of this Deed of Trust. Borrower's obligations will survive the satisfaction, release, or cancellation of the indebtedness, the release and reconveyance or partial release and reconveyance of this Deed of Trust, and the foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust. 10-2663/53421 10 e. Additional Covenants of Borrower. (1) Borrower and Agency agree that: (a) this Section is intended as Agency's written request for information and Borrower's written response concerning the environmental condition of the Property as provided by Code of Civil Procedure §726.5; and (b) each representation, warranty, covenant, or indemnity made by Borrower in this Section or in any other provision of this Deed of Trust or any loan document that relates to the environmental condition of the Property is intended by Borrower and Agency to be an "environmental provision" for purposes of Code of Civil Procedure §736 and will survive the payment of the indebtedness and the termination or expiration of this Deed of Trust and will not be affected by Agency's acquisition of any interest in the Property, whether by full credit bid at foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of Borrower's interest in the Property, any successor -in -interest to Borrower agrees by its succession to that interest that the written request made pursuant to this Section will be deemed remade to the successor -in -interest without any further or additional action on the part of Agency and that by assuming the debt secured by this Deed of Trust or by accepting the interest of Borrower subject to the lien of this Deed of Trust, the successor remakes each of the representations and warranties in this Deed of Trust and agrees to be bound by each covenant in this Deed of Trust, including, but not limited to, any indemnity provision. (2) Even though Borrower may have provided Agency with an environmental site assessment or other environmental report together with other relevant information regarding the environmental condition of the Property, Borrower acknowledges and agrees that Agency is not accepting the Property as security for the Loan based on that assessment, report, or information. Rather, Agency has relied on the representations and warranties of Borrower in this Deed of Trust, and Agency is not waiving any of its rights and remedies in the environmental provisions of this Deed of Trust or any other loan document. (3) Agency or its agents, representatives, and employees may seek a judgment that Borrower has breached its covenants, representations, or warranties in this Deed of Trust or any other covenants, representations, or warranties that are deemed to be "environmental provisions" pursuant to Code of Civil Procedure §736 (each an "Environmental Provision"), by commencing and maintaining an action or actions in any court of competent jurisdiction pursuant to Code of Civil Procedure §736, whether commenced prior to or after foreclosure of the lien of this Deed of Trust. Agency or its agents, representatives, and employees may also seek an injunction to cause Borrower to abate any action in violation of any Environmental Provision and may seek the recovery of all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by 10-2663/53421 11 Agency (collectively, "Environmental Costs") incurred or advanced by Agency relating to the cleanup, remedy, or other response action required by any Hazardous Substances Law or any Hazardous Substance Claim, or which Agency believes necessary to protect the Property. It will be conclusively presumed between Agency and Borrower that all Environmental Costs incurred or advanced by Agency relating to the cleanup, remedy, or other response action of or to the Property were made by Agency in good faith. All Environmental Costs incurred by Agency under this Section (including without limitation court costs, consultant fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest from the date of expenditure until those sums have been paid in full. Agency will be entitled to bid, at any trustee's or foreclosure sale of the Property, the amount of the costs, expenses, and interest in addition to the amount of other indebtedness. (4) Agency or its agents, representatives, and employees may waive its lien against the Property or any portion of it, including but not limited to the Improvements, to the extent that the Property or any portion of the Security is found to be environmentally impaired in accordance with Code of Civil Procedure §726.5, and to exercise all rights and remedies of an unsecured creditor against Borrower and all of Borrower's assets and property for the recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an attachment order under Code of Civil Procedure §§483.010. As between Agency and Borrower, for purposes of Code of Civil Procedure §726.5, Borrower will have the burden of proving that Borrower or any related party (or any affiliate or agent of Borrower or any related party) was not in any way negligent in permitting the Release or threatened Release of the Hazardous Substances. 11. Preservation and Maintenance of Security. a. The Borrower agrees that at all times prior to full payment of .the sums owed under the Note and secured by this Deed of Trust, the Borrower will, at the Borrower's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition and repair and in a prudent and reasonable manner. The Borrower will from time to time make or cause to be made all repairs, replacements and renewals to the Security, which are necessary or appropriate. The Agency shall have no responsibility in any of these matters or for the making of improvements or additions to the Security. b. Borrower shall not remove, demolish or substantially alter any of the Improvements to the Security, other than to make repairs in the ordinary course of business of a nonstructural nature which serve to preserve or increase the value of the Security without Agency's prior written consent, which consent shall not be unreasonably withheld so long as Borrower provides reasonable evidence to Agency that, following such demolition and restoration and/or alteration, the Security shall have a fair market value at least equal to their fair market value prior to such demolition and restoration and/or alteration; Borrower shall complete promptly and in a good and workmanlike manner any improvement which may now or hereafter be constructed and promptly restore in like manner any improvement which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed and materials furnished there for; Borrower shall not commit, suffer or permit any act to be done in, upon or to the Security or any part thereof in violation of any such laws, ordinances, rules, regulations or orders, or any covenant, condition or restriction now or hereafter affecting the 10-2663/53421 12 Security; Borrower shall not commit or permit any waste or deterioration of the Security, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Borrower will not take (or fail to take) any action, which if taken (or not so taken) would increase in any way the risk of fire or other hazard occurring to or affecting the Security or otherwise would impair the security of Agency in the Security; Borrower shall not abandon the Security or any portion thereof or leave the Security unprotected, unguarded, vacant or deserted; Borrower shall not initiate, join in or consent to any change in any zoning ordinance, general plan, specific plan, private restrictive covenant or other public or private restriction limiting the uses which may be made of the Security by Borrower thereof; except as otherwise prohibited or restricted by the Covenant Agreement and the other instruments and documents executed in connection with the transaction to which the Covenant Agreement pertains or any of them, Borrower shall do any and all other acts which may be reasonably necessary to protect or preserve the value of the Security and the rights of Trustee and Agency with respect thereto. 12. Granting of Easements. Borrower may not grant easements, licenses, rights -of - way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. 13. Utilities. Borrower shall pay or cause to be paid when due all utility charges which are incurred for the benefit of the Security or which may become a charge or lien against the Security for gas, electricity, water, sewer services or other fees and charges for utilities furnished to the Security and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Security or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon. 14. Condemnation. Immediately upon its obtaining knowledge of the institution or the threatened institution of any proceeding for the condemnation or other taking for public or quasi -public use of the Security or any part thereof, or if the same be taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Borrower receive any notice or other information regarding such proceedings, action, taking or damage, Borrower shall promptly notify Trustee and Agency of such fact. Borrower shall then, if requested by Agency, file or defend its right there under and prosecute the same with due diligence to its final disposition and shall cause any award or settlement to be paid to Agency in accordance with the provisions of the Note. At Agency's option, Agency or Borrower may be the nominal party in such proceeding but in any event Agency shall be entitled, without regard to the adequacy of its security, to participate in, appear in, prosecute and settle, jointly with Borrower to control the same and to be represented therein by counsel of its choice, and Borrower will deliver, or cause to be delivered, to Agency such instruments as may be requested by it from time to time to permit such participation. Borrower and Agency agree to act in good faith with respect to any consent, settlement, or award arising out of said prosecution. If the Security or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceedings, all compensation, awards, damages, rights of action proceeds and settlements payable to Borrower by virtue of its interest in the security shall be and hereby are assigned, transferred and set over into Agency to be held by it, in trust, subject to the lien and security interest of this Deed of Trust. All such proceeds shall be first applied to reimburse 10-2663/53421 13 Trustee and Agency, for all costs and expenses, including reasonable attorneys' fees, incurred in connection with the collection of such award or settlement. Application or release of proceeds as provided herein shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 15. Protection of Agency's Security. a. If Borrower fails to perform the Homebuyer Covenants or any obligations contained in this Deed of Trust, if an Event of Default, as defined hereafter, occurs, or if any action or proceeding is commenced which materially affects Agency's interest in the Security, including, but not limited to, default under the deed of trust securing the First Lender Note, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Agency, at its option and upon notice to Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect Agency's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs. b. Any amounts disbursed by Agency pursuant to this Section will become an indebtedness of Borrower secured by this Deed of Trust. Unless Borrower and Agency agree to other terms of payment, such amount will be payable upon notice from Agency to Borrower requesting payment thereof, and will bear interest at the Default Rate from the date of disbursement unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this Section will require Agency to insure any expense or take any action hereunder. C. In the event that the Borrower fails to observe or perform any obligations or Homebuyer Covenants under this Deed of Trust, or the Note the Agency may hold the Borrower in default, treat the occurrence as an Event of Default, and take any actions available under this Deed of Trust, or the Note, including, but not limited to, acceleration of any payments due or sale of the Security, as provided for hereafter. 16. Inspection. Agency may make or cause to be made reasonable entries upon and inspections of the Security, provided that Agency has given Borrower reasonable notice of inspection. 17. Events of Default. Each of the following shall constitute events of default ("Events of Default"): (1) the occurrence of any default under the provisions of this Deed of Trust, or the Note; or (2) the failure to make any payment or perform any of Borrower's other obligations now or hereafter secured by this Deed of Trust (subject to any applicable cure period). 18. Acceleration, Remedies and Notice. If the Borrower is in default of any obligations under this Deed of Trust (including the Homebuyer Covenants), the Covenant Agreement, or the Note, or at the occurrence of any Event of Default, then at the option of the Agency, the amount of any payment related to the occurrence of the default, the unpaid amount of the Note and any other indebtedness and other obligations secured hereby shall immediately 10-2663/53421 14 become due and payable without presentment, protest notice or demand, all of which are hereby expressly waived, upon written notice by the Agency to the Borrower and no omission on the part of the Agency to exercise such option when entitled to do so shall be construed as a waiver of such right. Upon Borrower's breach of any covenant or agreement in this Deed of Trust (including, but not limited to, the covenant to pay, when due, any sums secured by this Deed of Trust), or the Note, the Homebuyer Covenants, or upon the occurrence of an Event of Default, Agency, prior to acceleration, will provide notice by certified mail, return receipt requested, to Borrower specifying: a. the breach or Event of Default; b. if the breach or Event of Default is curable, and the action required to cure such breach; C. a date, not less than thirty (30) days from the date the notice is effective, by which such breach, if curable, is to be cured; and d. if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums due under the Note and secured by this Deed of Trust, as well as sale of the Security. ("Notice of Default.") The Notice of Default will also inform Borrower of Borrower's right to reinstate after acceleration and the right to bring a court action to assert the'nonexistence of default or any other defense of Borrower to acceleration and sale. If the breach or Event of Default is not curable or is not cured on or before the date specified in the notice, Agency, at its option, may: a. declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; b. commence an action to foreclose this Deed of Trust as a mortgage, or specifically enforce any of the covenants hereof; C. deliver to Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code §§2924, et seq., as amended from time to time; or d. exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Agency shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph. 10-2663/53421 15 19. Foreclosure by Power of Sale. Should the Agency elect to foreclose by exercise of the power of sale herein contained, the Agency shall notify Trustee and shall deposit with Trustee this Deed of Trust, and the Note which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid Loan amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. a. Upon receipt of such notice from the Agency, Trustee shall cause to be recorded, published and delivered to Borrower the Notice of Default, as outlined above, and Agency's notice of election to sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Borrower, after lapse of such time as may then be required by law and after recordation of a Notice of Default and after Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise to the Borrower according to California Civil Code §§2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Borrower, Trustee or Agency, may purchase at such sale, and Borrower hereby covenants to warrant and defend the title of such purchaser or purchasers. b. After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of. (i) the unpaid Loan amount of the Note; (ii) all other sums then secured hereby, including the Equity Share payment and Contingent Interest, as applicable; and (iii) the remainder, if any, to Borrower. C. Trustee may postpone sale of- all or any portion of the Security by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. 20. Borrower's Right to Reinstate. Notwithstanding Agency's acceleration of the sums secured by this Deed of Trust, or other actions taken in response to any Event of Default of Borrower, Borrower will have the right to have any proceedings commenced by Agency, to enforce this Deed of Trust, discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: a. Borrower pays Agency all sums which would be then due under this Deed of Trust, and the Note; b. Borrower cures all breaches of any other covenants or agreements of Borrower contained in this Deed of Trust, and the Note; 10-2663/53421 16 C. Borrower pays all reasonable expenses incurred by Agency and Trustee in enforcing the covenants and agreements of Borrower contained in this Deed of Trust, and in enforcing Agency's and Trustee's remedies, including, but not limited to, reasonable attorney's fees, as applicable; and d. Borrower takes such action as Agency may reasonably require to assure that the lien of this Deed of Trust, Agency's interest in the Security and Borrower's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Borrower, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 21. Forbearance by the Agency Not a Waiver. Any forbearance by Agency in exercising any right or remedy will not be a waiver of the -exercise of any such right or remedy, nor shall acceptance by the Agency of any payment provided for in the Note constitute a waiver of the Agency's right to require prompt payment of any remaining principal and interest owed. The procurement of insurance or the payment of taxes or other liens or charges by Agency will not be a waiver of Agency's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 22. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively at the discretion of the Agency. 23. Reconveyance. Upon payment or forgiveness of all sums secured by this Deed of Trust, including the Loan, Simple Interest and any amounts due under the Loan Document, as applicable, and at the expiration of the Term, Agency will request Trustee to reconvey the Security and will surrender this Deed of Trust and the Note to Trustee. Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 24. Substitute Trustee. Agency, at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon Trustee herein and by applicable law. 25. Notice. All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt and shall be deemed to be effective as of the date received or the date delivery was refused as indicated on the return receipt as follows: To the Borrower: Matthew M. Harward or Kiersty N. Harward 8252 Grant Drive Huntington Beach, CA 92646 To the Agency: Redevelopment Agency of the City of Huntington Beach Attn: Deputy Executive Director P.O. Box 190 2000 Main Street Huntington Beach, CA 92647 10-2663/53421 17 To the Trustee: Stewart Title of California, Inc. 2010 Main Street, Suite 250 Irvine, CA 92614 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section. 26. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Agency and Borrower subject to the provisions of this Deed of Trust. 27. Joint and Several Liability All covenants and agreements of Borrower shall be joint and several. 28. Subordination to First Mortgage. Notwithstanding any other provision hereof, the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the First Lender, or the First Lender's successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Borrower. 29. Nondiscrimination. The Borrower covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Borrower or any person claiming under or through the Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Property. The foregoing covenant shall run with the land. 30. Governing Law. This Deed of Trust shall be governed by the laws of the State of California. 31. Severability. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. 32. Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 10-2663/53421 18 EXHIBIT A LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Orange, City of Huntington Beach, and described as follows: Lot 38 of Tract No. 3573, in the City of Huntington Beach, County of Orange, State of California, as per rnap recorded in Book 127 Pages 21 and 22 of miscellaneous maps, in the Office of the County Recorder of said County. Except all oil, gas and other minerals in and under said land which lies below a plane which is 500 feet below the surface of the land, but without the right of surface entry, as reserved in the deed from Tide Water Associated Oil Company, a corporation, recorded July 26, 1956 in Book 3591 Page 545 of Official Records. Also except all underground waters lying beneath said land, but without the right of entry to the surface of said land for the purpose of producing water, as granted to the City of Huntington Beach by deed recorded March 16, 1960 in Book 5149 Page 23 of Official Records. APN: 153-063-03 (End of Legal Description) 10-2663/53421 33. Exhibits. Any exhibits referred to in this Deed of Trust are incorporated in this Deed of Trust by such reference. IN WITNESS WHEREOF, Borrower has executed this Deed Of Trust as of the date first written above. TY Df I r1-U J I r,r,. Stewart Title of California, Inc. APPROVED AS TO FORM: By: -� ly/A &?'/0 (�✓ Agency Counsel Its: INITIATED, REVIEWED AND APPROVED: By: � -- Deputy Executi)e Director Its: 10-2663/53421 19 ACKNOWLEDGMENT State of California County of Orange On October 6, 2010 before me, Kathleen Nelson, Notary Public, personally appeared Stanley Smalewitz who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature KATHLEEN NELSON COMM. #1814694 z 0 Notary Public • California IOUz Orange County ivly Comm. Expires Sep, 23, 2012 (Seal) ACKNOWLEDGMENT State of California County of Orange On October 7, 2010 before me, Kathleen Nelson, Notary Public, personally appeared Cathy Green, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature K=L-S �o W C694 za = o Notforniaz°►� Com23 2012 (Seal) ACKNOWLEDGMENT State of California County of Orange On October 7, 2010, before me, Kathleen Nelson, Notary Public, personally appeared Fred Wilson who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature KATHLEEN NELSON COMM. #1814694 �° ; Notary Public • California A z "' Orange County o M Cam, oomm.m. Expires ep. 23 2012 (Seal) State of California County of On&AA . 201[0 before me, personally ACKNOWLEDGMENT D. Moseley (a notary Public) (here insert name and title of the officer) who proved to me on the basis of satisfactory evidence to be the persorwhose nam s s �/are subscribed to the within instrument and acknowledged to me that *5Xe/they executed the same in h�/their authorized capacity iesy and that by �Q*their signatur N on the instrument the persorn, or the entity on behalf of which the persoroacted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signa re " p. MOSELEY a 0 CO A # 1707497 � $ o NOTAf F !Kir CAuFORNIA " GPANGE COUNTY u' M y Comm. Expires DEC 25, 2010 (Seal) MOSELEY ta` ; COIMM. # V07497 M ® NOTARY PU6LICXALIFORNIA Cn Ay/p to.. EGxp1res DEC 25 COUNTY10 a I a a a a a a a a e SIR a a a a a■ a a a a a a a a a a a a a a a a ■ a a a a a a a a a a a a a a a a a a a a a a a a ■ a a a a a a a a[ a a a a a t a a i a a i a■ OPTIONAL INFORMATION Description or Title of the Attached Document: Number of Pages: Document Date: Capacity Claimed by Signer(s): ❑ Individual(s) ❑ Corporate Officer(s): ❑ Trustee(s) ❑ Attorney -in -Fact ❑ Partner(s) ❑ Other: