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Pacific Sun Apartments CIC, L.P. - 2011-03-07
Council/Agency Meeting Held: L,�0/ Deferred/Continued to: �LAp ve ❑ Conditionally Approved ❑ Denied ClOk' Signatbfe _T Council Meeting Date: March 7, 2011 Department ID Number: ED 11-07 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Stanley Smalewitz, Director of Economic Development SUBJECT: Approve and authorize execution of an Affordable Housing Agreement with Pacific Sun Apartments CIC, L.P. for the development of a six- unit multi-family complex located at 7911 Slater Avenue Statement of Issue: Approve an Affordable Housing Agreement between the City and Pacific Sun Apartments CIC, L.P. This Agreement will facilitate the construction of a six-unit multi-family complex, located at 7911 Slater Avenue. Financial Impact: The Agreement allocates $500,000 of HOME Federal Housing Funds for the Construction Fund 85080401. Recommended Action: Motion to: A) Approve and authorize the Mayor and City Clerk to execute the "Affordable Housing Agreement" with Pacific Sun Apartments CIC, L.P.; and, B) Authorize the City Manager, City Clerk, and the Mayor to take any action and execute any and all documents and agreements necessary to implement the Agreement. Alternative Action(s): Do not approve the "Affordable Housing Agreement" and direct staff as appropriate. H -81- Item 7. - 1 REQUEST FOR COUNCIL ACTION MEETING DATE: 3/07/2011 DEPARTMENT ID NUMBER: ED 11-07 Analysis: In April 2010, the City entered into a Subrecipient and Acquisition Loan Agreement with Colette's Children Home to acquire a vacant lot at 7911 Slater Avenue with NSP and HOME Funds in the amount of $675,000. The lot is adjacent to 17432-17442 Keelson Lane, which the City assisted Colette's with the funding of acquisition and rehabilitation of a ten-unit affordable housing complex in anticipation that the project seeks state tax credits. Colette's has partnered with Chelsea Investments, an affordable housing developer ("Developer"), and they have been awarded a tax-credit allocation for the project entitled "Pacific Sun." It will be comprised of five, three-bedroom units, and one, two-bedroom unit. The rents will be restricted to Redevelopment very low income rent. In addition, the project must comply with Tax Credit income limits. The Agreement calls for the following terms: - Units to be affordable for a minimum of 60 years - Units to be leased to households at the following income levels, with rents to be limited to the more restrictive of Redevelopment very low income rents or applicable Tax Credit rents: - 2 units to be leased to households who earn up to 30% of Area Median Income - 2 units to be leased to households who earn up to 40% of Area Median Income - 2 units to be leased to households who earn up to 50% of Area Median Income - A management plan submitted by Colette's Children Home to be approved by the City Manager or designee and to be reviewed on a quarterly basis through a "Quarterly Report" The project is an opportunity for the City to create six affordable housing units, thereby enhancing the life of very low income families. With the previous Agreement, the City provided NSP Funds and HOME Funds for the acquisition of the property. This acquisition financing will now be converted to permanent financing, with the City adding an additional $500,000 in HOME funds to help finance construction. The term of the City NSP and HOME Fund loans will be sixty (60) years with 3% interest. This loan will be repaid by annual payments to the City from residual receipts once the project is fully operational. Residual receipts are defined as the amount by which the gross revenue exceeds annual operating expenses. The Developer will annually submit an audit by an independent certified public accounting firm. The Economic Development Committee has reviewed the proposed project and recommended it. If the City approves the Affordable Housing Agreement, escrow is expected to close by March 21, with construction commencing within (90) days. Item 7. - 2 HB -82- REQUEST FOR COUNCIL ACTION MEETING DATE: 3/07/2011 DEPARTMENT ID NUMBER: ED 11-07 Environmental Status: N/A Strategic Plan Goal: Enhance Economic Development Attachment(s): Noil PqStriptkih 1. "Affordable Housing Agreement" HB -83- Item 7. - 3 ATTACHMENT # 1 Item , _ 4 HB -84- AFFORDABLE HOUSING AGREEMENT By and Between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California and PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership (7911 Slater Avenue) TABLE OF CONTENTS PAGE ARTICLE 1. DEFINITIONS.............................................................................................2 ARTICLE 2. SUBJECT OF THIS AGREEMENT.........................................................15 Section 201 Purpose of the Agreement..........................................................................15 Section 202 The Redevelopment Plan...........................................................................15 Section203 Developer...................................................................................................15 Section 204 Prohibition Against Transfers; Right of First Refusal. ..............................16 Section 205 Consent to Assignment to Administrative General Partner or Managing General Partner Upon Expiration of Tax Credit Compliance Period Associated with the Nine Percent Tax Credits...........18 ARTICLE 3. DEVELOPMENT OF THE SITE..............................................................19 Section 301 Scope of Development...............................................................................19 Section 302 Construction Drawings and Related Documents.......................................19 Section 303 City Approval of Plans, Drawings and Related Documents......................19 Section 304 Cost of Construction..................................................................................20 Section 305 Schedule of Performance...........................................................................20 Section 306 Local, State, and Federal Laws..................................................................20 Section 307 Nondiscrimination During Construction....................................................22 Section 308 Insurance....................................................................................................22 Section 309 Indemnification..........................................................................................23 Section 310 Disclaimer of Responsibility by the City...................................................24 Section 311 Rights of Access ........................................................................................24 Section 312 Taxes, Assessments, Encumbrances and Liens .........................................24 Section 313 Security Financing; Right of Holders ........................................................24 Section 314 Rights to Plans...........................................................................................25 Section 315 Hazardous Materials ...................................................................................25 Section 316 Release of Construction Covenants...........................................................26 ARTICLE 4. USE OF THE PROPERTY........................................................................26 Section401 Uses............................................................................................................26 Section 402 Management Plan; Annual Project Budget; Quarterly Reports.................27 Section 403 Maintenance of the Property......................................................................28 Section 404 Lead-Based Paint. ......................................................................................28 Section 405 Barriers to the Disabled...............................................................................29 Section 406 Creation of Capital Reserve Account.........................................................29 Section 407 Capital Reserves.........................................................................................29 Section 408 Obligation to Refrain from Discrimination...............................:................29 Section 409 Effectiveness and Duration of Covenants..................................................30 i Section 410 Effect of Violation of Covenants...............................................................30 ARTICLE 5. DEFAULTS, REMEDIES AND TERMINATION...................................30 Section 501 Defaults;Notice of Cure; Cure Rights.......................................................30 Section 502 Institution of Legal Actions .......................................................................31 Section 503 Applicable Law..........................................................................................31 Section 504 Acceptance of Service of Process..............................................................31 Section 505 Rights and Remedies Are Cumulative.......................................................32 Section 506 Specific Performance.................................................................................32 Section 507 Termination by City...................................................................................32 Section 508 Termination by Any Party..........................................................................32 Section 509 Limited Recourse Obligations ............................................. ..32 .................... Section 510 Developer's Remedies. ..............................................................................33 Section 511 Attorney's Fees ..........................................................................................33 ARTICLE 6. NSP PROVISIONS....................................................................................34 Section 601 National Objectives....................................................................................34 Section 602 General Compliance...................................................................................34 Section 603 No Employer/Employee Relationship........................................................34 Section 604 Insurance & Bonding .................................................................................34 Section 605 City Recognition........................................................................................34 Section 606 Amendments..............................................................................................34 Section 607 Suspension or Termination........................................................................35 ARTICLE 7. ADMINISTRATIVE REQUIREMENTS..................................................35 Section 701 Financial Management...............................................................................35 Section 702 Documentation and Record Keeping.........................................................35 Section703 Retention....................................................................................................36 Section 704 Client Data.................................................................................................36 Section 705 Disclosure ..................................................................................................36 Section706 Closeouts....................................................................................................36 Section 707 Audits & Inspections..................................................................................37 Section 708 Reporting and Payment Procedures...........................................................37 Section 709 Use and Reversion of Assets......................................................................38 Section 710 Relocation, Real Property Acquisition And One-For-One Housing Replacement...............................................................................................39 Section 711 Personnel & Participant Conditions...........................................................39 Section 712 Affirmative Action.....................................................................................40 Section 713 Employment Restrictions...........................................................................41 Section714 Conduct......................................................................................................43 ARTICLE 8. ENVIRONMENTAL CONDITIONS........................................................45 Section801 Air and Water.............................................................................................45 ii Section 802 Flood Disaster Protection...........................................................................46 Section 803 Lead-Based Paint.......................................................................................46 Section 804 Historic Preservation..................................................................................46 ARTICLE 9. GENERAL PROVISIONS.........................................................................46 Section 901 Developer's Warranties..............................................................................46 Section 902 Governing Law ..........................................................................................47 Section 903 Attorneys' Fees..........................................................................................47 Section 904 Notices, Demands, and Communications Between the Parties .................47 Section 905 Acceptance of Service of Process..............................................................48 Section 906 Conflicts of Interest....................................................................................48 Section 907 Titles and Captions ....................................................................................48 Section908 Gender........................................................................................................48 Section 909 Modifications.............................................................................................48 Section 910 Merger of Prior Agreements and Understandings .....................................48 Section 911 No Third Parties Benefited ........................................................................48 Section 912 Assurances to Act in Good Faith...............................................................49 Section 913 Warranty Against Payment of Consideration for Agreement....................49 Section 914 Nonliability of City Officials and Employees............................................49 Section 915 Interpretation..............................................................................................49 Section 916 Counterparts...............................................................................................49 Section 917 Severability................................................................................................49 Section 918 Extension of Times of Performance ..........................................................49 Section 919 Inspection of Books and Records...............................................................50 Section920 Waivers......................................................................................................50 ARTICLE 10. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE.............50 iii LIST OF EXHIBITS EXHIBIT 1 - LEGAL DESCRIPTION EXHIBIT 2 - SITE MAP EXHIBIT 3 - METHOD OF FINANCING EXHIBIT 4 - SCOPE OF DEVELOPMENT EXHIBIT 5 - PROJECT BUDGET EXHIBIT 6 - SCHEDULE OF PERFORMANCE EXHIBIT 7 - NSP PROMISSORY NOTE EXHIBIT 8 - HOME PROMISSORY NOTE EXHIBIT 9 - NSP DEED OF TRUST EXHIBIT 10 - HOME DEED OF TRUST EXHIBIT 11 - AMENDMENT TO REGULATORY AGREEMENT EXHIBIT 12 - ENVIRONMENTAL INDEMNITY EXHIBIT 13 - ASSIGNMENT OF AGREEMENTS EXHIBIT 14 - ASSIGNMENT OF RENTS & LEASES EXHIBIT 15 - FORM OF RELEASE OF CONSTRUCTION COVENANTS iv AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITE' OF HUNTINGTON BEACH AND PACIFIC SUN APARTMENTS CIC, L.P. (CDBG - NEIGHBORHOOD STABILIZATION PROGRAM) (HOME PROGRAM) THIS AFFORDABLE HOUSING AGREEMENT ("Agreement"), dated as of , 2011, is entered into by and between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California (herein called the "City") and PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership (herein called the "Developer"). RECITALS A. The City has applied for and received from the State of California, Department of Housing and Community Development ("the Department"), funds from the Neighborhood Stabilization Program allocation of the Department's State Community Development Block Grant Program (the "NSP Funds"), originating from the United States Government under the Housing and Economic Recovery Act of 2008 and Title I of the Housing and Community Development Act of 1974, as amended (HCD Act), Public Law 93-383. B. Pursuant to the Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010 between the City and Developer's predecessor in interest, Colette's Children Home, Inc., a California nonprofit public benefit corporation ("Colette's"), the City made a loan of NSP Funds in the original principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) (the "Colette's NSP Loan") and a loan of HOME Investment Partnership Program funds ("HOME Funds") in the original principal amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS ($284,432.00) (the "Colette's HOME, Acquisition Loan") to assist Colette's in acquiring the Property (as hereinafter defined), for development as six units of affordable rental housing for very low income persons and families, more specifically, the Project as hereinafter defined. C. Colette's has obtained a loan from Teamsters Local 986 Charity Fund, Inc. in a principal amount not to exceed $200,000.00 for the payment of certain predevelopment costs incurred in connection with the Project (the "Teamsters Loan" or "Predevelopment Loan"), which loan will be repaid at the Construction Financing Event (as hereinafter defined). D. The City desires to improve and preserve affordable housing in the community by making a loan of an additional FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in Home Funds to Developer for payment of development costs of the Project (defined herein as the "HOME Development Loan"). Page 1 of 51 E. Concurrently with the Construction Financing Event (as hereinafter defined), (1) Colette's will repay the Colette's NSP Loan, the Colette's HOME Acquisition Loan, and the Teamsters Loan, including all accrued interest on each such loan, and (2) the City will make two separate loans to Developer in the respective amounts of(i) $390,568.00 plus all accrued interest on the Colette's NSP Loan through the Construction Financing Event plus any other sums secured by the Deed of Trust securing the Colette's NSP Loan and added to the principal amount of the Colette's NSP Loan at the Construction Financing Event as reimbursement to Developer for a portion of Developer's costs to acquire the Property for the Project (defined herein as the "NSP Loan") and (ii) $284,432.00 plus all accrued interest on the Colette's HOME Acquisition Loan through the Construction Financing Event plus any other sums secured by the Deed of Trust securing the Colette's HOME Acquisition Loan and added to the principal amount of the Colette's HOME Acquisition Loan at the Construction Financing Event as reimbursement to Developer for a portion of Developer's costs to acquire the Property for the Project (defined herein as the "HOME Acquisition Reimbursement Loan") plus the additional $500,000.00 representing the HOME Development Loan for use toward the development costs of the Project (the Home Acquisition Reimbursement Loan and the HOME Development Loan are collectively defined herein as the "HOME Loan"), pursuant to this Agreement and as more particularly described herein. F. Concurrently with the Construction Financing Event (as hereinafter defined), Colette's will convey to Developer all of its interest in the Property and the Project, by instrument in writing satisfactory to the City and in form recordable among the land records of Orange County. G. Developer has obtained an allocation of Nine Percent Credits (as hereafter defined) and has obtained a commitment for a Construction Loan (as hereafter defined) in the amount set forth in this Agreement, for the development of the Project. 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: AGREEMENT ARTICLE 1. DEFINITIONS The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: The term "Administrative General Partner" shall mean CIC Pacific Sun Apartments, LLC, a California limited liability company. Chelsea Investment Corporation, a California corporation, is the managing member or manager of CIC Pacific Sun Apartments, LLC. The term "Affiliate" shall mean (i) any party directly or indirectly controlling, controlled by or under common control with another party, (ii) any party owning or controlling 10% or more Page 2 of 51 of the outstanding voting securities of such other party, (iii) any officer, director or partner of such party, or (iv) if such other party is an officer, director or partner, any company for which such party acts in any such capacity. The term "Affordable Rent" shall mean rental rates not to exceed the lesser of (1) "affordable rent" for very low income households as defined by California Health &Safety Code Section 50053(b)(2) and (2) the rent limits set forth by the HOME Program in 24 C.F.R. 92.252(b)(1) and 24 C.F.R. 92.252(b)(2). Affordable Rent shall include a reasonable utility allowance for tenant-paid utilities based on the Orange County Housing Authority's published utility schedules. The term "Affordable Unit" shall mean one of the six (6) rental dwelling units in the Project restricted to occupancy by Very Low Income Households at Affordable Rent. The term "Affordable Unit" and "Affordable Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. The term "Agreement" or any reference to this "Agreement" shall mean this Affordable Housing Agreement executed by and between City and Developer, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "AHP Grant/Loan" shall mean a conditional grant or loan, if any, awarded to Developer by a member bank of the Federal Home Loan Bank under the Federal Home Loan Bank Affordable Housing Program, which shall be subject to terms and conditions that are approved by the City Manager or designee. The term "Amendment to Regulatory Agreement" shall mean the Amendment to Regulatory Agreement substantially in the form attached hereto as Exhibit 11, to be recorded at the Construction Financing Event. The term "Anti-Terrorism Laws" shall mean all laws relating to terrorism or money laundering, including, without limitation, the Executive Order and the Bank Secrecy Act, as amended by the USA Patriot Act. The term "Assignment of Agreements" shall mean the assignments by Developer to City of plans, contracts and permits, substantially in the form attached hereto as Exhibit 13. The term "Assignment of Rents and Leases" shall mean a document substantially in the form attached hereto as Exhibit 14. The term "Bank Secrecy Act" shall mean the Currency and Foreign Transactions Reporting Act of 1970, Pub. L. No. 91-508, 84 Stat. 1305 (1970), as amended from time to time. The term "City" shall mean the City of Huntington Beach, a municipal corporation of the State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of City. Page 3 of 51 The term "City Manager" shall mean the individual duly appointed to the position of City Manager of the City, or authorized designee. Whenever an administrative action is required by City to implement the terms of this Agreement, the City Manager, or an authorized designee, shall have authority to act on behalf of City, except with respect to matters reserved under California law or the City's Charter wholly for City Council determination. The term "Colette's HOME Acquisition Loan" shall mean the loan of HOME Funds made by the City to Colette's in the original principal amount of TWO HUNDRED EIGHTY- FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS ($284,432.00) to assist Colette's in acquiring the Property for development of the Project. The Colette's HOME Acquisition Loan will be repaid in full at the Construction Financing Event. The term "Colette's NSP Loan" shall mean the loan of NSP Funds made by the City to Colette's in the original principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) to assist Colette's in acquiring the Property for development of the Project. The Colette's NSP Loan will be repaid in full at the Construction Financing Event. The term "Completion" shall mean, with regard to construction of the Project, the satisfaction of each of the following events: (i) the City shall have determined that construction of the Project has been completed substantially in accordance with the plans approved by the City, (ii) certificates of occupancy shall have been issued by the City with respect to all of the Units, (iii) the time for Developer's contractor, suppliers and subcontractors to file a claim pursuant to Civil Code Sections 3115-3117 has expired or Developer has delivered to the City unconditional lien releases for its contractor, suppliers and subcontractors, and any mechanic's liens that have been recorded or stop notices that have been delivered have been paid, settled or otherwise extinguished, discharged, released, waived, bonded around or insured against, provided that a notice of completion pursuant to Civil Code Section 3117 has been duly recorded in the land records of Orange County. The term "Construction Financing Event" shall mean the point in time when (i) all conditions precedent to the recording of the City's HOME Loan Documents and NSP Loan Documents for the Project have been satisfied and (ii) the Construction Loan documents for the Project are recorded in accordance with the Method of Financing. The term "Construction Lender" shall mean Raymond James Tax Credit Funds, Inc. or another institutional lender approved by the City and providing funds for Developer's construction of the Project. The term "Construction Loan" shall mean a loan provided to Developer by the Construction Lender for payment of a portion of the construction costs of the Project. The term "Construction Period" shall mean the period of time commencing upon the Construction Financing Event and ending upon the repayment of the Construction Loan and the deposit of the additional Limited Partner Capital Contribution (less that portion of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609). Page 4 of 51 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 "Developer" shall mean PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership and any assignee of or successor to its rights, powers and responsibilities approved by the City or permitted by this Agreement. The term "Developer Equity" shall mean funds provided by the Developer for payment of Project Costs and shall not include the Senior Loan, the HOME Loan, the NSP Loan or any other borrowed funds, and shall include any Deferred Developer Fee and the Limited Partner Capital Contribution as well as any other funds of the Developer. The term "Disbursement Agreement' shall mean an agreement setting forth the timing and conditions of the disbursement of Project funds, which shall be entered into at the Construction Financing Event in a form that is mutually acceptable to the City, the Developer and the Construction Lender. The term "Effective Date" shall mean the date this Agreement is executed by the City; which date shall be inserted into the preamble of this Agreement. The term "Eligible Tenant' shall mean any person entitled to rent an Affordable Unit as set forth in the Regulatory Agreement. The term "Environmental Indemnity" shall mean an instrument substantially in the form attached to this Agreement as Exhibit 12. The term "Escrow" shall mean that certain escrow with Escrow Agent, which has been established for the Construction Financing Event. The term "Escrow Agent' shall mean First American Title Company or another escrow agent mutually acceptable to City and Developer. The term "Executive Order" shall mean Executive Order No. 13224 on Terrorist Financing, effective September 23, 2001, including the Annex thereto, as amended from time to time. The term "Force Majeure" or "Force Majeure Event' shall mean the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof, unusually severe weather; inability to secure necessary labor, materials or tools, provided that such inability is not caused by the party claiming a Force Majeure Delay; delays of any contractor, subcontractor, or suppliers, provided that such delay is not caused by Page 5 of 51 the party claiming a Force Majeure Delay; acts of the other party; acts or failure to act of any Governmental Agency (except acts or failure to act of the City shall not excuse performance by the City); the imposition of any applicable moratorium by a Governmental Agency; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such parry obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within ten (10) business days after it obtains actual knowledge of the event. The term "Force Majeure Delay" shall mean any delay in taking any action required by this Agreement,proximately caused by the occurrence of any Force Majeure Event. The term "Governmental Approvals" shall mean and include any and all general plan amendments, zoning approvals or changes, required approvals and certifications under the California Environmental Quality Act, tentative and final tract maps, variances, conditional use permits, demolition permits, excavation/foundation permits, grading permits, building permits, inspection reports and approvals, certificates of occupancy, and other approvals, permits, certificates, authorizations, consents, orders, entitlements, filings or registrations, and actions of any nature whatsoever required from any Governmental Agency in order to commence and complete the Project. The term "Governmental Agency" means the United States, the State of California, the County of Orange, the City of Huntington Beach or any other political subdivision in which the Project is located, and any court or political subdivision, agency or instrumentality having jurisdiction over the Project. The term "Hazardous Materials" shall have the meaning set forth in the Environmental Indemnity. The term "HOME Acquisition Reimbursement Loan" shall mean the City's loan of HOME Funds to Developer in an original principal amount equal to the sum of(i) the original principal amount of the Colette's HOME Acquisition Loan of TWO HUNDRED EIGHTY FOUR THOUSAND FOUR HUNDRED THIRTY TWO DOLLARS ($284,432.00) plus (ii) interest accrued on the original principal amount of the Colette's HOME Acquisition Loan through the Construction Financing Event plus (iii) any other sums secured by the Deed of Trust securing the Colette's HOME Acquisition Loan and added to the principal amount of the Colette's HOME Acquisition Loan at the Construction Financing Event, as reimbursement to Developer for a portion of Developer's costs to acquire the Property for development of the Project, pursuant to this Agreement. The term "HOME Deed of 'Trust" shall mean the Deed of Trust securing the HOME Loan, substantially in the form attached hereto as Exhibit 10. Page 6 of 51 The term "HOME Development Loan" shall mean the City's loan to Developer in an amount not to exceed FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) of HOME Funds for use toward the development costs of the Project, pursuant to this Agreement. The term "HOME Funds" means the City's allocation of funds from the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. The term "DOME Loan" shall mean the City's loan to Developer in an aggregate principal amount equal to the sum of (1) the HOME Acquisition Reimbursement Loan in an original principal amount equal to the sum of(i) the original principal amount of the Colette's HOME Acquisition Loan of TWO HUNDRED EIGHTY FOUR THOUSAND FOUR HUNDRED THIRTY TWO DOLLARS ($284,432.00) plus (ii) interest accrued on the original principal amount of the Colette's HOME Acquisition Loan through the Construction Financing Event plus (iii) any other sums secured by the Deed of Trust securing the Colette's HOME Acquisition Loan and added to the principal amount of the Colette's HOME Acquisition Loan at the Construction Financing Event, plus (2) the HOME Development Loan in an original principal amount not to exceed $500,000.00, as evidenced by the Home Note and secured by the HOME Deed of Trust pursuant to this Agreement. The term "HOME Loan Documents" shall mean this Housing Agreement, the HOME Note, the HOME Deed of Trust, the Assignment of Rents and Leases, the Assignment of Agreements and the UCC 1 Financing Statement. The HOME Loan Documents do not include the Regulatory Agreement or the Environmental Indemnity. The term "HOME Note" shall mean that certain Promissory Note evidencing the HOME Loan, substantially in the form attached hereto as Exhibit 8. The term "HOME Regulations" shall mean 24 CFR Part 92, as amended from time to time. The term "HUD" means the United States Department of Housing and Urban Development. The term "Investor Limited Partner" shall mean the entity, or any successor thereof, that will provide the Limited Partner Capital Contribution set forth in the Method of Financing and identified in the Limited Partnership Agreement. The term "Improvements" shall mean the improvements located on the Property, to be constructed in accordance with this Agreement, including but not limited to the Scope of Development. The term "Lease"means the lease entered into between Developer and an Eligible Tenant of a Unit. The term "Limited Partner Capital Contribution" shall mean and refer to the Developer Equity derived from the sale of the Nine Percent Tax Credits, in the form of the initial Page 7 of 51 Limited Partner Capital Contribution and the additional Limited Partner Capital Contribution in the estimated amounts set forth in the Method of Financing (including that portion of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), which capital contributions shall be made subject and in accordance with the terms of the Limited Partnership Agreement. The term "Limited Partnership" shall mean the single purpose entity referred to herein as "Developer", formed for the syndication of the Nine Percent Tax Credit. The term "Limited Partnership Agreement" shall mean the agreement governing the Limited Partnership and shall include the Limited Partnership Agreement as amended and restated on the admission of the Investor Limited Partner. The term"Limited Partnership Documents" shall mean all of those documents required to create the Limited Partnership and to obtain the Nine Percent Tax Credit investment, including but not limited to, the Limited Partnership Agreement as amended and restated on the admission of the Investor Limited Partner, and the Guaranty and Reserve Agreements described in Section 5 of the Method of Financing. The term "Managing General Partner" shall mean Colette's Children Home, Inc., a California nonprofit public benefit corporation unless and until removed or replaced with another nonprofit (or limited liability company with a nonprofit as its sole member) reasonably acceptable to the City, pursuant to the terms of this Agreement and the Limited Partnership Agreement. Colette's Children HOME, Inc. has been certified by the City as a Community Housing Development Organization ("CHDO") for purposes of the HOME Investment Partnerships Program reservation of funds for CHDO-eligible projects. The term "Median Income" shall mean the area median income of the Orange County metropolitan statistical area (PMSA), with adjustments for household size, as estimated annually by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended and published by California's Housing and Community Development Department pursuant to Health and Safety Code section 50093. The term "Method of Financing" shall mean the Method of Financing attached hereto as Exhibit 3, which is incorporated herein by this reference. The term "Net Proceeds" shall mean the amount, if any, by which a refinancing exceeds the amount needed to repay a Senior Loan in full, including principal and interest, any early redemption or prepayment penalty, and customary and -reasonable fees and costs of the transaction. The term "Nine Percent Tax Credit" shall mean the federal tax credit allocated to the Project by the. California Tax Credit Allocation Committee. "Nine Percent" refers to the applicable percentage of the qualified basis for a building that is not federally subsidized, as provided in Internal Revenue Code Section 42(b)(1). Page 8 of 51 The term "NSP Deed of Trust" shall mean the Deed of Trust attached as Exhibit 9 hereto, securing the NSP Loan. The term "NSP Funds" shall mean funds received by the City from the Neighborhood Stabilization Program allocation of the California Department of Housing and Community Development's State Community Development Block Grant Program The term "NSP Loan" shall mean the City's loan of NSP Funds to Developer in an original principal amount equal to the sum of(1) the original principal amount of the Colette's NSP Loan of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) plus (2) interest accrued on the original principal amount of the Colette's NSP Loan through the Construction Financing Event plus (3) any other sums secured by the Deed of Trust securing the Colette's NSP Loan and added to the principal amount of the Colette's NSP Loan at the Construction Financing Event, as reimbursement to Developer for a portion of Developer's costs to acquire the Property for the Project, as evidenced by the NSP Note and secured by the NSP Deed of Trust pursuant to this Agreement. The term "NSP Loan Documents" shall have the meaning given to it in the Method of Financing. The term "NSP Note" shall mean that certain Promissory Note attached here to as Exhibit 7. The term "Operating Costs" shall have the same meaning as the definition of Annual Operating Expenses set forth in the HOME Note and the NSP Note. The term "Permanent Period" shall mean the period of time commencing upon the repayment of the Construction Loan. The term "Permitted Transfer" shall mean any Transfer that is approved by the City or expressly permitted by the terms of this Agreement. The term "Plans" shall mean any architectural and construction plans and drawings prepared on behalf of Developer for the Project in accordance with this Agreement. The term "Person" shall mean an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. The term "Predevelopment Deed of Trust" shall mean the senior position deed of trust recorded in the Land Records of Orange County on November 15, 2010 as Instrument No. 2010000605541, securing the Predevelopment Loan. The term "Predevelopment Lender" shall mean Teamsters Local 986 Charity Fund, Inc., a California non-profit public benefit corporation. Page 9 of 51 The term "Predevelopment Loan" shall mean the loan in the maximum amount of $200,000 from the Predevelopment Lender to Developer's Managing General Partner to pay certain predevelopment costs of the Project. The Predevelopment Loan will be repaid in full at the Construction Financing Event. The term "Predevelopment Note" shall mean the promissory note executed by Developer's Managing General Partner for the benefit of the Predevelopment Lender, evidencing the Predevelopment Loan. The term "Prohibited Person" shall mean any of the following: (a) a person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (b) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (c) a person or entity with whom Investor Limited Partner is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (d) a person or entity who or that commits, threatens, or conspires to commit or supports "terrorism," as defined in the Executive Order; or (e) a person or entity that is named as a "specially designated national and blocked person" on the most current list published by the Office of Foreign Asset Control of the U.S. Treasury Department at its official web site or any replacement website or other replacement official publication of such list. The term "Project" shall mean the development on the Property of six Affordable Units, and the subsequent rental of the Affordable Units to Eligible Tenants, all at Affordable Rent for a period of not less than 60 years, as more particularly described in the Scope of Development and the Regulatory Agreement. The term "Project Budget" shall mean the anticipated sources and uses of funds for acquisition of the Property and the development of the Project as set forth in Exhibit 5. The Project Budget and Developer's proposed method of financing shall be subject to change from time-to-time, subject to the prior written approval of Developer and the City Manager or designee, which shall not be unreasonably withheld, and subject to and conditioned on such further review and approval by the City Council as is needed to satisfy applicable law, policies and procedures, upon which approval the Project Budget shall be replaced by the approved revised Project Budget. The term "Project Costs" shall mean all costs which are actually incurred by Developer for the acquisition of the Property and the financing and development of the Project, and shall Page 10 of 51 include, without limitation, all of the items of cost set forth in the Project Budget and similar costs, fees and expenses as approved by the City Manager, but not including Operating Costs. The term "Property" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater Avenue, Huntington Beach, California, and legally described in Exhibit 1 and depicted on the Property Map attached hereto as Exhibit 2. The term "Pro Rata Percentages" shall mean the pro rata application of Residual Receipts to the repayment of the HOME Loan and the NSP Loan, reflecting the relative amounts of those loans. The Pro Rata Percentages shall be sixty-seven percent (67%) for the HOME Loan and thirty-three percent (33%) for the NSP Loan. The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions dated as of April 5, 2010, by and between the City and Colette's Children Home, Inc. and recorded as Document No. 2010000231149 on May 17, 2010 in the Official Records of Orange County, as amended by the Amendment to Regulatory Agreement. The Regulatory Agreement, as amended by the Amendment to Regulatory Agreement, shall unconditionally be and at all times remain prior and superior to any lien recorded against the Property including, without limitation, any lien created by the Senior Loan and Senior Loan Documents and all of the terms and conditions contained in the Senior Loan Documents, except as otherwise provided in this Agreement or as otherwise approved by the City. The term "Release of Construction Covenants" shall have the meaning set forth in Section 316 of this Agreement. The term "Restricted Period" shall mean sixty (60) years from the recordation of the Release of Construction Covenants for the Project. The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit 6 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 4. The term "Senior Lender" shall mean the maker of any Senior Loan, any construction lender, credit enhancer or construction period guaranty facility, including but not limited to the Construction Lender. The term "Senior Loan" shall mean, during the Construction Period, the Construction Loan, and during the Permanent Period, a loan for Project purposes that is approved by the City, in its sole discretion, for recordation senior in priority to the NSP Loan and the HOME Loan. Page 11 of 51 The term "Senior Loan Documents" shall mean the deed of trust, loan agreements, promissory notes, financing statements, guaranties, security agreements, assignments, and similar documents and instruments to be executed by Developer in connection with the Senior Loan. The term "Subordination Agreement" shall mean an agreement to be entered into at the Construction Financing Event, subordinating the HOME Loan Documents and the NSP Loan Documents (which do not include the Regulatory Agreement, as amended by the Amendment to Regulatory Agreement, or the Environmental Indemnity) to the Senior Loan Documents, in a form that is acceptable to the City in its sole discretion. The Subordination Agreement shall include provisions reasonably satisfactory to the City in order to protect the City's investments in the event of default, including (1) a right of the City to cure a default on the Senior Loan or any of the Senior Loan Documents, (2) a right of the City to negotiate with the Senior Lender after notice of default by the Senior Lender, (3) an agreement that if prior to foreclosure of the Senior Loan, the City takes title to the Property and cures the default on the Senior Loan, the Senior Lender will not exercise any right it may have to accelerate the Senior Loan by reason of the transfer of title to the City, and (4) a right of the City to purchase the Property from the Developer at any time after a default on the Senior Loan. The term "Title Company" shall mean First American Title Insurance Company or another title insurance company mutually acceptable to City and Developer. The term"Transfer" shall mean: (i) the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, the lease of all or substantially all of the Property or Project, except as provided in subparagraph (iii) below, or the appointment of a receiver or trustee to operate or exercise direct or indirect control over any portion of or interest in the Project or to operate or exercise direct or indirect control over any interest in any general partner or member of Developer or any general partner or member of a general partner or member of Developer. (ii) "Transfer" shall also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Developer or any general partner or member of Developer or of any general partner or member of a general partner or member of Developer, or any conversion of Developer to an entity form other than that of Developer at the time of execution of this Agreement, except that, a cumulative change in ownership interest of any general partner of the Developer of forty-nine percent (49%) or less shall not be deemed a "Transfer" for purposes of this Housing Agreement. (iii) Notwithstanding paragraphs (i) and (ii), "Transfer" shall not include any of the following Permitted Transfers: (A) A conveyance of a security interest to the beneficiary of the Senior Deed of Trust, the HOME Deed of Trust, the NSP Deed of Trust and the AHP Grant/Loan, if any, or Page 12 of 51 the conveyance of title to the Property or Project in connection with a foreclosure, a deed in lieu of foreclosure or similar conversion of such loan; (B) (1) A conveyance of the Project to a limited partnership in which the Managing General Partner and/or Administrative General Partner is Developer or Developer's Administrative General Partner or (following the City's issuance of a Release of Construction Covenants for the Project) Managing General Partner or Administrative General Partner, or a sale back from such partnership to Developer or either such General Partner. (2) The substitution of a General Partner as directed by the Investor Limited Partner in accordance with the terms of the Limited Partnership Agreement, subject to the following terms and conditions. The Investor Limited Partner may substitute a reasonably acceptable Affiliate of Investor Limited Partner (the "Interim General Partner") on an interim basis for a period reasonably calculated to identify and admit into the partnership a new General Partner, as set forth below (the "Substitute General Partner"). It is the desire of the City that the Managing General Partner shall be a Community Housing Development Organization("CHDO") and reasonable efforts shall be made to accomplish that objective. The Substitute General Partner must be an entity reasonably acceptable to the City Manager, which approval shall not be unreasonably withheld or delayed. (C) Any refinancing that repays any of the Senior Loan (referred to herein as a "Take-out Loan"), if the City Manager reasonably determines (which determination shall not be unreasonably withheld, conditioned or delayed) that the resulting loan-to-value ratio (including the Take-out Loan, any of the remaining Senior Loan not repaid by the refinancing, the HOME Loan and the NSP Loan) will not exceed the loan-to-value ratio in effect at the time of the Permanent Financing Event for the initial development of the Project, and the repayment terms of the Take-out Loan do not materially impair the Developer's ability to repay the HOME Loan and the NSP Loan. (D) The leasing for occupancy of all or any part of the Property or Project in accordance with this Agreement and the Regulatory Agreement. (E) The inclusion of equity participation by Developer by transfer or addition of limited partners to the Developer or similar mechanism; provided that such transfer, addition or other mechanism shall not involve any Prohibited Person or otherwise result in a violation of Anti-Terrorism Laws. (F) The pledge by a General Partner to the Investor Limited Partner of the General Partner's interest in the Developer, as security for the performance of all of the General Partner's obligations under the Limited Partnership Agreement. (G) The sale, transfer or pledge of any limited partnership interest in the Developer or of any partnership interest in the Investor Limited Partner; provided that such sale, transfer or pledge shall not be to any Prohibited Person or otherwise result in a violation of Anti- Terrorism Laws. Page 13 of 51 (H) Any dilution of the General Partner's interest in the Developer in accordance with the Limited Partnership Agreement. (I) A transfer of ownership interest in the Administrative General Partner or the Administrative General Partner's interest in Developer to (i) an immediate family member of the transferor or (ii) a trust established for the benefit of the transferor and/or for the benefit of an immediate family member of the transferor, provided that such a transfer will not cause a change in the management and/or control of Developer. (J) A conveyance of the Property and Project to the Administrative General Partner pursuant to and in accordance with Section 205 of this Agreement, upon its exercise of the option to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (K) A conveyance of the Property and Project to the Managing General Partner pursuant to and in accordance with Section 205 of this Agreement, upon its exercise of the right of first refusal to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (L) The withdrawal of the Administrative General Partner from Developer after Completion pursuant to the Limited Partnership Agreement and the replacement of the Administrative General Partner with a general partner that meets all requirements of the California Tax Credit Allocation Committee in connection with the Nine Percent Tax Credit and is acceptable to the City in its reasonable discretion and approved by the City in writing. The term"UCC1 Financing Statement'' shall mean the financing statement(s) to be filed with the California Secretary of State's Office at the Construction Financing Event in connection with the HOME Loan and the NSP Loan. The Developer hereby consents to the filing of the UCC1 Financing Statement. The term "Units" shall mean the five (5)three-bedroom and two-bathroom dwelling units and the one (1) two-bedroom and two-bathroom dwelling unit comprising the Project. The term "USA Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as amended from time to time. The term "Very Low Income Household" shall have the meaning given in California Health and Safety Code section 50105(a). Page 14 of 51 ARTICLE 2. SUBJECT OF THIS AGREEMENT Section 201 Purpose of the Agreement A. The purpose of this Agreement is to promote affordable housing by providing the HOME Development Loan to assist Developer in the development of the Project in the City of Huntington Beach and providing the HOME Acquisition Reimbursement Loan and the NSP Loan to assist Developer with its costs to acquire the Property for the Project. B. This Agreement is intended to facilitate Developer's development of six (6) rental units for rental to Very Low Income Households at Affordable Rents for a period of not less than 60 years following recordation of the Release of Construction Covenants for the Project. 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 is being undertaken and is being assisted. C. The Project will be used and operated for not less than sixty (60) years as rental housing, with all six of the Units restricted to occupancy by Very Low Income Households in accordance with the Regulatory Agreement. Section 202 The Redevelopment Plan This Agreement conforms to the Redevelopment Plan for 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 Property is located inside of the Merged Redevelopment Project. Section 203 Developer. The Developer is PACIFIC SUN APARTMENTS CIC, L.P. a California limited partnership and includes any permitted assignee or nominee. Prior to the admission of the Investor Limited Partner, the Developer shall submit to the City for review and approval the proposed Limited Partnership Documents, which approval shall not be unreasonably withheld. The Limited Partnership Documents must verify that Colette's Children Home, Inc. will be the Managing General Partner and CIC Pacific Sun Apartments, LLC will be the Administrative General Partner of the Limited Partnership. The address of Developer for the purpose of receiving notices pursuant to this Agreement is: Pacific Sun Apartments CIC, L.P c/o Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 Attention: Page 15 of 51 With a copy to: CIC Pacific Sun Apartments, LLC c/o Chelsea Investment Corporation 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 Section 204 Prohibition Against Transfers; Right of First Refusal. A. The qualifications and identity of the Developer are of particular concern to the City. It is because of those qualifications and identity that the City has entered into this Agreement with the Developer. No voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. B. Developer agrees that Developer shall not sell the Property during the term of the Regulatory Agreement, unless and until Developer has given to City notice in writing of its intent to sell, specifying the identity of the prospective buyer and the price and terms of the contemplated sale. Subject to the rights of the Administrative General Partner and the Managing General Partner set forth in Section 205 of this Agreement, within ninety (90) days after Developer gives City written notice of Developer's intent to sell, City shall have the right to purchase the Property at the same price and on the .same terms and conditions set forth in Developer's written notice of intent to sell. To exercise this right, City must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the Developer's notice of intent to sell to be paid or delivered to Developer on close of escrow and shall also give Developer written notice of the deposit. If City does not exercise the right in accordance with the provisions of this Section, Developer may sell the Property to the prospective buyer for the price and on the terms contained in the notice; provided, however, that Developer has made every reasonable effort to sell the Property to another nonprofit housing corporation with Developer's similar experience and reputation in the field of low-income housing (including the management of properties with income and affordability restrictions), and provided further that City has reasonably approved such prospective buyer in advance in writing. C. If at any time during the term of this Agreement Developer receives from any third party a bona fide offer to purchase the Property on terms acceptable to Developer, Developer shall give written notice of the offer to City. Subject to the rights of the Administrative General Partner and the Managing General Partner set forth in Section 205 of this Agreement, within ninety (90) days after Developer gives City written notice of the third-party offer, City shall have the right to purchase the Property at the same price and on the same terms and conditions set forth in the third-party offer. To exercise its right, City must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the offer to be paid or delivered to Developer on close of escrow and shall also give Developer written notice of the deposit. In the event City does not exercise its right to purchase in accordance with the provisions of this Section, Developer may sell the Property to the third party making the offer on the same terms Page 16 of 51 and conditions set forth in that offer; provided, however, that Developer has made every reasonable effort to sell the Property to another nonprofit housing corporation with Developer's similar experience and reputation in the field of low-income housing (including the management of properties with income and affordability restrictions), and provided further that City has reasonably approved such prospective buyer in advance in writing. If for any reason the Property is not sold to the party making the offer, Developer shall give City the same right to purchase the Property on receiving any subsequent offer from any third party that is acceptable to Developer. D. For the reasons cited above, the Developer represents and agrees for itself and any successor in interest that, except for the Permitted Transfers set forth in the definition of "Transfer" or as otherwise expressly permitted under this Agreement, without the prior written approval of the City (not to be unreasonably withheld, conditioned or delayed), there shall be no significant change in the ownership of the Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of the Developer or the degree thereof, by any method or means. E. The Developer shall promptly notify the City of any and all changes whatsoever in the identity of the parties in ownership and/or in control of the Developer 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 City and the City may exercise any and all available remedies if there is any significant change (voluntary or involuntary) in membership, ownership, management or control, of the Developer or any general partner of the Developer (other than such changes occasioned by the death or incapacity of any individual and the Permitted Transfers set forth in the definition of"Transfer" or as otherwise expressly permitted by this Agreement) without the prior written consent of the City. F. Except with respect to a Permitted Transfer, Developer shall not 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 Property (referred to hereinafter as a "Transfer"), without prior written approval of the City Manager, except as expressly permitted by this Agreement. Any proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City to fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed transferee, by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City shall expressly assume all of the obligations of the Developer under this Agreement and agree to be subject to all conditions and restrictions applicable to the Developer in this Agreement. There shall be submitted to the City for review all instruments and other legal documents proposed to affect any such Transfer, and if approved by the City Manager, its approval shall be indicated to the Developer in writing. G. In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. H. Consent to any Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. Page 17 of 51 I. The provisions of this Section 204 shall be of no force or effect as of the expiration of the Regulatory Agreement. Section 205 Section 205 Consent to Assignment to Administrative _General Partner or Managing General Partner Upon Expiration of Tax Credit Compliance Period Associated with the Nine Percent Tax Credits. A. Pursuant to Section 8.19(a) of the Limited Partnership Agreement, Developer has granted to the Administrative General Partner an option to purchase the Property and Project during the period commencing on the fifteenth (15th) anniversary of the first day of the first taxable year of the applicable tax credit compliance period associated with the Nine Percent Tax Credits and ending one year thereafter(the "Option Period"). B. Pursuant to Section 8.19(b) of the Limited Partnership Agreement, Developer has granted to the Managing General Partner a right of first refusal to purchase the Property and Project during the Option Period. C. Subject to all of the following conditions precedent, the City consents to the conveyance of the Property and Project during the Option Period and the assignment of this Agreement and all associated legal and recordable documents referenced in this Agreement from Developer (i) to the Administrative General Partner pursuant to the option to purchase referenced above in Subsection A of this Section 205, or (ii) to the Managing General Partner pursuant to the right of first refusal to purchase referenced above in Subsection B of this Section 205: 1. There shall be no uncured event of default existing under this Agreement or any other document referenced in this Agreement or recorded against the subject Property; 2. Developer and the Administrative General Partner or the Managing General Partner, as the case may be, shall fully execute and deliver to the City an Assignment and Assumption Agreement in a form reasonably satisfactory to the City and that does not relieve Developer or any other party from their obligations under this Agreement; 3. Review and prior written approval (which shall not be unreasonably withheld or delayed) by the City and the City's legal counsel of all documents related to the conveyance of the Property and Project and the assignment of this Agreement and associated legal documents; and 4. Any documents in connection with the conveyance of the Property and Project from Developer to the Administrative General Partner or the Managing General Partner, as the case may be, are and shall remain junior and subordinate to the NSP Loan Documents, the HOME Loan Documents, Regulatory Agreement, and Environmental Indemnity. Page 19 of 51 ARTICLE 3. DEVELOPMENT OF THE SITE Section 301 Scope of Development The Property shall be developed in accordance with and within the limitations established in the Scope of Development and plans approved by the City pursuant to this Agreement and permits issued by the City. It is anticipated that Developer will contract for performance of specific activities, including but not limited to activities such as site inspections and management of the Units. Such contracts shall not in any way diminish or waive Developer's obligations under this Agreement. Section 302 Construction Drawings and Related Documents A. If construction drawings are required for City permitting purposes, Developer shall prepare and submit construction drawings and related documents for the development of the Property to the City for review (including, but not limited to, architectural review) and written approval at the times established in the Schedule of Performance. The construction drawings and related documents shall be submitted in two stages, preliminary and final drawings, plans and specifications. Final drawings, plans, and specifications are hereby defined as those in sufficient detail to obtain a building permit. Any items so submitted and approved in writing by the City shall not be subject to subsequent disapproval. City approval shall not be unreasonably withheld, conditioned or delayed. B. Progressively detailed plans shall be approved by the City if exterior spaces and areas open to public view do not vary and the plans otherwise do not materially vary from previously approved plans, and if they are a logical evolution of previously approved plans and conform to the provisions of the Scope of Development. In the event of the disapproval by the City of any plans submitted by Developer, City shall promptly communicate in writing to Developer all reasons for such disapproval and all requirements for subsequent approval of revised plans. C. During the preparation of all drawings and plans, the City staff and Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of construction plans and related documents by the City. The City staff and Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the City can receive prompt and speedy consideration. D. If any revisions or corrections of plans approved by the City shall be required by a governmental official, agency, department or bureau having jurisdiction over the development of the Property, Developer and the City shall cooperate in efforts to obtain waiver of such requirements or to develop a mutually acceptable alternative. Neither the City nor Developer shall unreasonably withhold approval of a mutually acceptable alternative. Section 303 City Approval of Plans,Drawings and Related Documents As provided in Section 302, the City shall have the right of reasonable review (including, but not limited to, architectural review) of all plans, drawings and related documents for the construction of the Property, including any proposed changes therein. The City Manager or designee shall approve or disapprove such plans, drawings, and related documents referred to in this Agreement Page 19 of 51 (and any proposed changes therein), in writing, within the times established in the Schedule of Performance. Any disapproval shall state, in writing, the reasons for disapproval. Developer, upon receipt of disapproval shall revise such portions of the plans, drawings or related documents in a manner that satisfactorily addresses the reasons for disapproval and resubmit such revised portions to the City as soon as possible after receipt of the notice of disapproval. The City shall approve or disapprove such revised portions in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings, and related documents initially submitted to the City. No matter once approved shall be subsequently disapproved. Section 304 Cost of Construction A. Except as otherwise expressly set forth in this Agreement, the cost of developing the Project shall be the responsibility of the Developer, as provided in the Method of Financing. The Project Costs are set forth in the Project Budget, which shall be subject to change from time- to-time as provided in the Method of Financing. B. The Developer has proposed, and the City has approved, the Project Budget appended to this Agreement. Developer acknowledges that the City is relying on Developer's experience and expertise in establishing the costs for the Project and Developer represents that the Project Budget is based on the best, good faith estimate of the Developer of the costs that are likely to be incurred for the Project. Section 305 Schedule of Performance A. Developer and City shall perform all acts respectively required of such party in this Agreement within the times provided in the Schedule of Performance. B. After the Construction Financing Event, Developer shall promptly begin and thereafter diligently prosecute to completion the construction of the Project as provided in the Scope of Development. Developer shall begin and complete all construction within the times specified in the Schedule of Performance, with such reasonable extensions of said times as may be granted by the City. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing by Developer and the City Manager. C. During periods of construction, Developer shall submit to the City a written report of the progress of the construction when and as requested by the City. The report shall be in such form and detail as may be reasonably required by the City and shall include a reasonable number of construction photographs (if requested) taken since the last report by Developer. Section 306 Local, State, and Federal Laws A. Developer hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Project on the Property, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, rules and regulations and all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). Developer hereby expressly acknowledges and agrees that the City has never previously affirmatively represented to the Developer or its contractor(s) for the Project in writing or otherwise, in a call for bids or Page 20 of 51 otherwise, that the work to be covered by the bid or contract is not a"public work," as defined in Section 1720 of the Labor Code. Developer hereby agrees that Developer shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. The Developer hereby agrees that the Developer shall have the obligation, at the Developer's sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer shall indemnify, protect, defend and hold harmless the City and its officers, employees, contractors and agents, with counsel reasonably acceptable to City, from and against any and all loss, liability, damage, claim, cost, expense, and/or"increased costs" (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Developer of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Developer to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the -same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Developer to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by the Developer to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Developer shall bear all risks of payment or non-payment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. "Increased costs" as used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after recordation of the Release of Construction Covenants. B. Developer shall be responsible for obtaining all Permits and land use approvals required by the City for the construction of the Property, ensuring that the use of the Property for the purposes described in this Agreement complies with the zoning and other City land use Page 21 of 51 regulations (including any applicable exemptions and/or exceptions) applicable to the Property at the time of Construction Financing Event. C. Prior to or concurrently with the Construction Financing Event, Developer shall satisfy all conditions to the issuance of any Permit required for the construction of the Property. The City shall provide reasonable assistance to Developer in obtaining these permits. D. This Housing Agreement is not a "Development Agreement" as provided in Section 65864 et sec. of the California Government Code. Developer shall comply with all applicable conditions of approval required by the City of Huntington Beach in its regulatory capacity. Section 307 Nondiscrimination During Construction Developer, for itself and its successors and assigns, agrees that during the construction of the Improvements provided for in the Agreement, Developer will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. Section 308 Insurance A. Developer shall procure and maintain, during the term of this Agreement, at its sole cost and expense, until the date that City waives any such insurance requirement or requirements in writing, the following policies of insurance on a Project specific basis: 1. Workers' Compensation Insurance. Pursuant to California Labor Code Section 1861, Developer acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation. Developer covenants that it will comply with such laws and provisions prior to commencing any work of construction or construction on the Property. To the extent Developer directly employs personnel at the Project, Developer shall maintain such Workers' Compensation Insurance in an amount not less than the statutory requirements in California for bodily injury and disease and must maintain employer's liability coverage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00). Developer shall require all contractors to provide such Workers' Compensation Insurance for all of the contractors' and subcontractors' employees. Developer shall furnish City with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Developer shall similarly require all contractors and subcontractors to waive subrogation. 2. General Liability and Auto Insurance. Developer shall carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual liability in an amount not less than TWO MILLION DOLLARS ($2,000,000.00) per occurrence and FOUR MILLION DOLLARS ($4,000,000.00) annual aggregate, combined single limit for bodily injury and property damage. All such insurance shall be provided by insurance companies admitted in California, or if not admitted in California, then reasonably acceptable to City. Such insurance shall name the City and its officers, agents, and employees acting in their official capacity, as additional insureds. Developer shall carry automobile insurance, including liability coverage for bodily injury and property damage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per Page 22 of 51 occurrence. Developer shall require its insurer to waive its subrogation rights against City and shall provide certificates of insurance evidencing same. 3. Property Insurance. Developer shall obtain and maintain in force, all- perils (to include fire and vandalism protection) property insurance with extended coverage endorsements thereon, on the Property, in an amount equal to the full replacement costs and/or value thereof, this policy shall contain a replacement cost endorsement naming City as the insured and shall not contain a coinsurance penalty provision. The policy shall contain a lender's loss payable endorsement that such proceeds shall be used to repair or rebuild any Units or other improvements situated on the Property so damaged or destroyed; and, if not so used, such proceeds shall be paid to City. The proceeds of any such insurance payable to City shall be used for rebuilding or repair as necessary to restore the site at the sole discretion of City. The policy shall name City and its, officers, agents and employees acting in their official capacity as additional insureds. 4. Certificate of Insurance• Additional Insured Endorsements. Prior to the Construction Financing Event, Developer shall furnish to City 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 City. 5. If Developer fails or refuses to procure or maintain insurance as required by this Agreement, City shall have the right, at City's election, and upon ten (10) days prior notice to Developer, to procure and maintain such insurance. The premiums paid by City shall be treated as a loan, due from Developer, to be paid on the first day of the month following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). Section 309 Indemnification During the term of this Agreement, Developer agrees to and shall protect, defend, indemnify and hold harmless the City and its members, officers, officials, employees, agents, representatives, servants, contractors, successors and assigns 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) Developer'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 to any person or to the property of any person which shall occur on the Property and which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the Developer or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Developer shall not be responsible for, and the City shall protect, defend, hold harmless and indemnify Developer 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 City or its members, officers, officials, employees, agents, representatives, servants, or contractors. Page 23 of 51 Section 310 Disclaimer of Responsibility by the City Except as otherwise expressly provided in this Agreement, the City neither undertakes nor assumes nor will have any responsibility, right or duty to Developer or to any third party to review, inspect, supervise, pass judgment upon or inform Developer or any third party of any matter in connection with the Property, whether with respect to the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished to the Project, any person furnishing the same or otherwise. Developer and all third parties shall rely upon its or their own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to Developer or to any third party by the City in connection with such matter is for the public purpose of providing affordable housing, and neither Developer (except for the purposes set forth in this Agreement) nor any third party is entitled to rely thereon. Section 311 Rights of Access The City shall have the right, at its sole risk and expense, to enter the Property or any part thereof at reasonable times and with as little interference as possible, for the purpose of inspecting the Property to determine Developer's compliance with this Agreement. All residential leases shall provide for such right of the City. The representatives of the City entering the Property shall be identified in writing in advance by the City Manager (or his or her designee). Any such entry shall be made only after reasonable notice to Developer, and the City shall indemnify,and hold Developer harmless from any claims or liabilities pertaining to such entry. Any damage or injury to the Property resulting from such entry shall be promptly repaired at the sole expense of the City. Section 312 Taxes, Assessments, Encumbrances and Liens Subject to Developer's right to claim any exemption to which it may be entitled under State law, Developer shall be responsible for paying when due all real estate taxes and assessments, if any, assessed and levied on or against the Property or any portion thereof or interest therein. Developer shall not place, or allow to be placed, on the Property or any portion thereof or interest therein, any mortgage, trust deed, encumbrance (excluding easements not unreasonably interfering with the use of the Property) or lien (excluding mechanic's liens paid prior to foreclosure or liens for current year property taxes not paid) except the Permitted Transfers. Developer shall remove, or shall have removed, any levy or attachment made on the Property (or any portion thereof or interest therein), or shall assure the satisfaction thereof within a reasonable time but in any event prior to foreclosure. Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amount of any tax, assessment, encumbrance or lien, nor to limit the remedies available to Developer in respect thereto. The covenants of Developer set forth in this Section 312 relating to the placement of any unauthorized mortgage, trust deed, encumbrance or lien, shall remain in effect until issuance of the Release of Construction Covenants. Section 313 Security Financing; Right of Holders A. Permitted Encumbrances. Developer shall be permitted to enter into mortgages, deeds of trust, conveyances, and leases-back or any other form of conveyance in which the Property is used as security for the purpose of securing loans of funds to be used for Page 24 of 51 the implementation of the Project 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 Developer's obligations under this Agreement, including without limitation a pension fund, insurance company, or real estate investment trust. Any and all such loan amounts and security conveyances shall be subject to the prior approval of the City Manager, which approval shall not be unreasonably withheld. B. Notice of Default to Mortgage Deed of Trust or Other Security Interest Holders; Right to Cure. Whenever City shall deliver any notice or demand to Developer with respect to any breach by Developer in performance of this Agreement, it will endeavor at the same time to 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 City are concerned) have the right, at its option within thirty (30) 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 construction of the Property in accordance with this Agreement shall be entitled to a Release of Construction Covenants upon written request made to City. Section 314 Rights to Plans A. Subject to the rights of, and senior assignments to, the beneficiaries of the Senior Deed of Trust (the "Senior Beneficiaries"), all work product prepared pursuant to this Agreement, including (but not limited to), all Plans, construction documents,"soils tests and similar reports, Permits and other entitlements are hereby assigned to the City as security for Developer's obligations hereunder. In the event that this Agreement is terminated by the City following an uncured event of default, Developer shall, within ten (10) days of such termination, transmit all such work product to the City. B. To effectuate the assignment described in paragraph (a), concurrently with executing this Housing Agreement, Developer shall execute and deliver to the City an Assignment of Agreements substantially in the form attached to this Housing Agreement as Exhibit 13 in a form that is acceptable to the City Manager, granting to the City all of Developer's rights to: (1) the Plans prepared pursuant to this Agreement; (2) the contracts between Developer and its architect and between Developer and its general contractor; (3) all Permits relating to the Project; and all similar rights and property interests. Section 315 Hazardous Materials Developer, from and after the Construction Financing Event shall indemnify, defend, and hold harmless City 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 Property or (ii) contamination of the Property by a release of Hazardous Materials, except to the extent of the Indemnified Parties' gross negligence or willful misconduct. Developer, prior to the Construction Financing Event, shall provide to City a copy of any notices, orders, or reports concerning the presence of any Hazardous Materials on or Page 25 of 51 affecting the Property that is in Developer's possession. As a condition precedent to the Construction Financing Event, Developer shall execute and deliver to the City an Environmental Indemnity, substantially in the form of Exhibit 12 to this Agreement. Section 316 Release of Construction Covenants A. Promptly after Completion of the construction of the Project, as generally and specifically required by this Agreement and in particular the Scope of Development, the City shall furnish Developer with a Release of Construction Covenants in the form of Exhibit 15 to this Agreement, upon written request therefor by Developer. The City shall not unreasonably withhold such Release of Construction Covenants and such Release of Construction Covenants shall be issued so long as Developer has constructed the Project in accordance with this Agreement and the Plans approved by the City pursuant hereto. Such Release of Construction Covenants shall be, and shall so state, conclusive determination of satisfactory completion of all of the construction required by this Agreement. B. The Release of Construction Covenants shall be in such form as to permit it to be recorded in the Recorder's Office of Orange County. A Release of Construction Covenants for construction of less than the entire Project shall not be recorded. C. If the City refuses or fails to furnish a Release of Construction Covenants for the Property after written request from Developer, the City shall, within thirty (30) days of the written request, provide Developer with a written statement of the reasons the City refused or failed to furnish a Release of Construction Covenants. The statement shall also contain the City's opinion of the action Developer must take to obtain a Release of Construction Covenants. If the reason for such refusal is confined to the immediate availability of specific items or materials for landscaping, and/or minor items, the City will issue its Release of Construction Covenants upon the posting of a bond by Developer with the City in an amount representing the fair value of the work not yet completed. If the City shall have failed to provide such written statement within said 30-day period, Developer shall be deemed to have received the Release of Construction Covenants. D. Such Release of Construction Covenants shall not constitute evidence of compliance with, or satisfaction of any obligation of Developer to the beneficiary of, the Senior Deed of Trust. Such Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code. ARTICLE 4. USE OF THE PROPERTY Section 401 Uses Developer covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof or any interest therein) that Developer, its successors and assigns shall use the Property exclusively to provide affordable housing for Very Low Income Households. Developer further covenants and agrees, for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that for the period beginning on the Construction Financing Event and ending on the expiration date of the Regulatory Agreement, Developer and such successors shall not devote the Property to uses Page 26 of 51 inconsistent with the applicable zoning restrictions, this Agreement, and the Regulatory Agreement; provided that, in the event of any inconsistency, the provisions of the Regulatory Agreement shall prevail over this Agreement. Section 402 Manal4ement Plan; Annual Project Budget; Quarterly Reports A. Prior to the Construction Financing Event, Developer shall submit to the City Manager a Management Plan reasonably acceptable to the City Manager, describing the proposed plans for managing and operating the Property. The Management Plan shall include, without limitation, the use and access of the community room of the Project by residents and the Oak View neighborhood for community/educational purposes. In this regard, any modifications to the Management Plan relating to the use and access of the community room shall be subject to the prior written approval of the City Manager or designee, for the entire Restricted Period. B. Approval of the Management Plan by the City Manager or designee shall be a condition precedent to the Construction Financing Event. Developer shall manage and operate the Property in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Developer and the City Manager or designee, for the entire Restricted Period. C. In addition, the Developer shall submit on or before the first day of each fiscal year of the Restricted Period an estimated annual budget for management of the Property (the "Annual Project Budget") in accordance with the Management Plan. The Annual Project Budget shall include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies, prorated amount required for insurance and all other expenses incident to the operation of the Project; and shall show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Project Budget, including any amendments proposed by the Developer, shall be subject to the approval of the City Manager. D. Beginning on the date of first occupancy, and for each fiscal year thereafter of the Restricted Period, Developer shall also submit on a quarterly basis a quarterly report for the management of the Property (the "Quarterly Report"). The Quarterly Report shall include a profit and loss statement, budget to date figures, and occupancy report and shall clearly show project revenues, operating expenses, deposits to and withdrawals from the Project's Capital Reserve Account, and cash flow available for residual receipts payments. The Quarterly Report shall be in a form that is reasonably acceptable to the City Manager. The City Manager, in his/her sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver shall not operate to waive any subsequent requirement of the Quarterly Report for the Restricted Period. After receipt of such certified financial statements for the Project, City may request additional financial analyses or obtain a third party review at City's own expense, of financial statements for the Project to verify the accuracy of the payments by Developer on the HOME Note and the NSP Note or the required deposits into the Capital Reserve Account; provided, however that if such review reveals a substantial underpayment on the HOME Note and the NSP Note in the City's reasonable discretion, the Developer shall promptly reimburse the City for the reasonable cost of conducting the review. Page 27 of 51 Section 403 Maintenance of the Property A. Prior to the Construction Financing Event, the Developer shall prepare and submit to the City Manager or his designee for review and approval a program (the "Maintenance Program") for the exterior and interior maintenance of the Property and the Improvements. The City shall have the right at all reasonable times and upon 24 hours advance notice (except in the case of an emergency) to enter and inspect the Property in order to ensure compliance with the foregoing requirements. B. The Maintenance Program shall describe in reasonable detail the standards to be followed in maintaining the interior and exterior of the Improvements, including a schedule indicating the proposed frequency of each element of maintenance, and shall include, at a minimum, the following: periodic cleaning of the interior and exterior of the Improvements, including windows; removing graffiti; removing debris and waste materials and otherwise maintaining indoor and outdoor areas of the Property; maintaining any lawns, plants, shrubs and trees or other landscaping planted on the Property; performing inspections of all exterior features to determine whether repairs are required; conducting periodic protective treatments such as rust removal and caulking; conducting repairs to facades, roof, doors, windows and other exterior features; maintaining fencing and other security devices and systems; periodic repainting of the exterior; periodic repainting of the interior units and common areas; periodic replacing of the interior unit carpets; checking building systems, including, but not limited to the heating and cooling systems, smoke alarms and water heaters; checking interior unit appliances; and monitoring interior unit bathrooms for mold/mildew. The Maintenance Program, including any amendments proposed by the Developer, shall be subject to the approval of the City Manager. C. At all times during the Restricted Period, the Developer shall maintain the Property and the Improvements in accordance with the approved Maintenance Program and in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws and codes. To implement this requirement, Developer agrees to budget sufficient funds to pay for all reasonably anticipated costs (as indicated in the Annual Maintenance Budget). In the event Developer fails to maintain the Property as required by this Section, Developer shall, within thirty (30) days after City's notification or Developer's own discovery of any deficiency, take all necessary steps to correct such deficiency, provided that, if such deficiency is not reasonably capable of being cured within thirty (30) days, Developer shall commence to cure said deficiency within thirty (30) days and diligently and in good faith continue to take all necessary steps to correct such deficiency. In the event the Developer fails to cure said deficiency within the time allowed, the City shall have the right, but not the obligation, to enter the Property, correct any violation, and hold the Developer responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the Property. Section 404 Lead-Based Paint. Developer shall ensure that it and its contractors and subcontractors shall not use lead- based paint in the construction or maintenance of the Project. Developer shall insert this provision in all contracts and subcontracts for work performed on the Project which involves the application of paint. Page 28 of 51 Section 405 Barriers to the Disabled Developer shall ensure that the Project will be constructed and operated to comply with all federal, state, and local requirements for access for disabled persons that apply to the construction of new multi-family rental units. Section 406 Creation of Capital Reserve Account Concurrently with the Permanent Financing Event, Developer shall create a "Capital Reserve Account" in the initial amount shown on the Project Budget. No later than thirty (30) days after the Capital Reserve Account has been created, Developer shall provide to City a pro forma statement concerning the account, for review and approval. At any time thereafter during the term of this Agreement, City, on ten (10) days prior written notice to Developer, may request that Developer submit to it an updated, revised Capital Reserve Account statement. City, at its own expense, may audit any updated, revised Capital Reserve Account statement submitted to it by Developer; provided that, if such audit reveals a substantial underfunding of the Capital Reserve Account, Developer shall promptly reimburse the City for the cost of conducting the audit. Section 407 Capital Reserves. Beginning at the Permanent Financing Event and every succeeding year during the Restricted Period, Developer shall deposit the amount set forth in the definition of Operating Expenses in the Method of Financing into the Capital Reserve Account for repairs to the Property. The Capital Reserve Account shall only be used to fund the cost of repairs and improvements to the Property and to maintain the Property in compliance with the requirements of Section 403. Developer shall exhaust funds in the Capital Reserve Account prior to utilizing operating revenues to pay for repairs and improvements to the Property. Interest earned on the Capital Reserve Account shall remain in said account and be used as Capital Reserves. Upon repayment in full of the HOME Loan and the NSP Loan and to the extent the Capital Reserve Account is not required by another lender, the Developer may request the City's approval for the release of those funds, with such approval not to be unreasonably withheld. At the expiration of the Restricted Period, the City's approval of the release of the Capital Reserves shall no longer be required. Section 408 Obligation to Refrain from Discrimination There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class, source of income, religion, sex, sexual orientation, gender identity, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, or in the awarding of contracts for the Project, nor shall Developer, 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 Property, or any part thereof, or in the awarding of contracts for the Project. Developer shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Developer shall conduct affirmative marketing and minority outreach activities if and as required by Federal regulations. Page 29 of 51 Section 409 Effectiveness and Duration of Covenants The covenants established in this Agreement shall, without regard to technical classification and designation, be binding on Developer and any successor in interest to the Property or any part thereof or interest therein for the benefit and in favor of the City of Huntington Beach. Every covenant and condition and restriction contained in the Regulatory Agreement shall remain in effect for sixty (60) years from the Effective Date of the Regulatory Agreement (regardless of whether the HOME Loan or the NSP Loan have been repaid prior to the end of such 60-year period), except that the covenants against discrimination set forth in the Regulatory Agreement and in Section 408 and Section 711 hereof shall remain in effect in perpetuity. Section 410 Effect of Violation of Covenants The City is deemed beneficiary of the terms and provisions of this Agreement and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. The shall have the right if the covenants contained in this Agreement are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants are entitled. ARTICLE 5. DEFAULTS,REMEDIES AND TERMINATION Section 501 Defaults; Notice of Cure; Cure Rights A. Subject to Force Majeure Delay, as such term is defined in this Agreement, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who fails or delays must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. B. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. Except as otherwise expressly provided in this Agreement, any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. C. If a monetary event of default occurs, prior to exercising any remedies hereunder, the injured party shall give the party in default written notice of such default. The party in default shall have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by the injured party. D. If a non-monetary event of default occurs, prior to exercising any remedies hereunder, the injured party shall give the party in default notice of such default. If the default is Page 30 of 51 reasonably capable of being cured within thirty (30) days, the party in default shall have such period to effect a cure prior to exercise of remedies by the injured party. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the party in default (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then the party in default shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured party. If Developer fails to take corrective action or cure the default within-a reasonable time, the City shall give Developer and, as provided in paragraph (e), below, the Investor Limited Partner, notice thereof, whereupon the Investor Limited Partner may remove and replace the general partner with a substitute general partner, who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. The City agrees to accept cures tendered by the Investor Limited Partner within the cure periods provided in this Agreement or within the time periods provided in Civil Code Section 2924c, whichever is longer. Additionally, in the event the Investor Limited Partner is precluded from curing a non-monetary default due to an inability to remove the General Partner as a result of a bankruptcy, injunction, or similar proceeding by or against Developer or its General Partner, the City agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which the Investor Limited Partner is so precluded from acting, not to exceed 90 days, provided such limited partner is otherwise in compliance with the foregoing provisions. In no event shall the injured party be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety (90) days after the first notice of default is given. , E. After Developer gives written notice to City that the Investor Limited Partner has been admitted to the Developer and City shall send to the Investor Limited Partner a copy of all notices of default and all other notices that City sends to Developer, at the address for the Investor Limited Partner as provided by written notice to City by Developer. Section 502 Institution of Legal Actions Subject to the notice and cure provisions of Section 501 and the limited recourse provisions of Section 509, in addition to any other rights or remedies (and except as otherwise provided in this Agreement), either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California. Section 503 Applicable Law The internal laws of the State of California, without reference to the principles relating to conflicts of laws, shall govern the interpretation and enforcement of this Agreement. Section 504 Acceptance of Service of Process A. In the event that any legal action is commenced by the City against the Developer, service of process on the Developer shall be made by personal service upon the Developer (or upon an officer of the Developer) and shall be valid whether made within or without the State of California, or in such manner as may be provided by law, Page 31 of 51 B. In the event that any legal action is commenced by the Developer against the City, service of process on the City shall be made by personal service upon the City Manager or the City Clerk or in such other manner as may be provided by law. Section 505 RilZhts and Remedies Are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such 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 the other party. Section 506 Specific Performance If either party defaults with regard to any of the provisions of this Agreement, subject to the notice and cure provisions of Section 501, the non-defaulting party, at its option, may, after such notice and opportunity to cure (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default. Section 507 'termination by City Notwithstanding anything in this Agreement to the contrary, the City shall have the right to terminate this Agreement, in its sole discretion and without further notice to Developer and without requirement of the expiration of any cure period, in the event that, subject to Force Majeure Delay; the Construction Financing Event fails to occur within the time specified in the Schedule of Performance. Section 508 'termination by Any Party Prior to the Construction Financing Event, any party shall have the right to terminate this Agreement in the event any other party is in default of any material term or provision of this Agreement, and, following notice, fails to cure such default within the time provided in Section 501. Section 509 Limited Recourse Obligations Each obligation of the Developer under this Agreement is a nonrecourse obligation of the Developer and its partners. Except as provided otherwise in this Agreement, neither the Developer nor any of its general or limited partners, nor any other party, shall have any personal liability for payment of Developer's obligations to the City. The sole recourse of the City shall be the exercise of its rights against the Property and the improvements thereon and any related security for the HOME Loan and the NSP Loan. Provided, however, that the foregoing shall not (a) constitute a waiver of any obligation evidenced by this Agreement; (b) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any remedy prescribed by law or in equity in case of default, other than repayment of the HOME Loan and the NSP Loan; or (c) relieve Developer of any of its obligations under any indemnity delivered by Developer to the City. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Developer and its successors and assigns shall have personal liability hereunder for any deficiency judgment, but only if and to the extent Developer, its principals, Page 32 of 51 shareholders, partners or its successors and assigns received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Developer in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the foregoing, the City may obtain a judgment or order (including, without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the HOME Loan and the NSP Loan; may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and may recover directly from any Person: 1. any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Developer or any member, partner, shareholder, officer, director, agent or employee of (a) Developer or (b) any of Developer's members or general partners or (c) any member or partner of any of Developer's members or general partners; 2. any damages, costs and expenses incurred by City as a result of any misappropriation of funds provided for the construction of the Project, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; 3. any and all amounts owing by Developer pursuant to Developer's indemnification regarding Hazardous Substances; and 4. all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. Section 510 Developer's Remedies. Subject to any applicable cure periods and the right to notice provided for in this Agreement, upon a default or breach of this Agreement by City, Developer may bring an action for specific performance of this Agreement or any term or provision hereof, or, if prior to the Construction Financing Event, may terminate this Agreement. Developer cannot sue for monetary damages and hereby fully and finally releases City from any claims for monetary damages arising directly or indirectly from City's breach of its obligations under this Agreement. Section 511 Attorney's Fees Except as otherwise expressly provided in this Agreement, in the event that any action, suit or other proceeding is brought to enforce the obligations of any party under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. Page 33 of 51 ARTICLE 6. NSP PROVISIONS Section 601 National Obiectives All activities funded with CDGB funds must meet one of the CDBG program's National Objectives: benefit low- and moderate-income persons; aid in the prevention or elimination of slums or blight; or meet community development needs having a particular urgency, as defined in 24 CFR 570.208. The Developer certifies that the activities carried out under this Agreement will benefit low-income persons by providing affordable housing. Section 602 General Compliance The Developer agrees to comply with the requirements of Title 24 of the Code of Federal Regulations, Part 570 (the U.S. Housing and Urban Development regulations concerning Community Development Block Grants (CDBG)) including subpart K of these regulations, except that(1)the Developer does not assume the City's environmental responsibilities described in 24 CFR 570.604 and (2) the Developer does not assume the City's responsibility for initiating the review process under the provisions of 24 CFR Part 52. The Developer also agrees to comply with all other applicable Federal, state and local laws, regulations, and policies governing the NSP funds provided under this contract. The Developer further agrees to utilize funds available under this Agreement to supplement rather than supplant funds otherwise available. Section 603 No Employer/Employee Relationship Nothing contained in this Agreement is intended to, or shall be construed in any manner, as creating or establishing the relationship of employer/employee between the parties. The City shall be exempt from payment of all Unemployment Compensation, FICA, retirement, life and/or medical insurance and Workers' Compensation Insurance. Section 604 Insurance & Bonding The Developer shall comply with the applicable bonding and insurance requirements of 24 CFR 84.31 and 84.48, Bonding and Insurance. Section 605 City Recognition The Developer shall insure recognition of the role of the City in providing the housing to be developed through this Agreement. All activities, facilities and items utilized pursuant to this Agreement shall be prominently labeled as to funding source. In addition, the Developer will include a reference to the support provided herein in all publications made possible with funds made available under this Agreement. Section 606 Amendments A. The City or Developer may amend this Agreement at any time provided that such amendments make specific reference to this Agreement, and are executed in writing, signed by a duly authorized representative of each organization, and approved by the City's governing body. Such amendments shall not invalidate this Agreement, nor relieve or release the City or Developer from its obligations under this Agreement. B. The City may, in its reasonable discretion, amend this Agreement to conform with Federal, state or local governmental guidelines, policies and available funding amounts. If such Page 34 of 51 amendments result in a material change to the Agreement, including a change in the funding, the scope of services, or schedule of the activities to be undertaken as part of this Agreement, such modifications will be incorporated only by written amendment signed by both City and Developer. Section 607 Suspension or Termination In accordance with 24 CFR 85.43 and subject to the right of notice and expiration of applicable cure periods set forth herein, the City may suspend or terminate this Agreement if the Developer materially fails to comply with any terms of this Agreement, which include (but are not limited to) the following: A. Failure to comply with any of the rules, regulations or provisions referred to herein, or such statutes, regulations, executive orders, and HUD guidelines, policies or directives as may become applicable at any time; B. Failure, for any reason, of the Developer to fulfill in a timely and proper manner its obligations under this Agreement; C. Ineffective or improper use of funds provided under this Agreement; or D. Submission by the Developer to the City reports that are incorrect or incomplete in any material respect. ARTICLE 7. ADMINISTRATIVE REQUIREMENTS Section 701 Financial Management A. Accounting Standards The Developer agrees to comply with 24 CFR 84.21-28 and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred. B. Cost Principles The Developer shall administer its program in conformance with OMB Circulars A-122, "Cost Principles for Non-Profit Organizations," or A-21, "Cost Principles for Educational Institutions," as applicable. These principles shall be applied for all costs incurred whether charged on a direct or indirect basis. Section 702 Documentation and Record Keeping A. Records to be Maintained The Developer shall maintain all records required by the Federal regulations specified in 24 CFR 570.506, that are pertinent to the activities to be funded under this Agreement. Such records shall include but not be limited to: Page 35 of 51 1. Records providing a full description of each activity undertaken. 2. Records demonstrating that each activity undertaken meets one of the National Objectives of the CDBG program; 3. Records required to determine the eligibility of activities; 4. Records required to document the acquisition, improvement, use or disposition of real property acquired or improved with CDBG assistance; 5. Records documenting compliance with the fair housing and equal opportunity components of the CDBG program; 6. Financial records as required by 24 CFR 570.502, and 24 CFR 84.2128; and 7. Other records necessary to document compliance with Subpart K of 24 CFR Part 570. Section 703 Retention The Developer shall retain all financial records, supporting documents, statistical records, and all other records pertinent to the Agreement for a period of four (4) years. The retention period begins on the date of the submission of the City's annual performance and evaluation report to HUD in which the activities assisted under the Agreement are reported on for the final time. Notwithstanding the above, if there is litigation, claims, audits, negotiations or other actions that involve any of the records cited and that have started before the expiration of the four-year period, then such records must be retained until completion of the actions and resolution of all issues, or the expiration of the four-year period, whichever occurs later. Section 704 Client Data The Developer shall maintain client data demonstrating client eligibility for services provided. Such data shall include, but not be limited to, client name, address, income level or other basis for determining eligibility, and description of service provided. Such information shall be made available to City monitors or their designees for review upon request. Section 705 Disclosure The Developer understands that client information collected under this contract is private and the use or disclosure of such information, when not directly connected with the administration of the City's or Developer's responsibilities with respect to services provided under this contract, is prohibited unless written consent is obtained from such person receiving service and, in the case of a minor, that of a responsible parent/guardian. Section 706 Closeouts The Developer's obligation to the City shall not end until all close-out requirements are completed. Activities during this close-out period may include, but are not limited to: making final payments, disposing of program assets (including the return of all unused materials, equipment, unspent cash advances, program income balances, and accounts receivable to the Page 36of51 City), and determining the custodianship of records. Notwithstanding the foregoing, the terms of this Agreement shall remain in effect during any period that the Developer has control over NSP funds, including program income. Section 707 Audits & Inspections All Developer records with respect to any matters covered by this Agreement shall be made available to the City, the California Department of Housing and Community Development, and the Comptroller General of the United States or any of their authorized representatives, at any time during normal business hours, as often as deemed necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports must be fully cleared by the Developer within 30 days after receipt by the Developer. Failure of the Developer to comply with the above audit requirements will constitute a violation of this contract and may result in the withholding of future payments. The Developer hereby agrees to have an annual agency audit conducted in accordance with current City policy concerning subrecipient audits and OMB Circular A-133. Section 708 ReportinLy and Payment Procedures A. Program Income The Developer shall report annually all program income (as defined at 24 CFR 570.500(a)) generated by activities carried out with CDBG funds made available under this contract. The use of program income by the Developer shall comply with the requirements set forth at 24 CFR 570.504. By way of further limitations, the Developer may use such income during the contract period for activities permitted under this contract and shall reduce requests for additional funds by the amount of any such program income balances on hand. All unexpended program income shall be returned to the City at the end of the contract period. Any interest earned on cash advances from the U.S. Treasury and from funds held in a revolving fund account is not program income and shall be remitted promptly to the City. B. Indirect Costs If indirect costs are charged, the Developer will develop an indirect cost allocation plan for determining the appropriate Developer's share of administrative costs and shall submit such plan to the City for approval, in a form specified by the City. C. Payment Procedures The City will pay to the Developer funds available under this Agreement based upon information submitted by the Developer and consistent with any approved budget and City policy concerning payments. With the exception of certain advances, payments will be made for eligible expenses actually incurred by the Developer, and not to exceed actual cash requirements. Payments will be adjusted by the City in accordance with advance fund and program income balances available in Developer accounts. In addition, the City reserves the right to liquidate funds available under this contract for costs incurred by the City on behalf of the Developer. Page 37 of 51 m D. Progress Reports r The Developer shall submit regular Progress Reports to the City in the form, content, and frequency as required by the City. E. Procurement 1. Compliance The Developer shall comply with current City policy concerning the purchase of equipment and shall maintain inventory records of all non-expendable personal property as defined by such policy as may be procured with funds provided herein. All program assets (unexpended program income, property, equipment, etc.) shall revert to the City upon termination of this Agreement. 2. OMB Standards Unless specified otherwise within this agreement, the Developer shall procure all materials, property, or services in accordance with the requirements of 24 CFR 84.4048. 3. Travel The Developer shall obtain written approval from the City for any travel outside the metropolitan area with funds provided under this Agreement. Section 709 Use and Reversion of Assets The use and disposition of real property and equipment under this Agreement shall be in compliance with the requirements of 24 CFR Part 84 and 24 CFR 570.502, 570.503, and 570.504, as applicable, which include but are not limited to the following: A. The Developer shall transfer to the City any CDBG funds on hand and any accounts receivable attributable to the use of funds under this Agreement at the time of expiration, cancellation, or termination of this Agreement. B. Affordability Agreement. Real property under the Developer's control that was acquired or improved, in whole or in part, with funds under this Agreement in excess of$25,000 shall be used to meet one of the CDBG National Objectives pursuant to 24 CFR 570.208 until sixty (60) years after the recordation of the Release of Construction Covenants for the Project. If the Developer fails to use CDBG-assisted real property in a manner that meets a CDBG National Objective for the prescribed period of time, the Developer shall pay the City an amount equal to the current fair market value of the property less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of, or improvement to, the property. Such payment shall constitute program income to the City. The Developer may retain real property acquired or improved under this Agreement after the expiration of the sixty-year period. C. In all cases in which equipment acquired, in whole or in part, with funds under this Agreement is sold, the proceeds shall be program income (prorated to reflect the extent to Page 38 of 51 that funds received under this Agreement were used to acquire the equipment). Equipment not needed by the Developer for activities under this Agreement shall be (a) transferred to the City for the CDBG program or (b) retained after compensating the City an amount equal to the current fair market value of the equipment less the percentage of non-CDBG funds used to acquire the equipment. Section 710 Relocation, Real Property Acquisition And One-For-One Housin Replacement The Developer agrees to comply with (a) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA), and implementing regulations at 49 CFR Part 24 and 24 CFR 570.606(b); (b) the requirements of 24 CFR 570.606(c) governing the Residential Anti-displacement and Relocation Assistance Plan under section 104(d) of the HCD Act; and (c) the requirements in 24 CFR 570.606(d) governing optional relocation policies. The Developer shall provide relocation assistance to displaced persons as defined by 24 CFR 570.606(b)(2) that are displaced as a direct result of acquisition, construction, demolition or conversion for a CDBG-assisted project. The Developer also agrees to comply with applicable City ordinances, resolutions and policies concerning the displacement of persons from their residences. Section 711 Personnel & Participant Conditions A. Civil Rights I. Compliance The Developer agrees to comply with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b) and Section 109 of Title I of the Housing and Community Development Act of 1974 as amended, Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 as amended by Executive Orders 11375, 11478, 12107 and 12086. 2. Nondiscrimination The Developer agrees to comply with the non-discrimination in employment and contracting opportunities laws, regulations, and executive orders referenced in 24 CFR 570.607, as revised by Executive Order 13279. 3. Land Covenants This contract is subject to the requirements of Title VI of the Civil Rights Act of 1964 (P. L. 88-352) and 24 CFR 570.601 and 570.602. In regard to the sale, lease, or other transfer of land acquired, cleared or improved with assistance provided under this contract, the Developer shall cause or require a covenant running with the land to be inserted in the deed or lease for such transfer, prohibiting discrimination as herein defined, in the sale, lease or rental, or in the use or occupancy of such land, or in any improvements erected or to be erected thereon, providing that the City and the United States are beneficiaries of and entitled lo enforce such covenants. The Page 39 of 51 Developer, in undertaking its obligation to carry out the program assisted hereunder, agrees to take such measures as are necessary to enforce such covenant, and will not itself so discriminate. ° 4. Section 504 Requirements The Developer agrees to comply with all Federal regulations issued pursuant to compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), which prohibits discrimination against the individuals with disabilities or handicaps in any Federally assisted program. The City shall provide the Developer with any guidelines necessary for compliance with that portion of the regulations in force during the term of this Agreement. Section 712 Affirmative Action A. Approved Plan The Developer agrees that it shall be committed to carry out pursuant to the City's specifications an Affirmative Action Program in keeping with the principles as provided in President's Executive Order 11246 of September 24, 1966. The City shall provide Affirmative Action guidelines to the Developer to assist in the formulation of such program. The Developer shall submit a plan for an Affirmative Action Program for approval prior to the award of funds. B. Women- and Minority-Owned Businesses (W/MBE) The Developer will use its best efforts to afford small businesses, minority business enterprises, and women's business enterprises the maximum practicable opportunity to participate in the performance of this contract. As used in this contract, the terms "small business" means a business that meets the criteria set forth in section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and "minority and women's business enterprise" means a business at least fifty-one (51) percent owned and controlled by minority group members or women. For the purpose of this definition, "minority group members" are Afro-Americans, Spanish-speaking, Spanish surnamed or Spanish-heritage Americans, Asian-Americans, and American Indians. The Developer may rely on written representations by businesses regarding their status as minority and female business enterprises in lieu of an independent investigation. C. Access to Records The Developer shall furnish and cause each of its own contractors or subcontractors to furnish all information and reports required hereunder and will permit access to its books, records and accounts by the City, HUD or its agent, or other authorized Federal officials for purposes of investigation to ascertain compliance with the rules, regulations and provisions stated herein. D. Notifications The Developer will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or worker's representative of the Page 40 of 51 Developer's commitments hereunder, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. E. Equal Employment Opportunity and Affirmative Action(EEO/AA) Statement The Developer will, in all solicitations or advertisements for employees placed by or on behalf of the Developer, state that it is an Equal Opportunity or Affirmative Action employer. Developer shall comply with all State of California requirements regarding equal opportunity. F. Subcontract Provisions The Developer will include the provisions of Sections 10.1, Civil Rights, and 10.2, Affirmative Action, in every subcontract or purchase order, specifically or by reference, so that such provisions will be binding upon each of its contractors or subcontractors. Section 713 Employment Restrictions A. Prohibited Activity The Developer is prohibited from using funds provided herein or personnel employed in the administration of the program for: political activities; inherently religious activities; lobbying; political patronage; and nepotism activities. B. Labor Standards The Developer agrees to comply with the requirements of the Secretary of Labor in accordance with the Davis-Bacon Act as amended, the provisions of Contract Work Hours and Safety Standards Act (40 U.S.C. 327 et seq.) and all other applicable Federal, state and local laws and regulations pertaining to labor standards insofar as those acts apply to the performance of this Agreement. The Developer agrees to comply with the Copeland Anti-Kick Back Act (18 U.S.C. 874 et seq.) and its implementing regulations of the U.S. Department of Labor at 29 CFR Part 5. The Developer shall maintain documentation that demonstrates compliance with hour and wage requirements of this part. Such documentation shall be made available to the City for review upon request. The Developer agrees that, except with respect to the construction or construction of residential property containing less than eight (8) units, all contractors engaged under contracts in excess of$2,000.00 for construction, renovation or repair work financed in whole or in part with assistance provided under this contract, shall comply with Federal requirements adopted by the City pertaining to such contracts and with the applicable requirements of the regulations of the Department of Labor, under 29 CFR Parts 1, 3, 5 and 7 governing the payment of wages and ratio of apprentices and trainees to journey workers; provided that, if wage rates higher than those required under the regulations are imposed by state or local law, nothing hereunder is intended to relieve the Developer of its obligation, if any, to require payment of the higher wage. The Developer shall cause or require to be inserted in full, in all such contracts subject to such regulations,provisions meeting the requirements of this paragraph. Page 41 of 51 C. "Section 3" Clause 1. Compliance: Compliance with the provisions of Section 3 of the HUD Act of 1968, as amended, and as implemented by the regulations set forth in 24 CFR 135, and all applicable rules and orders issued hereunder prior to the execution of this contract, shall be a condition of the Federal financial assistance provided under this contract and binding upon the City, the Developer and any of the Developer's contractors and subcontractors. Failure to fulfill these requirements shall subject the City, the Developer and any of the Developer's contractors and subcontractors, their successors and assigns, to those sanctions specified by the Agreement through which Federal assistance is provided. The Developer certifies and agrees that no contractual or other disability exists that would prevent compliance with these requirements. The Developer further agrees to comply with these "Section 3" requirements and to include the following language in all subcontracts executed under this Agreement: "The work to be performed under this Agreement is a project assisted under a program providing direct Federal financial assistance from HUD and is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701). Section 3 requires that to the greatest extent feasible opportunities for training and employment be given to low- and very low-income residents of the project area, and that contracts for work in connection with the project be awarded to business concerns that provide economic opportunities for low- and very low-income persons residing in the metropolitan area in which the project is located." The Developer further agrees to ensure that opportunities for training and employment arising in connection with a housing construction (including reduction and abatement of lead- based paint hazards), housing construction, or other public construction project are given to low- and very low-income persons residing within the metropolitan area in which the CDBG-funded project is located; where feasible, priority should be given to low- and very low-income persons within the service area of the project or the neighborhood in which the project is located, and to low- and very low-income participants in other HUD programs; and award contracts for work undertaken in connection with a housing construction (including reduction and abatement of lead-based paint hazards), housing construction, or other public construction project to business concerns that provide economic opportunities for low- and very low-income persons residing within the metropolitan area in which the CDBG-funded project is located; where feasible, priority should be given to business concerns that provide economic opportunities to low- and very low-income residents within the service area or the neighborhood in which the project is located, and to low- and very low-income participants in other HUD programs. The Developer certifies and agrees that no contractual or other legal incapacity exists that would prevent compliance with these requirements. Page 42 of 51 2. Notifications: The Developer agrees to send to each labor organization or representative of workers with which it has a collective bargaining agreement or other contract or understanding, if any, a notice advising said labor organization or worker's representative of its commitments under this Section 3 clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment or training. 3. Contracts: The Developer will include this Section 3 clause in every contract and will take appropriate action pursuant to the contract upon a finding that the contractor is in violation of regulations issued by the grantor agency. The Developer will not contract with any entity where it has notice or knowledge that the latter has been found in violation of regulations under 24 CFR Part 135 and will not let any contract unless the entity has first provided it with a preliminary statement of ability to comply with the requirements of these regulations. Section 714 Conduct A. Assignability The Developer shall not assign or transfer any interest in this Agreement without the prior written consent of the City in accordance with the procedures set forth in Section 2.5 of this Agreement. B. Contracts (1) Approvals: The Developer shall not enter into any contracts with any agency or individual in the performance of this Agreement without the written consent of the City prior to the execution of such agreement. (2) Monitoring: The Developer will monitor all contracted services on a regular basis to assure contract compliance. Results of monitoring efforts shall be summarized in written reports and supported with documented evidence of follow-up actions taken to correct areas of noncompliance. (3) Content: The Developer shall cause all of the provisions of this contract in its entirety to be included in and made a part of any contract executed in the performance of this Agreement. (4) Selection Process: The Developer shall undertake to insure that all contracts in the performance of this Agreement shall be awarded on a fair and open competition basis in accordance with applicable procurement requirements. Executed copies of all contracts shall be forwarded to the City along with documentation concerning the selection process. Page 43 of 51 C. Hatch Act The Developer agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the U.S.C. D. Conflict of Interest The Developer agrees to abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following: (1) The Developer shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds. (2) No employee, officer or agent of the Developer shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. (3) No covered persons who exercise or have exercised any functions or responsibilities with respect to CDBG-assisted activities, or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the CDBG-assisted activity, or with respect to the proceeds from the CDBG-assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a "covered person" includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the City, the Developer, or any designated public agency. E. Lobbying The Developer hereby certifies that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative Page 44 of 51 agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and (3) It will require that the language of paragraph (d) of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all Developers shall certify and disclose accordingly: (4) Lobbying Certification This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. F. Copyright If this contract results in any copyrightable material or inventions, the City and/or grantor agency reserves the right to royalty-free, non-exclusive and irrevocable license to reproduce, publish or otherwise use and to authorize others to use, the work or materials for governmental purposes. G. Religious Activities The Developer agrees that funds provided under this Agreement will not be utilized for inherently religious activities prohibited by 24 CFR 570.2000), such as worship, religious instruction, or proselytization. ARTICLE 8. ENVIRONMENTAL. CONDITIONS Section 801 Air and Water The Developer agrees to comply with the following requirements insofar as they apply to the performance of this Agreement: A. Clean Air Act, 42 U.S.C. , 7401, et seq.; B. Federal Water Pollution Control Act, as amended, 33 U.S.C., 1251, et seq., as amended, 1318 relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in said Section 114 and Section 308, and all regulations and guidelines issued thereunder; C. Environmental Protection City (EPA) regulations pursuant to 40 CFR Part 50, as amended. Page 45 of 51 Section 802 Flood Disaster Protection In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), the Developer shall assure that for activities located in an area identified by the Federal Emergency Management City (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including construction). Section 803 Lead-Based Paint The Developer agrees that any construction or construction of residential structures with assistance provided under this Agreement shall be subject to HUD Lead-Based Paint Regulations at 24 CFR 570.608, and 24 CFR Part 35, Subpart B. Such regulations pertain to all CDBG- assisted housing and require that all owners, prospective owners, and tenants of properties constructed prior to 1978 be properly notified that such properties may include lead-based paint. Such notification shall point out the hazards of lead-based paint and explain the symptoms, treatment and precautions that should be taken when dealing with lead-based paint poisoning and the advisability and availability of blood lead level screening for children under seven. The notice should also point out that if lead-based paint is found on the property, abatement measures may be undertaken. The regulations further require that, depending on the amount of Federal funds applied to a property, paint testing, risk assessment, treatment and/or abatement may be conducted. Section 804 historic Preservation The Developer agrees to comply with the Historic Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set forth in 36 CFR Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic Properties, insofar as they apply to the performance of this agreement. In general, this requires concurrence from the State Historic Preservation Officer for all construction and demolition of historic properties that are fifty years old or older or that are included on a Federal, state, or local historic property list. ARTICLE 9. GENERAL PROVISIONS Section 901 Developer's Warranties Developer represents and warrants (1) that it has access to professional advice and support to the extent necessary to enable Developer to fully comply with the terms of this Agreement; (2) that it is duly organized, validly existing and in good standing under the laws of the State of California; (3) that it has the full power and authority to undertake the Project and to execute this Agreement; (4) that the persons executing and delivering this Agreement are authorized to execute and deliver such documents on behalf of Developer; (5) except as disclosed to the City in writing, there are no actions or proceedings pending or, to the best of the Developer's knowledge, threatened against the Developer before any court or administrative agency in any way connected with the Property or the Project which could adversely affect the Developer's ability to perform the activities contemplated hereunder; (6) neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or Page 46 of 51 instrument to which the Developer is a party or which affects the Project or any part thereof; (7) the Developer is not in default in respect of any of its obligations or liabilities pertaining to this Agreement, nor is there any state of facts or circumstances or conditions or events which, after notice, lapse of time, or both, would constitute or result in any such default under this Agreement; and (8) the Developer has not entered into any agreements which will adversely affect the title to the Project or the Developer's right to develop and use the Project as provided in this Agreement, and the Developer will not enter into any such agreements after the date hereof. Section 902 Governing Law The internal laws of the State of California shall govern the interpretation and enforcement of this Agreement. Section 903 Attorneys' Fees In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. Section 904 Notices, Demands, and Communications Between the Parties Formal notices, demands, and communications between City and Developer shall be sufficiently given if (i) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt 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 Developer: Pacific Sun Apartments CIC, L.P c/o Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 Attn: Pamela Hope, President With a copy to: CIC Pacific Sun Apartments, LLC c/o Chelsea Investment corporation 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 And a copy to: Raymond James Tax Credit Funds, Inc. 880 Carillon Parkway St. Petersburg, FL 33716 Attention: Ronald M. Diner If to City: The City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager Page 47 of 51 With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Notices personally delivered or delivered by courier 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. ' Section 905 Acceptance of Service of Process In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the Executive Director or the City Secretary, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made by in any manner provided by law, and shall be valid whether made within or without the State of California. Section 906 Conflicts of Interest No member, official, or employee of City 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. Section 907 'Titles and Captions Titles and captions are for convenience only and shall not be construed to limit or extend the meaning of this Agreement. Section 908 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. Section 909 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. Section 910 Merger of Prior Agreements and Understandings 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. Section 911 No 'Third Parties Benefited 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. Page 48 of 51 Section 912 Assurances to Act in Good Faith Developer and City 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 acquisition and construction of the Property in accordance with the provisions hereof. Section 913 Warranty Against Payment of Consideration for Agreement Except as provided in this Agreement, Developer 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. Section 914 Nonliability of City Officials and Employees No member, official, or employee of the City shall be personally liable to the Developer or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement. Section 915 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 any party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. Section 916 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. Section 917 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. Section 918 Extension of'Times of Performance A. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of 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. B. Times of performance under this Agreement may also be extended by mutual written agreement by City and Developer. In addition, the City Manager shall have the authority on behalf of City to approve extensions of time not to exceed a cumulative'total of one (1) year. Page 49 of 51 Section 919 Inspection of Books and Records The City or its designee shall have the right at all reasonable times to inspect the books, records and/or other documents of the Developer pertaining to the Property and/or the Project as pertinent to the purposes of this Agreement. Section 920 Waivers The waiver by City or Developer of any term, covenarii, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. ARTICLE 10. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE A. This Agreement and the attachments hereto, which are incorporated by this reference, constitute the entire understanding and agreement of the parties. B. This Agreement does not take effect until executed by the Developer and City. This Agreement, when executed by the Developer and delivered to the City, must be authorized, executed and delivered by the City within thirty (30) days after the date of signature by the Developer, or this Agreement may be terminated by the Developer on written notice to the City. C. The City Manager 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 City as may be necessary or proper to effect the terms of this Agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] Page 50 of 51 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "DEVELOPER" "CITY" PACIFIC SUN APARTMENTS CIC, L.P., THE CITY OF HUNTINGTON BEACH, a a California limited partnership municipal corporation of the state of California By: Colette's Children Home, Inc., a California non-profit public benefit By: corporation Mayor its Managi Gen ral Partner ATTEST: By: Pamela Ho By: Preside City Clerk By: CIC Pacific Sun Apartments,LLC, APPROVED AS TO FORM: a California limited liability company its Administrative General Partner By: By: Chelsea Investment Corporation, City Attorney a California corporation, its Manager By: By: KANE, BALLMER& BERKMAN James J. Schmid Special Counsel President COUNTERPART Page 51 of 51 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "DEVELOPER" "CITY" PACIFIC SUN APARTMENTS CIC,L.P., THE CITY OF HUNTINGTON BEACH, a a California limited partnership municipal corporation of the state of California By: Colette's Children Home,Inc., a California non-profit public benefit By: corporation Mayor its Managing General Partner ATTEST: By: Pamela Hope By: President City Clerk By: CIC Pacific Sun Apartments, LLC, APPROVED AS TO FORM: a California limited liability company its Administrative General Partner By: By: Chelsea Investment Corporation, City Attorney a California corporation, its Manager By: — _B_ :' KANE,BALLMER&BERKMAN / James . Sch Special Counsel President COUNTERPART Page 51 of 51 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "DEVELOPER" "CITY" PACIFIC SUN APARTMENTS CIC, L.P., THE CIT OF HUNTING BEACH, a a California limited partnership mu ' 1 co ration e state of California By: Colette's Children Home, Inc., a California non-profit public benefit B corporation ayor its Managing General Partner TTEST: By: Pamela Hope President City By: CIC Pacific Sun Apartments, LLC, APPR ED AS TO FORM: a California limited liability company its Administrative General Partner By: By: Chelsea Investment Corporation, 'ty A omey a California corporation, its Manager By: 1 By: KANE, BALLMER& BERKMAN James J. Schmid Special Counsel President COUNTERPART ART Page 51 of 51 EXHIBIT I LEGAL DESCRIPTION EXHIBIT 1 LEGAL. DESCRIPTION Legal Description of Property Commonly Known As 7911 Slater Avenue Huntington Beach, California All that certain real property situated in the County of Orange, State of California, described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-17 Legal Description Pacific Sun Exhibit 1 -Legal Description EXHIBIT 2 SITE MAP FOR. S 1/2 SE 114,NE 114,MT 2C,M%X II tX 22 a .I.[f a /CiL�' rnact „ AU" a �ry N usr O w !Y IPO-*t (D� � Afi fr`•M � .tt sr.f9t � t3 • O O jI /,:1 nuer � t t SI t6 v M At t � rs t 4 w 3 2E i 1 � \:J�, w� ,,V Y "✓�,,. �. 13 Mt I A." x k- x +•f w Kt ff x ALaif 4+r 4 T ;; '� 3u NQ ♦+ `� NO 41M NO 5357t, i .Rwr 4� u L_ _.! d.�.. sL,erFRa aveA,w+�� s 32 AOACH r976 rn."cr Al2 4155 AL.K /74-tP,13 rrorc-A}�=iOR'3 ELOrX 9 Assesson's raw "MCr Al2 4JLV AI.AL 177-H,r2 AIRF??'L NU MO$ 6Owi4s Aw 23 rAWT AV IM7 AI.Ar 1*0-6,7 SHOtw N pNCuL3 CriW Y OF ORANK AdRGEL MAP PAL I23-?2,14,!•43 SEP 1996 EXHIBIT 3 METHOD OF FINANCING EXHIBIT 3 METHOD OF FINANCING This is the Method of Financing attached to the Affordable Housing Agreement (the "Housing Agreement") between the City of Huntington Beach (the "City") and Pacific Sun Apartments CIC, L.P. ("Developer"), relating to Developer's construction of a 6-unit multifamily housing project, to be rented, at Affordable Rents, to Very Low Income Households. The Project will be financed by a combination of the HOME Acquisition Reimbursement Loan, the HOME Development Loan (collectively with the HOME Acquisition Reimbursement Loan, the "HOME Loan"), the NSP Loan, the Senior Loan and Developer Equity derived in part from the syndication of the Nine Percent Tax Credits. Pursuant to the Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010 between the City and Developer's predecessor in interest and Developer's Managing General Partner,Colette's Children Home,Inc.,a California nonprofit public benefit corporation("Colette's" or"Managing General Partner"),the City made a loan of NSP Funds in the original principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) (the "Colette's NSP Loan") and a loan of HOME Investment Partnership Program funds ("HOME Funds") in the original principal amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS($284,432.00)(the"Colette's HOME Acquisition Loan") to assist Colette's in acquiring the Property (as hereinafter defined), for development as six units of affordable rental housing for very low income persons and families, more specifically, the Project as hereinafter defined. Colette's has obtained a loan from Teamsters Local 986 Charity Fund, Inc. in a principal amount not to exceed $200,000 for the payment of certain predevelopment costs incurred in connection with the Project(the"Teamsters Loan"or"Predevelopment Loan"),which loan will be repaid at the Construction Financing Event. Concurrently with the Construction Financing Event and pursuant to the Housing Agreement, (1) Colette's will repay the Colette's NSP Loan, the Colette's HOME Acquisition Loan, and the Teamsters Loan, including all accrued interest on each such loan, and (2) the City will make two. separate loans to Developer as follows: (A) the NSP Loan in an original principal amount equal to the sum of(i) the original principal amount of the Colette's NSP Loan of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) plus (ii) interest accrued on the original principal amount of the Colette's NSP Loan through the Construction Financing Event plus(iii)any other sums secured by the Deed of Trust securing the Colette's NSP Loan and added to the principal amount of the Colette's NSP Loan at the Construction Financing Event, as reimbursement to METHOD OF FINANCING Page 1 of 12 Developer for a portion of Developer's costs to acquire the Property for the Project,as evidenced by the NSP Note and secured by the NSP Deed of Trust; and (B) the HOME Loan in an aggregate principal amount equal to the sum of(i)the HOME Acquisition Reimbursement Loan in an original principal amount equal to the sum of(a)the original principal amount of the Colette's HOME Acquisition Loan of TWO HUNDRED EIGHTY FOUR THOUSAND FOUR HUNDRED THIRTY TWO DOLLARS ($284,432.00) plus (b) interest accrued on the original principal amount of the Colette's HOME Acquisition Loan through the Construction Financing Event plus (c) any other sums secured by the Deed of Trust securing the Colette's HOME Acquisition Loan and added to the principal amount of the Colette's HOME Acquisition Loan at the Construction Financing Event,as reimbursement to Developer for a portion of Developer's costs to acquire the Property for the Project,plus(ii)the HOME Development Loan in an original principal amount not to exceed$500,000.00 for use toward the development costs of the Project. The HOME Loan is evidenced by the HOME Note and secured by the HOME Deed of Trust. Concurrently with the Construction Financing Event,Colette's will convey to Developer all of its interest in the Property and the Project,by instrument in writing satisfactory to the City and in form recordable among the land records of Orange County. The HOME Development Loan will be funded during the Construction Period pursuant to the Disbursement Agreement. The HOME Acquisition Reimbursement Loan and the HOME Development Loan, comprising the HOME Loan, shall be repaid during the Permanent Period from Residual Receipts pursuant to Section 13 herein and the HOME Note. 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to it in the Housing Agreement. 2. Total Proieci Cost. The parties estimate that the total Project Costs shall be approximately$2,650,852,of which approximately$675,000 comprises reimbursement to Developer for acquisition,closing and predevelopment costs. Approximately$200,000 of Project Costs that is allocated to predevelopment expenses was paid with the proceeds of the Predevelopment Loan.The Predevelopment Loan will be repaid in full at the Construction Financing Event. 3. Sources of Development li inancin . The parties anticipate that development portion of the Project Costs shall be financed during the Construction Period with the following combinations of funds. Developer must make every reasonable effort to structure the terms of the construction financing in a way that will minimize the amount of the HOME Development Loan. METHOD OF FINANCING Page 2 of 12 (a) An initial Limited Partner Capital Contribution in the amount of$221,378 to be disbursed in accordance with Developer's Limited Partnership Agreement. (b) The Construction Loan, in the approximate original principal amount of $1,218,548 to be secured by the Construction Deed of Trust. (c) The HOME Development Loan from the City in the original principal amount of$500,000 to be secured by the HOME Deed of Trust. Fifty percent of the HOME Development Loan (less retention) will be disbursed at 25% completion and 50%of the HOME Development Loan(less retention)will be disbursed at 50% completion. (d) Costs payable at conversion in the approximate amount of$35,926. (e) In addition,Developer shall be responsible during the Construction Period to provide funds, if and as needed, to pay for any cost overruns not funded and contingencies not otherwise funded by the sources of funds as described herein. 4. Sources of Permanent F'inancin . The parties anticipate that the Project Costs shall be financed during the Permanent Period with the following combinations of funds.Developer must make every reasonable effort to structure the terms of the permanent financing in a way that will minimize the amount of the HOME Loan. (a) The initial Limited Partner Capital Contribution referenced in paragraph 3(a) above in the amount of$221,378. (b) The HOME Loan in an aggregate principal amount equal to the sum of(1)the HOME Acquisition Reimbursement Loan in an original principal amount equal to the sum of(i)the original principal amount of the Colette's HOME Acquisition Loan of TWO HUNDRED EIGHTY FOUR THOUSAND FOUR HUNDRED THIRTY TWO DOLLARS ($284,432)plus(ii)interest accrued on the original principal amount of the Colette's HOME Acquisition Loan through the Construction Financing Event plus (iii) any other sums secured by the Deed of Trust securing the Colette's HOME Acquisition Loan and added to the principal amount of the Colette's HOME Acquisition Loan at the Construction Financing Event,plus(2)the HOME Development Loan in an original principal amount not to exceed$500,000. The HOME Loan is to be evidenced by the HOME Note and secured by the HOME Deed of Trust. METHOD OF FINANCING Page 3 of 12 (c) The NSP Loan in an original principal amount equal to the sum of(1) the original principal amount of the Colette's NSP Loan of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568) plus (2) interest accrued on the original principal amount of the Colette's NSP Loan through the Construction Financing Event plus (3) any other sums secured by the Deed of Trust securing the Colette's NSP Loan and added to the principal amount of the Colette's NSP Loan at the Construction Financing Event,as reimbursement to Developer for a portion of Developer's costs to acquire the Property for the Project. The NSP Loan is to be evidenced by the NSP Note and secured by the NSP Deed of Trust. (d) The AHP Grant/Loan, if any, in the original principal amount currently estimated to be $180,000 secured by a third priority deed of trust. (e) Developer Equity in the form of an additional Limited Partner Capital Contribution, in the approximate amount of $1,254,475 (including that portion of the Limited Partner Capital Contribution in the approximate amount of$73,793 that will be funded upon issuance of the Form 8609 for the Project), which amount may be adjusted pursuant to the provisions and requirements of the federal Internal Revenue Code, the TCAC Regulatory Agreement and the provisions of the Limited Partnership Agreement and the Contribution Agreement. 5. Minimum Reserves and Guaranties. Developer agrees to the following reserves (the"Reserve Agreements")and guaranties(the"Guaranty Agreements"),to the extent required by the Developer's Limited Partner, however named or described, which will be executed in favor of the Limited Partner of the Developer in a form reasonably approved by the City. The Guaranty and Reserve Agreements may not be limited or discontinued for any reason without the prior written consent of the City,which consent shall not be unreasonably withheld,conditioned or delayed,and provided that the Project has achieved Completion and the Developer can demonstrate to the City's reasonable satisfaction that the Project will generate sufficient cash flow to support the operation and maintenance of the Project as required by the approved Management Plan and Maintenance Program. The Guaranty Agreements and the Reserve Agreements are generally summarized as follows: (a) A development deficit guaranty pursuant to which the guarantor thereunder agrees, among other things,to: (a) pay any"Development Deficits"(as that term or a similar term is defined therein) which may arise during the construction of the Project and any tax credit adjusters, (b) buy out the interest of the Limited Partner(at the request of the Limited Partner),and(c) pay all expenses of operating and maintaining the Project in order for the Project to achieve"Break-Even Operations"(as that term or a similar term is defined therein). METHOD OF FINANCING Page 4 of 12 (b) An operating deficit guaranty pursuant to which the guarantor thereunder agrees to,among other things,cover any"Operating Deficits"(as that term or a similar term is defined therein)of the Project during the"Guaranty Period" (as that term or a similar term is defined therein). (c) A replacement reserve guaranty pursuant to which the guarantor thereunder agrees to, among other things, guaranty minimum reserves in the amount required by the Limited Partnership Agreement. (d) An operating deficit escrow pursuant to which the guarantor thereunder agrees to, among other things, secure a portion of its obligations under the operating deficit guaranty by making a cash deposit into an escrow account established for that purpose. 6. Project Budget. The parties anticipate that all Project Costs shall be as set forth in the Project Budget attached to the Housing Agreement as Exhibit 5. The Project Budget shall be subject to change from time-to-time, subject to the prior written approval of the City Manager or designee (which approval shall not be unreasonably withheld), upon which approval the Project Budget shall be replaced by the approved revised Project Budget, Within the respective times provided therefor in the Schedule of Performance,the Developer shall demonstrate to the satisfaction of the City Manager that the Senior Loan and all Developer Equity will be available for payment or refinancing of Project Costs when and as required by this Method of Financing. 7. Evidence of Financing. The sum of the Construction Loan plus the HOME Loan plus the NSP Loan plus the Developer's Equity, as provided in Sections 3 and 4 above, shall,at all times,be sufficient to pay all Project Costs as set forth in the most recently approved Project Budget. Prior to the Construction Financing Event, Developer shall submit for City review and approval evidence of such financing, including: (a) copies of the Construction Loan Documents; (b) the Limited Partnership Agreement,the Contribution Agreement,and other documentation evidencing the availability of the Developer Equity,including the Limited Partner Capital Contribution;and,(c) any other documents reasonably required by the City. The City shall not unreasonably withhold its approval of the Developer's evidence of financing. 8. HOME Development Loan. (a) In accordance with and subject to the terms and conditions of the Housing Agreement and this Method of Financing,the City agrees to make the HOME Development Loan to Developer and Developer agrees to borrow such funds for the purpose of payment of Project Costs. (b) The Developer hereby acknowledges that the HOME Development Loan is intended to be a "gap" loan, not to exceed the amount needed to bridge the gap between the total METHOD OF FINANCING Page 5,of 12 Project Costs and the maximum Construction Loan obtainable by Developer plus the maximum amount of Developer's Equity set forth above, but in any event not to exceed $500,000. (c) The HOME Development Loan shall be used exclusively to pay Project Costs identified in the Project Budget and for no other purpose. (d) At the Construction Financing Event the City and the Developer shall execute and deliver to Escrow such instruments and documents as may be necessary to evidence and secure the affordability restrictions on the Site and to evidence and secure the HOME Loan and the NSP Loan,consistent with the terms of the Housing Agreement and this Method of Financing,and each in a form that is acceptable to the City Manager or designee, including the following: (1) the Amendment to the Regulatory Agreement; (2) the Promissory Note evidencing the HOME Loan; (3) the Deed of Trust securing the HOME Loan; (4) the Promissory Note evidencing the NSP Loan; (5) the Deed of Trust securing the NSP Loan; (6) the Assignment of Rents and Leases; (7) the Assignment of Agreements; (8) the Environmental Indemnity; and (9) the UCC 1 Financing Statement. 9. Subordination.The Regulatory Agreement shall unconditionally be and at all times remain prior and superior to the lien created by the Senior Deed of Trust and any other of the Senior Loan Documents and all of the terms and conditions contained in the Senior Loan Documents. However,the City shall subordinate the HOME Loan Documents and the NSP Loan Documents to the lien created by the Senior Deed of Trust and any other of the Senior Loan Documents and all of the terms and conditions contained in the Senior Loan Documents. Subject to the terms and conditions of this Section 9, prior to the Construction Financing Event,the City Manager or designee shall execute a subordination agreement to,among other things, subordinate the HOME Loan Documents and the NSP Loan Documents to the Senior Deed of Trust and other Senior Loan Documents, provided, however, that such subordination agreement must contain provisions reasonably satisfactory to the City Manager or designee to protect the City's METHOD OF FINANCING Page 6 of 12 investments in the event of default, including (i) a right of the City to cure a default on the Senior Deed of Trust;(ii)a right of the City to negotiate with lender after notice of default from lender; (iii) an agreement that if prior to foreclosure of lender's loan,the City takes title to the Property 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 City;and(iv)a right of the City to purchase the Property from the Developer at any time after a default on the loan. 10. Recordation. Upon the Construction Financing Event, the Title Company shall record the Amendment to the Regulatory Agreement,the Construction Loan Documents,the HOME Loan Documents and the NSP Loan Documents in accordance with instructions provided by the City, the Construction Lender and the Developer, and shall be prepared to issue to the City ALTA policies of title insurance, insuring the priority of the HOME Deed of Trust and the NSP Deed of Trust, in amounts and with endorsements as the City may require. 11. Disbursement of HOME Development Loan. The HOME Development Loan shall be disbursed for the payment of Project Costs in accordance with a disbursement agreement among the City,Construction Lender and Developer in form and substance that is mutually acceptable to the parties thereto and that is consistent with this Method of Financing. 12. Conditions Precedent to Construction Financing Event.The City's obligation to fund the HOME Loan and the NSP Loan is conditioned and contingent upon satisfaction or the City's waiver of each of the following conditions precedent (collectively, the "Conditions to Closing"): (i) Colette's shall have repaid the Colette's NSP Loan, the Colette's HOME Acquisition Loan,and the Teamsters Loan/Predevelopment Loan,including all accrued interest on each such loan; (ii) Developer shall have submitted to the City,and the City shall have approved, evidence of Colette's assignment and Developer's assumption of all of Colette's rights,interests and obligations in the Project(including all personal property, contracts, agreements, licenses, permits, options and intangibles); (iii) Developer shall have submitted to the City,and the City shall have approved, evidence of Colette's conveyance to Developer of all Colette's interest in the Property and the Project,by instrument in writing satisfactory to the City and in form recordable among the land records of Orange County; (iv) The Teamsters/Predevelopment Lender shall have deposited into Escrow the Predevelopment Note for cancellation and return to Colette's upon repayment of the Predevelopment Loan and shall have deposited into Escrow a reconveyance of the Predevelopment Loan Deed of Trust in a form approved by the City; METHOD OF FINANCING Page 7 of 12 (v) The City shall have deposited into Escrow the Colette's NSP Loan Note and the Colette's Home Acquisition Loan Note for cancellation and return to Colette's upon repayment of the Colette's NSP Loan and the Colette's HOME Acquisition Loan and shall have deposited into Escrow a reconveyance of the Colette's NSP Loan Deed of Trust and the Colette's HOME Acquisition Loan Deed of Trust; (vi) Developer shall submit evidence that the final working drawings have been approved by the City in connection with the permitting of the Project; (vii) Developer submits a copy of the fully executed general construction contract with a licensed general contractor,covering all construction work required by the Housing Agreement and the approved final working drawings and if the general contractor is an affiliate of a general partner of Developer, submits (a) copies of the fully executed fixed price subcontracts with such subcontractors as are designated by the City and (b) copies of the bids received by Developer for the work to be performed by such subcontractors; (viii) Developer submits a final Project Budget, current as of the Construction Financing Event, demonstrating to the satisfaction of the City Manager, or designee, the availability of sufficient funds to pay all Project Costs; (ix) Developer submits evidence satisfactory to the City Manager, or designee, that Developer has satisfied all conditions precedent to the issuance of all Permits necessary for the Project,other than payment of fees(for which funds have been budgeted in the Project Budget); (x) Developer submits the Maintenance Program to the City for approval, including the Maintenance Budget, as required by the Housing Agreement; (xi) Developer submits the Annual Project Budget for the first year of operation to the City for approval, as required by the Housing Agreement; (xii) Developer submits the Management Plan to the City for approval,as required by the Housing Agreement; (xiii) Title Insurance Company is prepared to issue the title insurance policies required by the City; (xiv) Developer shall have delivered evidence acceptable to the City that Developer has obtained the insurance policies and endorsements required by the Housing Agreement; METHOD OF FINANCING Page 8 of 12 (xv) Developer shall have deposited into Escrow all of the funds and duly executed instruments required of it by the Housing Agreement, the Construction Loan Documents,the Limited Partnership Agreement and this Method of Financing to close the Escrow; (xvi) Developer shall have-delivered the Construction Loan Documents to the City for approval; (xvii) Developer shall have delivered to the City for approval the Limited Partnership Agreement, as amended upon admission of the Investor Limited Partner and the Special Limited Partner,if any,and the Guaranty and Reserve Agreements, as applicable; (xviii) Developer, Construction Lender and City shall have entered into a Disbursement Agreement, consistent with the terms of this Method of Financing,setting forth the timing and conditions of the disbursement of the Developer Equity,the Construction Loan and the HOME Development Loan; (xix) Developer shall have delivered satisfactory evidence to the City that Developer and its General Partners are in current good standing and are duly authorized to execute and implement the Housing Agreement; and (xx) Developer is in full compliance with the terms and conditions of the Housing Agreement and all documents and instruments referred to therein or executed by Developer in furtherance of the Housing Agreement. In the event any of these Conditions to Closing are not satisfied(or waived by the City)by the date set forth in the Schedule of Performance for the occurrence of the Construction Financing Event,the City may cancel the Escrow and terminate the Housing Agreement by delivering ten(10)days prior written notice to Developer and the Escrow Agent. Developer may nullify the notice to terminate if, within such ten(10)day period Developer(at no cost to the City)cures any unsatisfied Conditions to Closing and notifies the Escrow Agent of such cure. In the event of termination pursuant to this paragraph,(i)the Escrow shall be cancelled and any funds deposited by the City shall be returned to the City with any interest earned on such funds; (ii) Developer shall be responsible for any escrow cancellation fees imposed by the Escrow Agent; and(iii)the Housing Agreement shall be terminated and the parties shall have no further rights or obligations thereunder. Notwithstanding the foregoing, the City, in the sole discretion of the City Manager, may waive any of the foregoing conditions precedent to the Construction Financing Event. A waiver of any of the foregoing conditions shall not operate in any way as a waiver or estoppel with respect to any subsequent or other failure to comply with such condition or any other condition contained in this Method of Financing,the Housing Agreement or any of the HOME Loan Documents or the NSP Loan Documents. METHOD OF FINANCING Page 9 of 12 13. Repayment 'Perms. The repayment terms of the HOME Loan and the NSP Loan shall be as follows,as set forth more specifically in the NSP Note and HOME Note attached to the Housing Agreement as Exhibit 7 and Exhibit 8, respectively. The NSP Loan and the HOME Loan will be repaid with annual payments from Residual Receipts. The terms of the NSP Loan and the HOME Loan shall be sixty (60) years. The rate of interest shall be three percent(3%) per annum. The City Manager, or designee, is authorized,at Developer's request and for good cause shown,to modify the interest payable on the NSP Loan and the HOME Loan, provided that no such modification shall reduce the interest below a rate of three percent (3%) simple interest. (a) Residual Receipts. "Residual Receipts" means, in each calendar year, the amount by which Gross Revenue(as defined below)exceeds Annual Operating Expenses(as defined below), as determined by an audit to be completed not later than ninety (90) days after the end of each calendar year by an independent certified public accountant first approved in writing by the City,using generally accepted accounting principles and based on the accrual method(the"Audit"). (i) Gross Revenue."Gross Revenue,"with respect to each calendar year, shall mean all revenue,income,receipts,and other consideration actually received from operation or leasing of the Project. "Gross Revenue" shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period."Gross Revenue"shall also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project, except that the value of services provided by on-site manager(s) shall not be treated as"Gross Revenue"if no more than one dwelling unit is leased to or otherwise used by on- site manager(s). "Gross Revenue" shall not include tenants' security deposits, proceeds from the Senior Loan,the HOME Loan,the NSP Loan, Developer Equity, including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts. (ii) Annual Operating Expenses. "Annual Operating Expenses," with respect to each calendar year shall mean the costs reasonably and actually incurred for operation and maintenance of the Project,which may include,without limitation,the following,to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles: property and other taxes and assessments imposed on the Project;premiums for property damage and liability insurance;utility services not paid for directly or reimbursed by tenants;including but not limited to water,sewer,trash collection,gas and electricity; maintenance and repair including but not limited to pest control, landscaping and grounds maintenance,painting and decorating,cleaning,common systems repairs,general repairs,janitorial, supplies,and similar customary utility services;any license or certificate of occupancy fees required for operation of the Project;general administrative expenses including but not limited to advertising METHOD OF FINANCING Page 10 of 12 and marketing, security services and systems, professional fees for legal,audit, accounting and tax returns for the limited partnership, and similar customary administrative expenses; property management fees, expenses and costs,not to exceed$5,809 per unit per month in the first year with annual increases thereafter in proportion to the increases in Affordable Rent for the Project or six and one-half percent(6 1/2%)of Revenue,whichever is higher,and pursuant to a management contract approved by the City;an asset management fee payable to the Limited Partnership's Investor Limited Partner in a non-cumulative amount not to exceed two thousand five hundred dollars($2,500)in the first year and,to the extent required by the Limited Partnership Agreement,increased thereafter at an annual rate not to exceed three and one-half percent(3.5%);payments to the Investor Limited Partner as a result of any shortfalls or recapture of Tax Credits in accordance with the terms of Developer's partnership agreement;cash deposited into a replacement reserve in the amount of$600 per unit per year, subject to annual increases not to exceed three percent(3%); cash deposited into an operating reserve in such reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee,and the tax credit investor from time to time,and approved by the City;and, fixed debt service payments (excluding debt service contingent upon the availability of residual receipts or surplus cash of the Project)on loans associated with the Project and approved by the City. "Annual Operating Expenses"shall not include the following:depreciation,amortization,depletion or other non-cash expenses or any amount expended from a reserve account, or any partnership management fees payable to the Limited Partnership's Managing General Partner.Annual Operating Expenses shall be subject to the reasonable approval of the City. (b) Developer must utilize seventy-five percent(75%)of Residual Receipts with respect to each calendar year to repay the HOME Loan and the NSP Loan through the pro rata application of such share of Residual Receipts, reflecting the relative amounts of the HOME Loan and the NSP Loan. The Pro Rata Percentages shall be 67% for the HOME Loan and 33% for the NSP Loan.However,the City agrees that Developer may first utilize Residual Receipts,with respect to each calendar year, to pay the sponsors of the Project the theretofore unpaid portion of the Deferred Developer Fee. Payments due hereunder must be made no later than one hundred twenty (120) days following the end of the applicable calendar year. (c) After payment in full of the payments described in paragraph (b) of this Section 13, any remaining Residual Receipts with respect to each calendar year shall be distributed by the Developer in accordance with the Limited Partnership Agreement. (d) To the extent Developer refinances a Senior Loan at any time during the terms of the HOME Note and the NSP Note, seventy-five percent (75%) of the Net Proceeds shall be allocated and paid to the City to reduce the HOME Loan and the NSP Loan based on the Pro Rata Percentages. 14. Developer Fee. If, after Completion of the Project in accordance with the Housing Agreement, there exists any cost savings as a result of a reduction in the final Project Costs or if Developer is awarded the AHP Grant/Loan,Developer may allocate such resulting costs savings and METHOD OF FINANCING Page.I I of 12 the proceeds of such AHP Grant/Loan toward payment of the Developer Fee up to a maximum amount of TWO HUNDRED SIXTY THREE THOUSAND FIVE HUNDRED NINETY NINE DOLLARS ($263,599). Should such resulting cost savings and proceeds of such AHP Grant/Loan exceed the amount of$263,599,then the amount in excess of$263,599 shall be applied to reduce the principal amount of the HOME Development Loan by an equal amount of such excess. METHOD OF FINANCING Page 12 of 12 EXHIBIT 4 SCOPE OF DEVELOPMENT EXHIBIT NO. 4 SCOPE OF DEVELOPMENT Project Development Concept: 6 new construction residential rental units, which will meet all building code requirements, configured as follows: UNITS AMENITIES: Three Bedroom/2 Bath Units 5 Community Room 691 sq. ft. Two Bedroom/2 Bath Units 1 Laundry Room 156 sq. ft. Total Residential Units 6 Office 284 sq. ft. Project Amenities: Outstanding project amenities will be provided on site and include: Open Space and recreational common area: The project includes a well-designed common area with a landscaped central courtyard facilitating a safe and secure recreation area for children and adult use. Laundry Facilities: The project will include common laundry facilities including clothes washer and dryers. Parking: The project will provide 14 secure enclosed garage parking spaces and three open spaces on site. Community Room: The developer will provide a physical space of approximately 691 sq ft. for resident services. The community room will provide a communal kitchen for events, a teaching space for classes, and computer access for all tenants. Services: The developer will provide onsite services through the Colette's Children's Home office, located just up the street. A service coordinator will visit the project at twice a week to assess and refer clients to a case manager, and if necessary, a substance abuse/relapse prevention counselor on the Colette's staff. Adult education classes will be held on site addressing topics such as interview skills, resume building, securing employment, financial budgeting and management, and computer skills. Health and Wellness and Skill Building classes will be offered on topics such as health education for women and the proper care of children, smoking cessation, nutrition, cooking classes, parenting and self defense. External Service Partnerships: Colette's has extensive experience in developing local partnerships with agencies to provide an array of additional support services at no cost to the residents or the project, such as clothing, GED/ESL classes, dental care, nutrition, job development, counseling, health care, assistance and food stamps, and subsidized child care. The final spectrum of services offered to the tenants will depend on the availability of outside non- profit organizations to deliver these in a cost effective ongoing manner. SCOPE OF DEVELOPMENT Page 1 OF 2 Design / Energy Efficiency: The project will exceed Title 24 standards and will focus on water and energy saving fixtures and the utilization of green building materials. SCOPE OF DEVELOPMENT Page 2 OF 2 EXHIBIT 5 PROJECT BUDGET EXHIBIT 5 PROJECT BUDGET SOURCES NSP Loan* $ 390,568 HOME Acquisition Reimbursement Loan* $ 284,432 HOME Development Loan $ 500,000 9% Tax Credit Equity* $ 1,475,852 Total Sources $ 2,650,852 * The actual amount of the NSP Loan and the HOME Acquisition Reimbursement Loan will be greater than the amounts shown, and will be as determined at the Construction Financing Event and include all amounts stated in the Affordable Housing Agreement's definition of the NSP Loan and the HOME Acquisition Reimbursement Loan including, without limitation, the accrued interest on the principal amount of the Colette's NSP Loan and the Colette's HOME Acquisition Loan, respectively. * Construction Loan of $1,218,548 from Investor Limited Partner to be repaid in full at conversion. USES Acquisition& Closing Costs $ 653,721 Construction Costs $ 1,281,350 Soft Costs/Indirect Costs $ 715,781 Total Uses $ 2,650,852 Project Budget EXHIBIT 6 SCHEDULE OF PERFORMANCE EXHIBIT 6 SCHEDULE OF PERFORMANCE ACTION ITEM TIME OF REFERENCE PERFORMANCE 1. Submittal - Final Construction Drawings and At least thirty (30) days Section 302 Specifications. The Developer shall prepare prior to the Construction and submit to the City the Final Construction Financing Event. Drawings and Specifications as required for the permitting of the Project. 2. Submittal - Management Plan. Developer ,,,'At least thirty (30) days Section 402 and shall submit to the City for approval the- prior to the Construction Section 4.4(a) of proposed Management Plan. Financing Event. Regulatory Agreement 3. Submittal - Annual Project Budget. Developer At least thirty„(30) days Section 402 and shall submit to the City for approval the-``',._prior to the Construction Section 4.4(a) of proposed Annual Project Budget for the first '`-finanemg Event. ' Regulatory year of operation. Agreement 4. Submittal — Maintenance Program.. At least thirty (30) days Section 403 Developer shall submit to `,,the City for prior to the Construction approval the proposed Maintenarice Program ;:,Financing Event. for the Project. 5. Evidence- of Financing. The Developer shall Within thirty (30) days Section 7 of submit to the City substantially,, final prior to the scheduled Method of Construction Loan Documents- and date for the Construction Financing documentation of Developer Equity, as Financing Event. provide&i-itthe Method of Financing. 6. Deposits Into Escrow. The Developer and Not later than twelve Sections 8 and 9 City shall execute . documents and deposit noon on the business day of the Method of documents and funds into Escrow as provided immediately prior to the Financing in the Method of Financing. scheduled Construction Financing Event. 7. Construction Financing Event. All conditions Not later than March 14, Section 12 of the precedent to the Construction Financing Event 2011. Method of shall have been satisfied. Financing SCHEDULE OF PERFORMANCE Page 1 of 2 8. Commencement of Construction. The Within ninety (90) days Section 305 Developer shall commence construction of the after the Construction Project. Financing Event. 9. Completion of Construction. The Developer Not later than eight (8) Section 305 shall achieve Completion of construction. months following commencement of construction. 10. Submission - Tenant Lease. The Developer Within thirty (30) days Section 4.4(a) of shall prepare and submit to the City for prior to occupancy, but Regulatory approval the proposed tenant lease as provided no later than August 1, Agreement in the Regulatory Agreement. Z01J., 11. Submission — Annual Reports. The Developer' Within one hundred Sections 4.3 and submits annual financial statements and rent twenty- (120) days after 4.4(a) of records/tenant eligibility certifications to the the end-:of each calendar Regulatory City. year. Agreement NOTES: It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Housing:Agreernent., The summary of the items 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 Housing Agreement, the text shall govern." The time periods set�forth in this'$chedule of Performance may be altered or amended only by written agreement signedoxby the -Developer and the City. The City Manager shall have the authority to approve extensions of "time'without action of the City Council, not to exceed a cumulative total extension of-one (1);year. SCHEDULE OF PERFORMANCE Page 2 of 2 EXHIBIT 7 NSP PROMISSORY NOTE PROMISSORY NOTE SECURED BY DEED OF TRUST TO THE CITY OF HUNTINGTON BEACH [NEIGHBORHOOD STABILIZATION PROGRAM] DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same,must be surrendered to Trustee for cancellation before reconveyance will be made. 3%Interest Huntington Beach, California $390,568 _,2010 FOR VALUE RECEIVED, COLETTE'S CHILDREN HOME, INC., a California non- profit public benefit corporation ("Borrower"), hereby promises to pay to the CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California ("City"), or order, a principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY- EIGHT DOLLARS ($390,568) (the "NSP Loan"). This Note is given pursuant to that certain Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010, between Borrower ("Developer" therein) and City (the "Loan Agreement") and evidences the NSP Loan to Borrower, which provides part of the financing for the acquisition of that certain real property in the City of Huntington Beach legally described in the Deed of Trust securing this Note (the "Property") for the development of affordable housing for low income households. The Borrower shall not make any sale, assignment or conveyance, or transfer in any other form, of the Property, or any part thereof, or interest therein without the express written consent of the City as set forth in Section 2.5 of the Loan Agreement. The obligation of Borrower to City hereunder is subject to the terms of the Loan Agreement, this Note and the following instruments, each dated on or about the date hereof, and, where applicable, executed and delivered by Borrower for the purpose of securing this Note: a Regulatory Agreement ("Regulatory Agreement"); a Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) ("NSP Deed of Trust"); and an Assignment of Agreements ("Assignment of Agreements"). Said documents are public records on file in the offices of City, and the provisions of said documents are incorporated herein by this reference. The Borrower shall pay interest at the rate,in the amount and at the time hereinafter provided. 1. Definitions. Any capitalized tern not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement. In addition, the following terms shall have the following meanings: The term "Acquisition Costs" shall mean the total cost of acquiring the Property in conformance with the terms and conditions of this Agreement, in an amount approved by the City Administrator or his designee, including closing and escrow costs and the cost of the City's and the Borrower's title insurance policies. NSP Note[04.01.1 0J.doc NSP Note Page 1 of 9 The term "Approved Title Conditions" shall mean title that is subject to current property taxes and assessments, easements and other encumbrances specifically approved by the City Administrator. The term"Assignment of Agreements"shall mean a document substantially in the form attached to the Loan Agreement as Exhibit"L", which is incorporated herein by this reference. The term"City" shall mean the City of Huntington Beach, a municipal corporation of the State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of,or successor to,the rights,powers,and responsibilities of City. The term"City Administrator" shall mean the individual duly appointed to the position of City Administrator of the City, or authorized designee. Whenever an administrative action is required by City to implement the terms of this Housing Agreement, the City Administrator, or an authorized designee, shall have authority to act on behalf of City, except with respect to matters reserved under California law or the City's Charter wholly for City Council determination. The term "Construction Financing Event" shall mean the point in time when (i) all conditions precedent to the recording of the City's HOME development loan documents for the Project have been satisfied and(ii)the construction loan documents for the Project are recorded. The term "Environmental Indemnity" shall mean an instrument substantially in the form attached to the Loan Agreement as Exhibit"K". The term "Hazardous Materials" means any hazardous or toxic substances, materials, wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic substances," under federal or state environmental and health and safety laws and regulations, including without limitation petroleum and petroleum byproducts, flammable explosives, area formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not include substances that are used or consumed in the normal course of developing, operating, or occupying a housing project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term"Maturity Date"means the earliest to occur of: (a) Borrower's failure to obtain an award of Low Income Housing Tax Credits for the Project by June 30,2011; NSP Note t04.01.10}.doc NSP Note Page 2of9 (b) The date of the Construction Financing Event for the Project; (c) November 30, 2011, or such later date as may be determined by the City Administrator in his sole discretion; (d) The date that the Property or any portion thereof or interest therein is sold, transferred, assigned or refinanced, without the prior written approval of the City, except as otherwise permitted in this Note; or (e) The date of a default by the Borrower under the terms of this Note, the NSP Deed of Trust, the Loan Agreement, the Regulatory Agreement or other obligations secured by a deed of trust on the Property, which is not cured within the respective time period provided herein and therein. The term "NSP Deed of Trust" shall mean the Deed of Trust recorded on or about the date of this Note, securing the NSP Loan. The term "NSP Funds" shall mean funds received by the City from the Neighborhood Stabilization Program allocation of the California Department of Housing and Community Development's State Community Development Block Grant Program The term"NSP Loan" shall mean the City's loan to Borrower in an amount not to exceed THREE HUNDRED NINETY THOUSAND FOUR HUNDRED SEVENTY-FOUR DOLLARS ($390,568.00) of NSP Funds, as evidenced by this Note and secured by the NSP Deed of Trust. The term "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. The term "Property" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater Avenue, Huntington Beach, California, and legally described in Exhibit"A"to the NSP Deed of Trust. The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions recorded against the Property on or about the date of this Note. 2. This Note evidences the obligation of the Borrower to the City for the repayment of the NSP Loan. None of the funds provided pursuant to the NSP Loan were funded directly or indirectly with any obligation the interest on which is exempt from tax under Section 103 of the NSP Note[04.0 1.1 0J.doc NSP Note Page 3 of 9 Internal Revenue Code of 1986, as amended, or pursuant to any United States government federal source. 3. This Note is payable at the principal office of the City, 2000 Main Street, Huntington Beach, CA 92648, or at such other place as the holder hereof may inform the Borrower in writing,in lawful money of the United States. 4. This Note shall be secured by the NSP Deed of Trust. 5. This Note shall bear interest at the annual rate of three percent, which shall commence to accrue upon disbursement. 6. Until the Maturity Date, no payments shall be due and payable under this Note except to the extent of any refinancing. 7. The entire unpaid principal balance of this Note and any accrued but unpaid interest shall be due and payable upon the Maturity Date. 8. All payments to the City shall be applied first to interest, then to reduce the principal amount owed. 9. The NSP Loan evidenced by this Note was given in the expectation that the Construction Financing Event for the Project will occur no later than November 30, 2011, or such later date as may be determined by the City Administrator in his sole discretion. At the Construction Financing Event, the NSP Note shall be deposited into escrow to be cancelled, the NSP Deed of Trust shall be reconveyed to Borrower, and Borrower shall execute a new promissory note to the City for the total amount of the NSP Loan, including any accrued interest theretofore unpaid plus any other sums secured by the NSP Deed of Trust. The new promissory note shall be secured by a deed of trust on the Property that is subordinate only to those prior liens and encumbrances that are reasonably approved by the City Administrator in accordance with the Loan Agreement. 10. (a) Prior to the repayment in full of the NSP Loan, the Borrower shall not assign or attempt to assign the Loan Agreement or any right therein,nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the improvements thereon, or any portion thereof or interest therein (referred to hereinafter as a "Transfer") other than expressly allowed under the Loan Agreement, without prior written approval of the City. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. The City shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to NSP Note(04.0 1.1 01.doc NSP Note Page 4of9 this Section 10, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. (b) Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill the obligations undertaken by Borrower in the Loan Agreement, the Regulatory Agreement and this Note. Any such proposed transferee, by instrument in writing satisfactory to the City and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of the City shall expressly assume all of the obligations of the Borrower under the Loan Agreement and the Regulatory Agreement, and agree to be subject to all conditions and restrictions applicable to the Borrower in this Note. There shall be submitted to the City for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the City its approval shall be indicated to the Borrower in writing. (c) In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, shall be deemed to relieve the Borrower or any other party from any obligations under the Loan Agreement or the Regulatory Agreement. (d) In the event of a Transfer without the prior written consent of the City, prior to the earlier of(i) the time the NSP Loan is paid in full and (ii) the Construction Financing Event, the remaining principal balance of the NSP Loan and all accrued but unpaid interest shall be immediately due and payable. (e) (i) As used herein, "Transfer" includes the sale, transfer or conveyance of the Property or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property; or the lease of all or substantially all of the Property. (ii) "Transfer" shall also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Borrower, or any conversion of Borrower to an entity form other than that of Borrower at the time of execution of this Note, except for the following: (A) a cumulative change in the ownership interests of any individual limited liability company member of forty-nine percent (49%) or less shall not be deemed a "Transfer" for purposes of this Note; and (B) a transfer of a portion or a majority of stock of any corporation to a trust formed in connection with a qualified employee ownership plan shall not,by itself,be deemed to constitute a change in ownership for purposes of this Note. NSP Note[04.01.10].doc NSP Note Page 5 of 9 (f) The City shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain the City's reasons for disapproval. 11. The NSP Loan is funded from the City's award of NSP Funds. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the Property shall be subject to the restrictions on rent and occupancy set forth in the Regulatory Agreement. 12. Each obligation of the Borrower under this Note is a nonrecourse obligation of the Borrower and its approved assignee. Except as provided otherwise in this Note, neither the Borrower nor any of the general or limited partners of Borrower's approved assignee, nor any other party, shall have any personal liability for payment of obligations to the City. The sole recourse of the City shall be the exercise of its rights against the Property and the Project and any related security for the NSP Loan. Notwithstanding the foregoing, the City may obtain a judgment or order (including, without limitation, an injunction) requiring Borrower or any other party to perform (or refrain from) specified acts other than repayment of the NSP Loan; may proceed against any person or entity whatsoever with respect to the enforcement of any performance or completion guarantees or similar rights to performance; and may recover directly from Borrower or any other party: (a) any damages, costs and expenses incurred by the City as a result of fraud or any criminal act or acts of Borrower or Borrower's assignee or any partner, shareholder, officer, director or employee (acting within the scope of his or her employment) of Borrower or Borrower's assignee or of any general partners of Borrower's assignee; (b) any damages, costs and expenses incurred by the City as a result of any misappropriation of funds provided for the acquisition and development of the Property, as described in the Loan Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; (c) any and all amounts owing by Borrower pursuant to Borrower's indemnification regarding Hazardous Substances; and (d) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 13. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this NSP Note[04.0 1.1 0].doc NSP Note Page 6 of 9 Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Note, the NSP Deed of Trust or any term or provision of either thereof. 14. Upon the failure of Borrower to perform or observe any other term or provision of this Note, or upon the occurrence of any event of default under the terms of the NSP Deed of Trust, the Loan Agreement or the Regulatory Agreement, or other obligations secured by a deed of trust on the Property, the holder may exercise its rights or remedies hereunder or thereunder. 15. (a) Subject to the extensions of time set forth in this Section 15, and subject to the further provisions of this Section 15, failure or delay by Borrower to perform any material term or provision of this Note, the NSP Deed of Trust, the Loan Agreement, Regulatory Agreement, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. (b) City shall give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of its rights and remedies shall not deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If an event of default occurs under the terms of this Note or the NSP Deed of Trust, or other obligations secured by a deed of trust on the Property, prior to exercising any remedies hereunder or thereunder City shall give Borrower written notice of such default. Borrower shall have thirty (30) days within which to cure the default prior to exercise of remedies by City under this Note and/or the NSP Deed of Trust; provided that if such default is not reasonably capable of being cured within thirty (30) days, Borrower must commence to cure j said event within thirty (30) days and diligently and in good faith continue to cure the event of default. In no event shall City be precluded from exercising remedies if its security becomes or is about to become materially impaired by any failure to cure a default or the default is not cured within one hundred twenty (120) days after the notice of default is received or deemed received. (e) Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy,. shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of NSP Note[04.01.10].doc NSP Note Page 7 of 9 professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Borrower; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 16. Notwithstanding specific provisions of this Note,Borrower shall not be deemed to be in default for failure to perform any non-monetary performance hereunder where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub-contractor or supplier, acts of the City or any other public or governmental authority or entity, or any causes beyond the control or without the fault of the Borrower. An extension of time for any such cause (a"Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the City within thirty (30) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the Borrower delivers to the City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the City and Borrower. 17. If the rights created by this Note shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations shall be completely performed and paid. 18. If any event occurs giving the City the right to accelerate this Note,the entire unpaid principal owing hereunder shall,as of the date of such default,commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non-usurious interest rate permitted by law, whichever is less. Further, in the event Borrower fails to reimburse the City for any amount advanced by or for the account of the City which is due hereunder or under the NSP Deed of Trust within ten (10) days after written notice of such advance is made by the City to Borrower, then such unreimbursed amount shall thereafter bear interest at the Default Rate until paid. 19. Borrower shall have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, even if Borrower prepays the entire balance of this Note including all accrued interest, the covenants, conditions and restrictions imposed on the Property by the Regulatory Agreement shall remain in full force and effect for the full 60-year term NSP Note[04.01.10].doc NSP Note Page 8 of 9 i I as specified therein and Borrower shall not be entitled to a reconveyance of the NSP Deed of Trust so long as the Regulatory Agreement remains in effect. 20. If any attorney is engaged by the City because of any event of an uncured default under this Note or the NSP Deed of Trust or to enforce any provision of either instrument,whether or not suit is filed hereon,the City shall bear its own attorney's fees and costs. 21. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by City and Borrower. 22. Notwithstanding any provision in this Note, the City Deed of Trust or other document securing same,the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 23. Time is of the essence in the performance of each provision hereof. IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth above. COLETTE'S CHILDREN HOME,INC., a California nonprofit public benefit corporation By 1 Pamela Hop resident NSP Note[04.01.10].doc NSP Note Page 9 of 9 EXHIBIT 8 HOME PROMISSORY NOTE PROMISSORY NOTE SECURED BY DEED OF TRUST TO THE CITY OF HUNTINGTON BEACH [HOME PROGRAM] DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same,must be surrendered to Trustee for cancellation before reconveyance will be made. 3% Interest Huntington Beach, California $284,432.00 (` ,2010 FOR VALUE RECEIVED, COLETTE'S CHILDREN HOME, INC., a California non- profit public benefit corporation (`Borrower"), hereby promises to pay to the CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California ("City"), or order, a principal amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS ($284,432.00) (the "HOME Acquisition Loan"). This Note is given pursuant to that certain Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010, between Borrower ("Developer" therein) and City (the "Loan Agreement") and evidences the HOME Acquisition Loan to Borrower,which provides part of the financing for the acquisition of that certain real property in the City of Huntington Beach legally described in the Deed of Trust securing this Note (the "Property") for the development of affordable housing for low income households. The Borrower shall not make any sale, assignment or conveyance, or transfer in any other form, of the Property, or any part thereof, or interest therein without the express written consent of the City as set forth in Section 2.5 of the Loan Agreement. The obligation of Borrower to City hereunder is subject to the terms of the Loan Agreement, this Note and the following instruments, each dated on or about the date hereof, and, where applicable, executed and delivered by Borrower for the purpose of securing this Note: a Regulatory Agreement ("Regulatory Agreement"); a Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) ("HOME Deed of Trust"); and an Assignment of Agreements ("Assignment of Agreements'. Said documents are public records on file in the offices of City, and the provisions of said documents are incorporated herein by this reference. The Borrower shall pay interest at the rate, in the amount and at the time hereinafter provided. I. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement. In addition, the following terms shall have the following meanings: The term "Acquisition Costs" shall mean the total cost of acquiring the Property in conformance with the terms and conditions of this Agreement, in an amount approved by the City Administrator or his designee, including closing and escrow costs and the cost of the City's and the Borrower's title insurance policies. HOME Note[04.01.101.doc HOME Note Page 1 of 9 The term "Approved 'Title Conditions" shall mean title that is subject to current property taxes and assessments, easements and other encumbrances specifically approved by the City Administrator. The term"Assignment of Agreements" shall mean a document substantially in the form attached to the Loan Agreement as Exhibit"L",which is incorporated herein by this reference. The term"City" shall mean the City of Huntington Beach, a municipal corporation of the State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of, or successor to,the rights,powers, and responsibilities of City. The term"City Administrator" shall mean the individual duly appointed to the position of City Administrator of the City, or authorized designee. Whenever an administrative action is required by City to implement the terms of this Housing Agreement, the City Administrator, or an authorized designee, shall have authority to act on behalf of City, except with respect to matters reserved under California law or the City's Charter wholly for City Council determination. The term "Construction Financing Event" shall mean the point in time when (i) all conditions precedent to the recording of the City's HOME development loan documents for the Project have been satisfied and (ii)the construction loan documents for the Project are recorded. The term "Environmental Indemnity" shall mean an instrument substantially in the form attached to the Loan Agreement as Exhibit"K". The term "Hazardous Materials" means any hazardous or toxic substances, materials, wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic substances," under federal or state environmental and health and safety laws and regulations, including without limitation petroleum and petroleum byproducts, flammable explosives, area formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not include substances that are used or consumed in the normal course of developing, operating, or occupying a housing project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term "HOME Acquisition Loan" shall mean the City's loan to Developer in an amount not to exceed TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS ($284,432.00) of HOME Funds,pursuant to this Agreement. HOME Note[04.01.10].doc HOME Note Page 2 of 9 The term "HOME Deed of Trust" shall mean the Deed of Trust securing the HOME Acquisition Loan. The term "HOME Funds" means the City's allocation of funds from the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. The term"Maturity Date"means the earliest to occur of: (a) Borrower's failure to obtain an award of Low Income Housing Tax Credits for the Project by June 30,2011; (b) The date of the Construction Financing Event for the Project; (c) November 30, 2011, or such later date as may be determined by the City Administrator in his sole discretion; (d) The date that the Property or any portion thereof or interest therein is sold, transferred, assigned or refinanced, without the prior written approval of the City, except as otherwise permitted in this Note; or (e) The date of a default by the Borrower under the terms of this Note, the HOME Deed of Trust, the Loan Agreement,the Regulatory Agreement or other obligations secured by a deed of trust on the Property, which is not cured within the respective time period provided herein and therein. The term "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. The term "Property" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater Avenue, Huntington Beach, California, and legally described in Exhibit"A" to the HOME Deed of Trust. The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions recorded against the Property on or about the date of this Note. 2. This Note evidences the obligation of the Borrower to the City for the repayment of the HOME Acquisition Loan. None of the funds provided pursuant to the HOME Acquisition Loan were funded directly or indirectly with any obligation the interest on which is exempt from HOME Note[04.01.10].doc HOME Note Page 3 of 9 tax under Section 103 of the Internal Revenue Code of 1986, as amended, or pursuant to any United States government federal source. 3. This Note is payable at the principal office of the City, 2000 Main Street, Huntington Beach, CA 92648, or at such other place as the holder hereof may inform the Borrower in writing,in lawful money of the United States. 4. This Note shall be secured by the HOME Deed of Trust. 5. This Note shall bear interest at the annual rate of three percent, which shall commence to accrue upon disbursement. 6. Until the Maturity Date, no payments shall be due and payable under this Note except to the extent of any refinancing. 7. The entire unpaid principal balance of this Note and any accrued but unpaid interest shall be due and payable upon the Maturity Date, 8. All payments to the City shall be applied first to interest, then to reduce the principal amount owed. 9. The HOME Acquisition Loan evidenced by this Note was given in the expectation that the Construction Financing Event for the Project will occur no later than November 30, 2011, or such later date as may be determined by the City Administrator in his sole discretion. Upon the occurrence of the Construction Financing Event, the outstanding principal amount of the HOME Acquisition Loan shall be added to the amount of the additional HOME funds that City anticipates will be loaned to Borrower for payment of a portion of the Project's approved construction costs. At the Construction Financing Event, the HOME Note shall be deposited into escrow to be cancelled, the HOME Deed of Trust shall be reconveyed to Borrower, and Borrower shall execute a new promissory note to the City for the total amount of the HOME acquisition and construction loans plus any accrued interest on the HOME Acquisition Loan theretofore unpaid plus any other sums secured by the HOME Deed of Trust. The new promissory note shall be secured by a deed of trust on the Property that is subordinate only to those prior liens and encumbrances that are reasonably approved by the City Administrator in accordance with the Loan Agreement. 10. (a) Prior to the repayment in full of the HOME Acquisition Loan, the Borrower shall not assign or attempt to assign the Loan Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the improvements' thereon, or any portion thereof or interest therein (referred to HOME Note[04.01.101.aoe HOME Note Page 4of9 hereinafter as a "Transfer") other than expressly allowed under the Loan Agreement, without prior written approval of the City. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. The City shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 10, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. (b) Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill the obligations undertaken by Borrower in the Loan Agreement, the Regulatory Agreement and this Note. Any such proposed transferee, by instrument in writing satisfactory to the City and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of the City shall expressly assume all of the obligations of the Borrower under the Loan Agreement and the Regulatory Agreement, and agree to be subject to all conditions and restrictions applicable to the Borrower in this Note. There shall be submitted to the City for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the City its approval shall be indicated to the Borrower in writing. (c) In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, shall be deemed to relieve the Borrower or any other party from any obligations under the Loan Agreement or the Regulatory Agreement. (d) In the event of a Transfer without the prior written consent of the City, prior to the earlier of (i) the time the HOME Acquisition Loan is paid in full and (ii) the Construction Financing Event, the remaining principal balance of the HOME Acquisition Loan and all accrued but unpaid interest shall be immediately due and payable. (e) (i) As used herein, "Transfer" includes the sale, transfer or conveyance of the Property or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property; or the lease of all or substantially all of the Property. (ii) "Transfer" shall also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Borrower, or any conversion of Borrower to an entity form other than that of Borrower at the time of execution of this Note, except for the following: (A) a cumulative change in the ownership interests of any individual limited liability company member of forty-nine percent (49%) or less shall not be deemed a "Transfer" for purposes of this Note; and (B) a transfer of a portion or a majority of HOME Note[04.0 1.1 0).doc HOME Note Page 5 of 9 stock of any corporation to a trust formed in connection with a qualified employee ownership plan shall not,by itself,be deemed to constitute a change in ownership for purposes of this Note. (f) The City shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain the City's reasons for disapproval. 11. The HOME Acquisition Loan is funded from the City's allocation of HOME Funds. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the Property shall be subject to the restrictions on rent and occupancy set forth in the Regulatory Agreement. 12. Each obligation of the Borrower under this Note is a nonrecourse obligation of the Borrower and its approved assignee. Except as provided otherwise in this Note, neither the Borrower nor any of the general or limited partners of Borrower's approved assignee, nor any other party, shall have any personal liability for payment of obligations to the City. The sole recourse of the City shall be the exercise of its rights against the Property and the Project and any related security for the HOME Acquisition Loan. Notwithstanding the foregoing, the City may obtain a judgment or order (including, without limitation, an injunction) requiring Borrower or any other party to perform (or refrain from) specified acts other than repayment of the HOME Acquisition Loan; may proceed against any person or entity whatsoever with respect to the enforcement of any performance or completion guarantees or similar rights to performance; and may recover directly from Borrower or any other party: (a) any damages, costs and expenses incurred by the City as a result of fraud or any criminal act or acts of Borrower or Borrower's assignee or any partner, shareholder, officer, director or employee (acting within the scope of his or her employment) of Borrower or Borrower's assignee or of any general partners of Borrower's assignee; (b) any damages, costs and expenses incurred by the City as a result of any misappropriation of funds provided for the acquisition and development of the Property, as described in the Loan Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; (c) any and all amounts owing by Borrower pursuant to Borrower's indemnification regarding Hazardous Substances; and HOME Note[04,01.101.doc HOME Note Page 6 of 9 (d) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 13. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note,in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Note, the HOME Deed of Trust or any term or provision of either thereof. 14. Upon the failure of Borrower to perform or observe any other term or provision of this Note, or upon the occurrence of any event of default under the terms of the HOME Deed of Trust, the Loan Agreement or the Regulatory Agreement, or other obligations secured by a deed of trust on the Property,the holder may exercise its rights or remedies hereunder or thereunder. 15. (a) Subject to the extensions of time set forth in this Section 15, and subject to the further provisions of this Section 15, failure or delay by Borrower to perform any material term or provision of this Note, the HOME Deed of Trust, the Loan Agreement, Regulatory Agreement, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. (b) City shall give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of its rights and remedies shall not deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to.protect, assert, or enforce any such rights or remedies. (d) If an event of default occurs under the terms of this Note or the HOME Deed of Trust, or other obligations secured by a deed of trust on the Property, prior to exercising any remedies hereunder or thereunder City shall give Borrower written notice of such default. Borrower shall have thirty (30) days within which to cure the default prior to exercise of remedies by City under this Note and/or the HOME Deed of Trust; provided that if such default is not reasonably capable of being cured within thirty (30) days, Borrower must commence to cure said event within thirty (30) days and diligently and in good faith continue to cure the event of default. In no event shall City be precluded from exercising remedies if its security becomes HOME Note[04 01.10].doc HOME Note Page 7 of 9 or is about to become materially impaired by any failure to cure a default or the default is not cured within one hundred twenty (120) days after the notice of default is received or deemed received. (e) Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Borrower; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 16. Notwithstanding specific provisions of this Note,Borrower shall not be deemed to be in default for failure to perform any non-monetary performance hereunder where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub-contractor or supplier, acts of the City or any other public or governmental authority or entity, or any causes beyond the control or without the fault of the Borrower. An extension of time for any such cause (a"Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the City within thirty (30),days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the Borrower delivers to the City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the City and Borrower. 17. If the rights created by this Note shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations shall be completely performed and paid. 18. If any event occurs giving the City the right to accelerate this Note,the entire unpaid principal owing hereunder shall, as of the date of such default,commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non-usurious interest rate permitted by law, whichever is less. Further, in the event Borrower fails to reimburse the City for any amount advanced by or for the account of the City which is due hereunder or under the HOME Deed of Trust within ten (10) days after written HOME Note[04.01 10].doc HOME Note Page 8 of 9 notice of such advance is made by the City to Borrower, then such unreimbursed amount shall thereafter bear interest at the Default Rate until paid. 19. Borrower shall have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, even if Borrower prepays the entire balance of this Note including all accrued interest, the covenants, conditions and restrictions imposed on the Property by the Regulatory Agreement shall remain in full force and effect for the full 60-year term as specified therein and Borrower shall not be entitled to a reconveyance of the HOME Deed of Trust so long as the Regulatory Agreement remains in effect. 20. If any attorney is engaged by the City because of any event of an uncured default under this Note or the HOME Deed of Trust or to enforce any provision of either instrument, whether or not suit is filed hereon,the City shall bear its own attorney's fees and costs. 21. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by City and Borrower. 22. Notwithstanding any-provision in this Note, the City Deed of Trust or other document securing same,the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 23. Time is of the essence in the performance of each provision hereof. IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth above. COLETTE'S CHILDREN HOME,INC., a California nonprofit public benefit corpora on By Pamela Ho e,President HOME Note[04.01.101.doc HOME Note Page 9 of 9 EXHIBIT 9 NSP DEED OF TRUST This Document was electronically recorded by Recording Requested By:DPS DPS Norwalk C On Behalf Of: " DPS cc - Recorded in Official Records,Orange County Tom Daly,Clerk-Recorder FREE RECORDING REQUESTED BY I I �I I I III J6 NO FEE AND WHEN RECORDED MAIL TO: 2011000133136 04:30prn 03/11/11 42 414 D11 S02 A36 21 0.00 0.00 0.00 0.00 60.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code§27383) APN: 165-234-17 DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) BY.PACIFIC SUN APARTMENTS CIC, L.P. FOR THE BENEFIT OF THE CITY OF HUNTINGTON BEACH (NEIGHBORHOOD STABILIZATION PROGRAM] This Deed of Trust, Security Agreement and Fixture Filing(With Assignment of Rents)is made this_W day of Mti Vt h 2011 by PACIFIC SUN APARTMENTS CIC,L.P., a California limited partnership (hereinafter referred to as "Trustor") (whose address is c/o Colette's Children Home,17301-Beach Blvd.,#23,Huntington Beach,California 92647,to FIRST AMERICAN TITLE INSURANCE COMPANY, (hereinafter called "Trustee"), for the benefit of THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California (hereinafter called "Beneficiary").whose address is 2000 Main Street, Huntington Beach, California 92648. Witnesseth: That Trustor IRREVOCABLY GRANTS,TRANSFERS AND ASSIGNS to Trustee, its successors and assigns,_in Trust, with POWER. OF SALE TOGETHER.WITH RIGHT OF ENTRY AND POSSESSION all present and future right, title and interest of Trustor in and to the following property'(the "Trust Estate"): (1) All of Trustor's rights,title and interest in and to that certain real property in the City of Huntington Beach, County of Orange, State of California more particularly described in Exhibit "A" attached hereto and bythis reference made a part hereof(hereafter referred to as the "Subject Property'), (2) All_buildings, structures and other improvements now or in.the future Jocated or!to.be constructed on.the Subject Property(the "Improvements''); NSP DEED OF TRUST Page 1 of 17 (3) all tenements,hereditaments, appurtenances,privileges, franchises and other rights and interests now or in the future benefiting or otherwise relating to the Subject Property or the Improvements,including easements,rights-of-way and development rights(the"Appurtenances"). (The Appurtenances,together with the Subj ect Property and the Improvements,are hereafter referred to as the "Real Property"); (4) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation, leasing or occupancy of the Trust Estate, including those past due and unpaid (the "Rents"); (5) all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code(the"UCC"),and whether existing now orin the future)now or in the future located at, upon or about, or affixed or attached to or installed in,the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies,generators,boilers,furnaces,water tanks,heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor(the "Goods," and together with the Real Property, the "Property"); and (6) all accounts,general intangibles,chattel paper,deposit accounts,money,instruments and documents(as those terms are defined in the UCC)and all other agreements,obligations,rights and written material(in each case whether existing now or in the future)now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing,leasing,occupancy, sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (1) permits,approvals and other governmental authorizations,(ii)improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors,designers,architects,engineers, sales agents,leasing agents,consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of,injury or damage to,trespass on or taking,condemnation(or conveyance in lieu of condemnation)or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds,deferred payments,refunds,rebates,discounts,cost savings,escrow proceeds,sale proceeds and other rights to the payment of money,trade names,trademarks, goodwill and all other types on NSP DEED OF TRUST Page 2 of 17 intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the "Intangibles"). Trustor further grants to Trustee and Beneficiary,pursuant to the UCC,a security interest in all present and future right,title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estate described above in which a security interest may be created under the UCC (collectively, the "Personal Property"). This Deed of Trust constitutes a security agreement under the UCC,conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a"secured party'under the UCC and other applicable California law. Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9502(c)and 9604 of the UCC. FOR THE PURPOSE OF SECURING,in such order of priority as Beneficiary may elect, all of the following: (1) Due,prompt and complete observance,performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following: (a) a promissory note in the original principal amount of FOUR HUNDRED ONE THOUSAND FOUR HUNDRED EIGHTY TWO DOLLARS AND FIFTY CENTS ($401,482.50), executed by Trustor (Borrower" therein) of even date herewith (the "NSP Note"); (b) the Affordable Housing Agreement dated as of I & ,2011,by and between Trustor ("Developer" therein) and Beneficiary ("City" therein) (the `'Loan Agreement"); and (c) the Regulatory Agreement and Declaration of Covenants and Restrictions (including rental restrictions) dated as of April 5, 2010, by and between Trustor ("Developer" therein) and Beneficiary ("City" therein), recorded in the Official Records of Orange County on May 17, 2010 as Instrument No. 2010000231149, as amended by that certain Amendment to Regulatory Agreement and Declaration of Covenants and Restrictions dated as of 7j 2011 and recorded concurrently herewith("Regulatory Agreement")- NO (2) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of FOUR HUNDRED ONE THOUSAND FOUR HUNDRED EIGHTY TWO DOLLARS AND FIFTY CENTS ($401,482.50), evidenced by the NSP Note,with interest, according to the terms of the NSP Note. NSP DEED OF TRUST Page 3 of 17 (3) Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust. The Loan Agreement, including all Attachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the Regulatory Agreement, the NSP Note and the Assignment of Agreements, all as described in the Loan Agreement (collectively referred to as the"Secured Obligations") and all of their terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof however evidenced. Any capitalized term that is not otherwise defined in this Deed of Trust shall have the meaning ascribed to such term in the Loan Agreement. AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That Trustor shall pay the NSP Note at the time and in the manner provided therein, and perform the obligations of the Trustor as set forth in the Secured Obligations at the time and in the manner respectively provided therein; 2. That Trustor shall not permit or suffer the use of any of the Property for any purpose other than the uses permitted by the Secured Obligations; 3. That the Secured Obligations are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable; 4. That, subject to the prior rights,if any,of a lender whose lien is senior to this Deed of Trust ("Senior Lender"), all rents, profits and income from the Trust Estate are assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Secured Obligations, 5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period,Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Trust Estate and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the Improvements insured against loss by fire and such other hazards,casualties,and contingencies as may reasonably be required in writing from time to time by the Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage NSP DEED OF TRUST Page 4 of 17 insurance policy or policies. In no event shall the amounts of coverage be less than 100 percent of the replacement value of the Property. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies shall be deposited with the Beneficiary; 7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the Property;to pay,when due, all encumbrances,charges and liens,with interest,on the Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings,and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7; 8. To keep the Property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon without the prior written consent of Beneficiary,not to be unreasonably withheld,conditioned or delayed;to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon(subject to Trustor's right to contest the validity or applicability of laws or regulations);not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the Property; not to permit or suffer any material alteration of or addition to the Improvements without the consent of the Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail to make any payment or do any act as herein provided, then Beneficiary or Trustee,but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof,may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee;may pay,purchase,contest,or compromise any encumbrance,charge,or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay reasonable attorney fees. Notwithstanding the foregoing,in the event of default under this Deed of Trust,the Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary shall specify in writing the particular records that must be maintained and the information or reports that must be submitted; NSP DEED OF TRUST Page 5 of 17 11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary shall be added to the principal sum secured hereby; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under pennission given under this Deed of Trust,with interest from date of expenditure at the rate specified in the NSP Note; 13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor to keep and perform all the covenants, conditions, and agreements of said agreements,the principal sum and all arrears of interest,and other charges provided for in the NSP Note shall at the option of the Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding; 14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary,and further that it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor,materials or services which Trustor in good faith disputes and i diligently contesting, provided that Trustor shall. at Beneficiary's written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of Orange County, a surety bond in an amount one-and-one-half(12)times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; 15. That any and all improvements made or about to be made upon the premises covered by the Deed of Trust, and all plans and specifications, comply in all material respects with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated,now or hereafter,by lawful authority,and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; and 16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954,Article 2,Chapter 2 Title 14, Division 3, of the California Civil Code. IT IS MUTUALLY AGREED THAT: NSP DEED OF TRUST Page 6 of 17 17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner,subj ect to the rights of any senior lender that has been approved by Beneficiary,Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings,or to make any compromise or settlement,in connection with such taking or damage. Subject to the rights of any senior lender that has been approved by Beneficiary,all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including reasonable attorney's fees, the balance of the proceeds which are not used to reconstruct,restore or otherwise improve the Property or part thereof that was taken or damaged, shall be applied to the amount due under the NSP Note secured hereby. No amount applied to the reduction of the principal shall relieve the Trustor from making payments as required by the NSP Note. If the NSP Note has been repaid in full, the remainder of the balance shall revert to the Trustor; 18. Upon default by Trustor in making any payments provided for in the NSP Note secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust, the NSP Note and all documents evidencing expenditures secured hereby; 19. a. Prior to the repayment in full of the NSP Loan,the Trustor shall not assign or attempt to assign the Loan Agreement or any right therein,normake anytotal or partial sale,transfer, conveyance or assignment of the whole or any part of the Property,the Improvements,or any portion thereof or interest therein(referred to hereinafter as a"Transfer"),without prior written approval of the Beneficiary, except as otherwise permitted in the Secured Obligations. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. Beneficiary shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 19, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Beneficiary,to fulfill the obligations undertaken by Trustor in the Secured Obligations. Any such proposed transferee,by instrument in writing satisfactory to the Beneficiary and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of the Beneficiary NSP DEED OF TRUST Page 7 of 17 shall expressly assume all of the obligations of the Trustor under the Secured Obligations,and agree to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust. There shall be submitted to the Beneficiary for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the Beneficiary its approval shall be indicated to the Trustor in writing. C. In the absence of specific written agreement by the Beneficiary,no Transfer, or approval thereof by the Beneficiary,shall be deemed to relieve the Trustor or any other party from any obligations under the Secured Obligations. d. In the event of a Transfer prior to the time the NSP Loan is paid in full and without the prior written consent of the Beneficiary,the net proceeds of such Transfer,shall be paid to the Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the NSP Loan. e. (1) As used herein,"Transfer"includes the sale,agreement to sell,transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary,by operation of law or otherwise,the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project, except as provided in subparagraph e.(3)(iv) of this Section 19 below,or the appointment of a receiver or trustee to operate or exercise direct or indirect control over any portion of or interest in the Project or to operate or exercise direct or indirect control over any interest in any general partner or member of Trustor or any general partner or member of a general partner or member of Trustor. (2) "Transfer"shall also include the transfer,assignment,hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor or any general partner or member of Trustor or of any general partner or member of a general partner or member of Trustor,or any conversion of Trustor to an entity forin other than that of Trustor at the time of execution of the Loan Agreement, except for the assignment to a limited partnership provided for in the Secured Obligations and except that a cumulative change in ownership interest of forty-nine percent(49%)or less shall not be deemed a "Transfer" for purposes of this Deed of Trust. (3) Notwithstanding paragraphs(1)and(2),"Transfer"shall not include any of the following Permitted Transfers: (1) A conveyance of a security interest to the beneficiary of the Senior Deed of Trust, the HOME Deed of Trust, and the NSP Deed of Trust or the conveyance of title to the Property or Project in connection with a foreclosure, a deed in lieu of foreclosure or similar conversion of such loan; (ii) (a) A conveyance of the Project to a limited partnership in which the Managing General Partner and/or Administrative General Partner is Trustor or Trustor's NSP DEED OF TRUST Page 8 of 17 Administrative General Partner or (following the City's issuance of a Release of Construction Covenants for the Project) Managing General Partner or Administrative General Partner, or a sale back from such partnership to Trustor or either such General Partner. (b) The substitution of a General Partner as directed by the Investor Limited Partner in accordance with the terms of the Limited Partnership Agreement,subject to the following terms and conditions. The Investor Limited Partner may substitute a reasonably acceptable Affiliate of Investor Limited Partner(the"Interim General Partner')on an interim basis for a period reasonably calculated to identify and admit into the partnership a new General Partner, as set forth below (the "Substitute General Partner'). It is the desire of the City that the Managing General Partner shall be a Community Housing Development Organization ("CHDO") and reasonable efforts shall be made to accomplish that objective.The Substitute General Partner must be an entity reasonably acceptable to the City Manager, which approval shall not be unreasonably withheld or delayed. (iii) Any refinancing that repays any of the Senior Loan(referred to herein as a "Take-out Loan"), if the City Manager or designee reasonably determines (which determination shall not be unreasonably withheld,conditioned or delayed)that the resulting loan-to- value ratio (including the Take-out Loan, any of the remaining Senior Loan not repaid by the refinancing, the HOME Loan and the NSP Loan)will not exceed the loan-to-value ratio in effect at the time of the Permanent Financing Event for the initial development of the Project, and the repayment terns of the Take-out Loan do not materially impair the Trustor's ability to repay the HOME Loan and the NSP Loan. (iv) The leasing for occupancy of all or any part of the Property or Project in accordance with the Loan Agreement and the Regulatory Agreement. (v) The inclusion of equity participation by Trustor by transfer or addition of limited partners to the Trustor or similar mechanism;provided that such transfer,addition or other mechanism shall not involve any Prohibited Person or otherwise result in a violation of Anti-Terrorism Laws. (vi) The pledge by a General Partner to the Investor Limited Partner of the General Partner's interest in the Trustor, as security for the performance of all of the General Partner's obligations under the Limited Partnership Agreement. (vii) The sale, transfer or pledge of any limited partnership interest in the Trustor or of any partnership interest in the Investor Limited Partner;provided that such sale, transfer or pledge shall not be to any Prohibited Person or otherwise result in a violation of Anti-Terrorism Laws. (viii) Any dilution of the General Partner's interest in the Trustor in accordance with the Limited Partnership Agreement. NSP DEED OF TRUST Page 9 of 17 (ix) A transfer of ownership interest in the Administrative General Partner or the Administrative General Partner's interest in Trustor to (1) an immediate family member of the transferor or(ii) a trust established for the benefit of the transferor and/or for the benefit of an immediate family member of the transferor,provided that such a transfer will not cause a change in the management and/or control of Trustor. (x) A conveyance of the Property and Project to the Administrative General Partner pursuant to and in accordance with Section 205 of the Loan Agreement, upon its exercise of the option to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (xi) A conveyance of the Property and Project to the Managing General Partner pursuant to and in accordance with Section 205 of the Loan Agreement,upon its exercise of the right of first refusal to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (xii) The withdrawal of the Administrative General Partner from Trustor after Completion pursuant to the Limited Partnership Agreement and the replacement of the Administrative General Partner with a general partner that meets all requirements of the California Tax Credit Allocation Committee in connection with the Nine Percent Tax Credit and is acceptable to the Beneficiary in its reasonable discretion and approved by the Beneficiary in writing. f. Beneficiary shall not unreasonably withhold,condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain Beneficiary's reasons for disapproval. 20. After the lapse of such time as may then be required by law following the recordation of a notice of default, and notice of sale having been given as then required by law,Trustee,without demand on Trustor,shall sell the Property at the time and place fixed by it in the notice of sale,either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States,payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale,and from time to time thereafter may postpone the sale bypublic announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of(1)the expenses of such sale,together with the reasonable expenses NSP DEED OF TRUST Page 10 of 17 of this trust including therein reasonable Trustee's fees or attorneys fees for conducting the sale,and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3)all sums expended under the terms hereof,not then repaid,with accrued interest at the rate specified in the NSP Note; (4)all other sums then secured hereby; and(5)the remainder, if any, to the person or persons legally entitled thereto; 21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary,containing reference to this Deed of Trust and its place of record,which,when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, including but not limited to the obligations set forth in the Regulatory Agreement,and upon surrender of this Deed of Trust and any note,instrument or instruments setting forth all obligations secured hereby to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty,the Property then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive proof of the truthfulness thereof To the extent permitted by law,the grantee in such reconveyance may be described as"the person or persons legally entitled thereto."Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons claiming to be rightful grantees of any reconveyance. When the Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Property to the person or persons legally entitled thereto; 24, The trust created hereby is irrevocable by Trustor; 25, This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary"shall include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the NSP Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; 26. Trustee accepts this Trust when this Deed of Trust,duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not NSP DEED OF TRUST Page I 1 of 17 obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. Beneficiary, at its option,may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law; 27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of Trust,with a copy to CIC Pacific Sun Apartments,LLC,c/o Chelsea Investment Corporation, 5993 Avenida Encinas, Suite 101, Carlsbad, CA 92008.After Trustor gives written notice to Beneficiary that the Investor Limited Partner has been admitted to the Trustor, Beneficiary shall send to the Investor Limited Partner a copy of all notices of default and all other notices that Beneficiary sends to Trustor,at the address for the Investor Limited Partner as provided in accordance with the terms of the Loan Agreement; 28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary,to furnish to Beneficiary detailed statements in writing of income,rents,profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements,and such other information regarding the premises and their use as may be requested by Beneficiary; 29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the acquisition of the Property for the purpose of developing six dwelling units of affordable low income housing as set forth in the Secured Obligations for Very Low Income Households, and such dwelling units shall be occupied exclusively by such persons; 30. Trustor agrees that, except as otherwise provided in the NSP Note, upon sale or refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due and payable; 31. Each obligation of the Trustor under this Deed of Trust is a nonrecourse obligation of the Trustor and its approved assignee. Except as provided otherwise in this Deed of Trust,neither the Trustor nor any of the general or limited partners of Trustor's approved assignee, nor any other party, shall have any personal liability for payment of obligations to the City. The sole recourse of the City shall be the exercise of its rights against the Property and any related security for the NSP Loan. Notwithstanding the foregoing, Beneficiary may obtain a judgment or order (including, without limitation, an injunction)requiring Trustor or any other party to perform (or refrain from) specified acts other than repayment of the NSP Loan; may proceed against any person or entity whatsoever with respect to the enforcement of any performance or completion guarantees or similar rights to perfonnance; and may recover directly from Trustor or any other person or entity: NSP DEED OF TRUST Page 12 of 17 (i) any damages,costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any general partner or member of Trustor or any member,partner, shareholder, officer, director, agent or employee of(1)Trustor or(2) any general partner or member of Trustor or(3)any general partner or member of a general partner or member of Trustor; (ii) any damages,costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the acquisition and development of the Property, as described in the Secured Obligations, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; (iii) any and all amounts owing by Trustor pursuant to Trustor's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys'fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 32. Notwithstanding specific provisions of this Deed of Trust,non-monetary performance hereunder shall not be deemed to be in default where delays or defaults are proximately caused by any of the following Force Majeure events,provided such event actually delays and interferes with the timely performance of the matter, and, despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor: War; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof, unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority(except acts or failure to act of the Beneficiary shall not excuse performance by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event,its cause,when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor shall deliver such written notice within ten (10) business days after it obtains actual knowledge of the event; 33. If the rights and liens created by this Deed of Trust shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations,the unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all NSP DEED OF TRUST Page 13 of 17 performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations; 34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further provisions of this Section 34, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed_ of Trust constitutes a default under this Deed of Trust. (b) Beneficiary shall give written notice of default to Trustor and Investor Limited Partner, specifying the default complained of by the Beneficiary. Failure or delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary shall give Trustor written notice of such default. Trustor shall have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary. (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within thirty(30)days,Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently,continually,and in good faith works to effect a cure as soon as possible,then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. If Trustor fails to take corrective action or cure the default within a reasonable time,Beneficiary shall give Trustor and, as provided in paragraph(f),below,the Investor Limited Partner,notice thereof,whereupon the Investor Limited Partner may remove and replace the general partner with a substitute general partner, who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. Beneficiary agrees to accept cures tendered by the Investor Limited Partner within the cure periods provided in this Deed of Trust or within the time periods provided in Civil Code Section 2924c, whichever is longer. Additionally,in the event the Investor Limited Partner is precluded from curing a non-monetary default due to an inability to remove the General Partner as a result of a bankruptcy, injunction, or similar proceeding by or against Trustor or its General Partner, Beneficiary agrees to forbear from completing a foreclosure (judicial or nonjudicial)during the period during which the Investor Limited Partner is so precluded from acting,not to exceed 90 days,provided such limited partner is otherwise in compliance with the foregoing provisions. In no event shall Beneficiary be precluded from exercising remedies if its NSP DEED OF TRUST. Page 14 of 17 security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety(90) days after the first notice of default is given. (f) After Trustor gives written notice to Beneficiary that the Investor Limited Partner has been admitted to the Trustor, Beneficiary shall send to the Investor Limited Partner a copy of all notices of default and all other notices that Beneficiary sends to Trustor,at the address for the limited partner as provided by written notice to Beneficiary by Trustor. (g) Except as otherwise required to comply with the provisions of California Civil Code Section 2924 et seq. that are applicable thereto, any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a"hard"copy, shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service,courier service such as United Parcel Service or Federal Express,or by U.S. Postal Service),shall be deemed received on the documented date of receipt by Trustor;and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 35. This Deed of Trust shall be subordinate and junior to the Construction Deed of Trust. In the event of a default or breach by Trustor of any security instrument securing a senior loan, Beneficiary shall have the right to cure the default prior to completion of any foreclosure. In such event,Beneficiary shall be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law; 36. This Deed of Trust shall be subordinate and junior to the City of Huntington Beach HOME Deed of Trust to be recorded concurrently herewith against the Property in the Official Records of Orange County; and 37. The Trustor has informed the Beneficiary that Trustor intends that the Project qualify for an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code ("Nine Percent Tax Credit"). In order to receive an allocation of tax credits, the Trustor will be required to record in the real property records of the County of Orange an"extended low-income housing commitment"(as defined in Code Section 42(h)(6)(13))(the"Extended Use Agreement"). If the Trustor demonstrates to the reasonable satisfaction of Beneficiary that the California Department of Housing and Community Development or applicable federal law requires that the lien of this Deed of Trust be subordinate to the Extended Use Agreement, then the Beneficiary shall execute a subordination agreement("Extended Use Subordination Agreement")wherein the lien of this Deed of Trust is subordinated to the Extended Use Agreement. The Extended Use Subordination Agreement will: (a) provide that, if the Beneficiary or its successors or assigns (collectively, the "REO Owner") acquires the Property by foreclosure(or instrument in lieu of foreclosure),then the NSP DEED OF TRUST Page 15 of 17 "extended use period" (as defined in Code Section 42(h)(6)(D)) shall terminate, except for the obligation of the REO Owner to comply with the limitations on evictions,termination of tenancy and increase in rents for the three year period following the REO Owner's acquisition of the mortgaged property, as set forth in Code Section 42(h)(6)(E)(ii); and (b) otherwise be in a form reasonably acceptable to Beneficiary. IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above. "TRUSTOR" PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing General Partner By: I j k Pamela ope Presid t By: CIC Pacific Sun Apartments, LLC, a California limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager �B James J. Sch President NSP DEED OF TRUST Page 16 of 17 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT . State of California County of Vj;��I_rqe_ On ,-' bef e me, 4 Ddte Here Insert Name and Title o the Officer personally appeared l LAG" Name(s)of Signer(s) 4 who proved to me on. the basis of satisfactory evidence to be the personal whose namos-) is/are- subscribed to the within instrument and acknowledged to me that -He/she/they executed the same in 4 G.R.WITHERS till/her/their authorized capacity), and that by Commission# 1903166 kris/her/their signature(s) on the instrument the ®� `'Notary Public-California' person(sj, or the entity upon behalf of which the San Diego County - personfs) acted, executed the instrument. Mi Co7, 1mm.Ex Tres Se 6,2014 I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing (F paragraph is true and correct. WITNESS my 1 nd and official seat. Signature: Place Notary Seal Above Signature of Notary Public. OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document i( Title or Type of Document: r'`'t�,� -�` ,z e Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) F Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s)` ❑ Individual ❑Individual 0 ❑ Partner—❑Limited ❑General Top of thumb her ❑Partner—❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact (4 ❑ Trustee ❑Trustee ) ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: i 0 2009 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-800-876-6827) Item#5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California , County of On / �'� i ..r�' befor me, /bate —� _r Her lr ert a. and Title of the Officer personally appeared Name(s) Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose names) is/are subscribed to the R.yVITHER3 within instrument and acknowledged to me that G.R Commission b'ERS _6 he/shef executed the same in his/ eir authorized Notary Public-california capacity(ies), and that by his/heMteir signature(s) on the San Dior,County instrument the personEsj, or the entity upon behalf of AA Comm.Ex Tres Se 6;2014 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 //? t= 1�� '' �✓ Place Notary Seal Above p� � Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying 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: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer—Title(s): ❑ Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General _ ElPartner—ElLimited ElGeneral ❑ Attorney in Fact MON M LHi I q i ❑ Attorney in Fact • El Trustee Top of thumb here El Trustee Top of thumb here ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: ©2007 National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402•www.NationalNotary.org Item#5907 Reorder:Call Toll-Free 1-800-876-6827 APPROVED BY: THE CITY OF HUNTINGTON BEACH, a municipal co ration of the State of California By: 0'10z� J/dlityh4anager ATTEST: By: City er APPROVED AS TO FORM: r• ity Att e By: KANE BALLMER&BERKMA Special Counsel NSP DEED OF TRUST Page 17 of 17 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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 m hand and official seal .l. P L. ESPARZA y Commission# 1857021 Z :'+e Notary Public-California z Z ` Orange County My Comm. Expires Aug 4, 2013 (Seal) (Notary Sign re) EXHIBIT A LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO.79-577,IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE, STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED"RECIPROCAL EASEMENT AGREEMENT"RECORDED t>i I I ,2011 AS INSTRUMENT NO. 2011 ®©Q 13 1 Z6) , OF OFFICIAL RECORDS. APN: 165-234-17 EXHIBIT 10 HOME DEED OF TRUST This Document was electronically recorded by DPS Norwalk C RECORDED REQUEST OF Recorded in Official Records,Orange County First American Title Tom Daly,Clerk-Recorder v SUBDIVISION MAPPING DEPT. FREE RECORDING REQUESTED BY I I III II I II II III III II I III II 84.00 A� AND WHEN RECORDED MAIL TO: 2011000133134 04:30pm 03/11/11 42 414 D11 S02 A36 22 O 0.00 0.00 0.00 0.00 63.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk (Space Above This Line for Recorder's Office Use Only) (Exempt.from Recording Fee per Gov. Code§ 27383) APN: 165-234-17 DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) BY PACIFIC'SUN'APARTMENTS CIC,L.P. FOR THE BENEFIT OF THE CITY OF HUNTINGTON BEACH IHOME PROGRAM] .This Deed of Trust,`Security Agreement and Fixture Filing(With Assignment of Rents) is made this�day of Mtq y-c ,2011 by PACIFIC SUN APARTMENTS CIC,L.P.,a California limited partnership (hereinafter referred to as "Trustor") (whose address is c/o Colette's Children Home, 17301 Beach Blvd.,#23,Huntington Beach,California 92647,to FIRST AMERICAN TITLE INSURANCE COMPANY; (hereinafter called "Trustee"), for the benefit of THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California (hereinafter called "Beneficiary"), whose address is 2000 Main Street, Huntington Beach, California 92648. Witnesseth: That Trustor IRREVOCABLY GRANTS,TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION all present and future right, title and interest ofTrustor in and to the following property(the "Trust-Estate"): . (1) All of Trustor's rights,title and interest in and to that certain real property in the City of Huntington Beach, County of Orange, State of California more particularly described in Exhibit "A" attached hereto and by this reference made a part hereof(hereafter referred to as the "Subject Property"); (2) All buildings;structures and other improvements now or in the future.located or to be constructed on the Subject Property (the "Improvements"): HOME DEED OF,TRUST PAGE 1 of 18 (3) all tenements, hereditaments, appurtenances,privileges, franchises and other rights and interests now or in the future benefiting or otherwise relating to the Subject Property or the Improvements,including easements, rights-of-way and development rights(the"Appurtenances"). (The Appurtenances,together with the Subject Property and the Improvements,are hereafter referred to as the "Real Property"); (4) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation, leasing or occupancy of the Trust Estate, including those past due and unpaid (the "Rents"); (5) all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code(the"UCC"),and whether existing now or in the future)now or in the future located at,upon or about,or affixed or attached to or installed in,the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings,machinery, appliances, building materials and supplies,generators,boilers,furnaces,water tanks,heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor (the "Goods," and together with the Real Property,the "Property'); and (6) all accounts,general intangibles,chattel paper,deposit accounts,money,instruments and documents(as those terms are defined in the UCC)and all other agreements,obligations,rights and written material(in each case whether existing now or in the future)now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits,approvals and other governmental authorizations,(ii)improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors,designers,architects, engineers, sales agents, leasing agents,consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of,injury or damage to,trespass on or taking,condemnation(or conveyance in lieu of condemnation)orpublic use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, HOME DEED OF TRUST PAGE 2 of 18 bonds,deferred payments,refunds,rebates,discounts,cost savings,escrow proceeds,sale proceeds and other rights to the payment of money,trade names, trademarks, goodwill and all other types on intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property(the "Intangibles'). Trustor further grants to Trustee and Beneficiary,pursuant to the UCC, a security interest in all present and future right,title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estate described above in which a security interest may be created under the UCC (collectively, the "Personal Property'). This Deed of Trust constitutes a security agreement under the UCC,conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a"secured party'under the UCC and other applicable California law. Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9502(c)and 9604 of the UCC. FOR THE PURPOSE OF SECURING,in such order of priority as Beneficiary may elect, all of the following: (1) Due,prompt and complete observance,performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following: (a) a promissory note in the original principal amount of SEVEN HUNDRED SEVENTY NINE THOUSAND TWO HUNDRED FIVE DOLLARS AND THIRTY FOUR CENTS($779,205.34),executed by Trustor(`Borrower"therein)of even date herewith (the "HOME Note"); (b) the Affordable Housing Agreement dated as of 2011,by and between Trustor ("Developer" therein) and Beneficiary ("City' therein) (the "Loan Agreement"); and (c) the Regulatory Agreement and Declaration of Covenants and Restrictions (including rental restrictions) dated as of April 5, 2010, by and between Trustor ("Developer" therein) and Beneficiary ("City' therein), recorded in the Official Records of Orange County on May 17, 2010 as Instrument No. 2010000231149, as amended by that certain Amendment to Regulatory Agreement and Declaration of Covenants and Restrictions dated as of ?j 2011 and recorded concurrently herewith("Regulatory Agreement"). ZG� f OG013�13D (2) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of SEVEN HUNDRED SEVENTY NINE THOUSAND TWO HUNDRED FIVE DOLLARS AND HOME DEED OF TRUST PAGE 3 of 18 THIRTY FOUR CENTS ($779,205.34),or so much thereof as may be advanced by Beneficiary for the benefit of Trustor, evidenced by the HOME Note, with interest, according to the terms of the HOME Note. (3) Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform(whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust. The Loan Agreement, including all Attachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the Regulatory Agreement,the HOME Note and the Assignment of Agreements, all as described in the Loan Agreement (collectively referred to as the"Secured Obligations")and all of their terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof however evidenced.Any capitalized term that is not otherwise defined in this Deed of Trust shall have the meaning ascribed to such term in the Loan Agreement. AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That Trustor shall pay the HOME Note at the time and in the manner provided therein,and perform the obligations of the Trustor as set forth in the Secured Obligations at the time and in the manner respectively provided therein; 2. That Trustor shall not permit or suffer the use of any of the Property for any purpose other than the uses permitted by the Secured Obligations; 3. That the Secured Obligations are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation,and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable; 4. That,subject to the prior rights,if any,of a lender whose lien is senior to this Deed of Trust ("Senior Lender"), all rents, profits and income from the Trust Estate are assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Secured Obligations; 5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period,Beneficiary shall be entitled to the HOME DEED OF TRUST PAGE 4 of 18 appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Trust Estate and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the Improvements insured against loss by fire and such other hazards,casualties,and contingencies as may reasonably be required in writing from time to time by the Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. In no event shall the amounts of coverage be less than 100 percent of the replacement value of the Property. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies shall be deposited with the Beneficiary; 7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the Property;to pay,when due,all encumbrances,charges and liens,with interest,on the Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings,and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7; 8. To keep the Property in good condition and repair,subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon without the prior written consent of Beneficiary,not to be unreasonably withheld,conditioned or delayed;to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon(subject to Trustor's right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the Property;not to permit or suffer any material alteration of or addition to the Improvements without the consent of the Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee,and to pay all costs and expenses,including cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail to make any payment or do any act as herein provided, then Beneficiary or Trustee,but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof,may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee HOME DEED OF TRUST PAGE 5 of 18 being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee;may pay,purchase,contest,or compromise any encumbrance,charge,or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay reasonable attorney fees. Notwithstanding the foregoing,in the event of default under this Deed of Trust,the Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary shall specify in writing the particular records that must be maintained and the information or reports that must be submitted; 11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary shall be added to the principal sum secured hereby; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee,under permission given under this Deed of Trust,with interest from date of expenditure at the rate specified in the HOME Note; 13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor to keep and perform all the covenants, conditions,and agreements of said agreements,the principal sum and all arrears of interest,and other charges provided for in the HOME Note shall at the option of the Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding; 14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary,and further that it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor,materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall, at Beneficiary's written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of Orange County,a surety bond in an amount one-and-one-half(12)times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; 15. That any and all improvements made or about to be made upon the premises covered by the Deed of Trust, and all plans and specifications, comply in all material respects with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated,now or hereafter,by lawful authority,and that the same will upon completion comply HOME DEED OF TRUST PAGE 6 of 18 with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; and 16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954,Article 2,Chapter 2 Title 14, Division 3, of the California Civil Code. IT IS MUTUALLY AGREED THAT: 17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner,subject to the rights of any senior lender that has been approved by Beneficiary,Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings,or to make any compromise or settlement,in connection with such taking or damage. Subject to the rights of any senior lender that has been approved by Beneficiary,all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including reasonable attorney's fees, the balance of the proceeds which are not used to reconstruct,restore or otherwise improve the Property or part thereof that was taken or damaged, shall be applied to the amount due under the HOME Note secured hereby. No amount applied to the reduction of the principal shall relieve the Trustor from making payments as required by the HOME Note. If the HOME Note has been repaid in full, the remainder of the balance shall revert to the Trustor; 18. Upon default by Trustor in making any payments provided for in the HOME Note secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust, the HOME Note and all documents evidencing expenditures secured hereby; 19. a. Prior to the repayment in full of the HOME Loan,the Trustor shall not assign or attempt to assign the Loan Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the Improvements, or HOME DEED OF TRUST PAGE 7 of 18 any portion thereof or interest therein(referred to hereinafter as a"Transfer'),without prior written approval of the Beneficiary, except as otherwise permitted in the Secured Obligations. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. Beneficiary shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 19, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Beneficiary,to fulfill the obligations undertaken by Trustor in the Secured Obligations. Any such proposed transferee,by instrument in writing satisfactory to the Beneficiary and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of the Beneficiary shall expressly assume all of the obligations of the Trustor under the Secured Obligations,and agree to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust. There shall be submitted to the Beneficiary for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the Beneficiary its approval shall be indicated to the Trustor in writing. C. In the absence of specific written agreement by the Beneficiary,no Transfer, or approval thereof by the Beneficiary,shall be deemed to relieve the Trustor or any other party from any obligations under the Secured Obligations. d. In the event of a Transfer prior to the time the HOME Loan is paid in full and without the prior written consent of the Beneficiary,the net proceeds of such Transfer, shall be paid to the Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the HOME Loan. e. (1) As used herein,"Transfer'includes the sale,agreement to sel 1,transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary,by operation of law or otherwise,the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project, except as provided in subparagraph e.(3)(iv) of this Section 19 below,or the appointment of a receiver or trustee to operate or exercise direct or indirect control over any portion of or interest in the Project or to operate or exercise direct or indirect control over any interest in any general partner or member of Trustor or any general partner or member of a general partner or member of Trustor. (2) "Transfer'shall also include the transfer,assignment,hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor or any general partner or member of Trustor or of any general partner or member of a general partner or member of Trustor,or any conversion of Trustor to an entity form other than that of Trustor at the time of execution of the HOME DEED OF TRUST PAGE 8 of 18 Loan Agreement, except for the assignment to a limited partnership provided for in the Secured Obligations and except that a cumulative change in ownership interest of forty-nine percent(49%)or less shall not be deemed a"Transfer" for purposes of this Deed of Trust. (3) Notwithstanding paragraphs(1)and(2),"Transfer"shall not include any of the following Permitted Transfers: (i) A conveyance of a security interest to the beneficiary of the Senior Deed of Trust, the HOME Deed of Trust, and the NSP Deed of Trust or the conveyance of title to the Property or Project in connection with a foreclosure, a deed in lieu of foreclosure or similar conversion of such loan; (ii) (a) A conveyance of the Project to a limited partnership in which the Managing General Partner and/or Administrative General Partner is Trustor or Trustor's Administrative General Partner or (following the City's issuance of a Release of Construction Covenants for the Project) Managing General Partner or Administrative General Partner, or a sale back from such partnership to Trustor or either such General Partner. (b) The substitution of a General Partner as directed by the Investor Limited Partner in accordance with the terms of the Limited Partnership Agreement,subject to the following terms and conditions. The Investor Limited Partner may substitute a reasonably acceptable Affiliate of Investor Limited Partner(the"Interim General Partner')on an interim basis for a period reasonably calculated to identify and admit into the partnership a new General Partner, as set forth below (the "Substitute General Partner'). It is the desire of the City that the Managing General Partner shall be a Community Housing Development Organization ("CHDO") and reasonable efforts shall be made to accomplish that objective.The Substitute General Partner must be an entity reasonably acceptable to the City Manager, which approval shall not be unreasonably withheld or delayed. (iii) Any refinancing that repays any of the Senior Loan(referred to herein as a "Take-out Loan"), if the City Manager or designee reasonably determines (which determination shall not be unreasonably withheld,conditioned or delayed)that the resulting loan-to- value ratio (including the Take-out Loan, any of the remaining Senior Loan not repaid by the refinancing, the HOME Loan and the NSP Loan)will not exceed the loan-to-value ratio in effect at the time of the Permanent Financing Event for the initial development of the Project, and the repayment terms of the Take-out Loan do not materially impair the Trustor's ability to repay the HOME Loan and the NSP Loan. (iv) The leasing for occupancy of all or any part of the Property or Project in accordance with the Loan Agreement and the Regulatory Agreement. HOME DEED OF TRUST PAGE 9 of 18 (v) The inclusion of equity participation by Trustor by transfer or addition of limited partners to the Trustor or similar mechanism;provided that such transfer,addition or other mechanism shall not involve any Prohibited Person or otherwise result in a violation of Anti-Terrorism Laws. (vi) The pledge by a General Partner to the Investor Limited Partner of the General Partner's interest in the Trustor, as security for the performance of all of the General Partner's obligations under the Limited Partnership Agreement. (vii) The sale,transfer or pledge of any limited partnership interest in the Trustor or of any partnership interest in the Investor Limited Partner;provided that such sale, transfer or pledge shall not be to any Prohibited Person or otherwise result in a violation of Anti- Terrorism Laws. (viii) Any dilution of the General Partner's interest in the Trustor in accordance with the Limited Partnership Agreement. (ix) A transfer of ownership interest in the Administrative General Partner or the Administrative General Partner's interest in Trustor to (i) an immediate family member of the transferor or (ii) a trust established for the benefit of the transferor and/or for the benefit of an immediate family member of the transferor,provided that such a transfer will not cause a change in the management and/or control of Trustor. (x) A conveyance of the Property and Project to the Administrative General Partner pursuant to and in accordance with Section 205 of the Loan Agreement, upon its exercise of the option to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (xi) A conveyance of the Property and Project to the Managing General Partner pursuant to and in accordance with Section 205 of the Loan Agreement, upon its exercise of the right of first refusal to purchase the Property and Project during the limited period upon the expiration of the applicable tax credit compliance period associated with the Nine Percent Tax Credits. (xii) The withdrawal of the Administrative General Partner from Trustor after Completion pursuant to the Limited Partnership Agreement and the replacement of the Administrative General Partner with a general partner that meets all requirements of the California Tax Credit Allocation Committee in connection with the Nine Percent Tax Credit and is acceptable to the Beneficiary in its reasonable discretion and approved by the Beneficiary in writing. HOME DEED OF TRUST PAGE 10 of 18 f. Beneficiary shall not unreasonably withhold,condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain Beneficiary's reasons for disapproval. 20. After the lapse of such time as may then be required by law following the recordation of a notice of default,and notice of sale having been given as then required by law,Trustee,without demand on Trustor,shall sell the Property at the time and place fixed by it in the notice of sale,either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States,payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale,and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold,but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of(1)the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attomey's fees for conducting the sale,and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3)all sums expended under the terms hereof,not then repaid,with accrued interest at the rate specified in the IJOME Note; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto; 21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instnnnent executed by Beneficiary,containing reference to this Deed of Trust and its place of record,which,when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent perinissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, including but not limited to the obligations set forth in the Regulatory Agreement,and upon surrender of this Deed of Trust and any note,instrument or instruments setting forth all obligations secured hereby to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty,the Property HOME DEED OF TRUST PAGE 11 of 18 then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive proof of the truthfulness thereof. To the extent permitted by law,the grantee in such reconveyance may be described as"the person or persons legally entitled thereto."Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons claiming to be rightful grantees of any reconveyance. When the Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Property to the person or persons legally entitled thereto; 24. The trust created hereby is irrevocable by Trustor; 25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary"shall include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the HOME Note secured hereby. In this Deed of Trust,whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; 26. Trustee accepts this Trust when this Deed of Trust,duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. Beneficiary, at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. Without conveyance of the Property,the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law; 27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of Trust,with a copy to CIC Pacific Sun Apartments,LLC, c/o Chelsea Investment Corporation,5993 Avenida Encinas, Suite 101, Carlsbad,CA 92008. After Trustor gives written notice to Beneficiary that the Investor Limited Partner has been admitted to the Trustor, Beneficiary shall send to the Investor Limited Partner a copy of all notices of default and all other notices that Beneficiary sends to Trustor,at the address for the Investor Limited Partner as provided in accordance with the terms of the Loan Agreement; 28. Trustor agrees at any time and from tirne to time upon receipt of a written request from Beneficiary,to furnish to Beneficiary detailed statements in writing of income, rents,profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements,and such other information regarding the premises and their use as maybe requested by Beneficiary; HOME DEED OF TRUST PAGE 12 of 18 29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the acquisition of the Property for the purpose of developing six dwelling units of affordable low income housing as set forth in the Secured Obligations for Very Low Income Households, and such dwelling units shall be occupied exclusively by such persons; 30. Trustor agrees that, except as otherwise provided in the HOME Note, upon sale or refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due and payable; 31. Each obligation of the Trustor under this Deed of Trust is a nonrecourse obligation of the Trustor and its approved assignee. Except as provided otherwise in this Deed of Trust, neither the Trustor nor any of the general or limited partners of Trustor's approved assignee;nor any other party, shall have any personal liability for payment of obligations to the City. The sole recourse of the City shall be the exercise of its rights against the Property and any related security for the HOME Loan. Notwithstanding the foregoing, Beneficiary may obtain a judgment or order (including, without limitation, an injunction) requiring Trustor or any other party to perform (or refrain from) specified acts other than repayment of the HOME Loan; may proceed against any person or entity whatsoever with respect to the enforcement of any performance or completion guarantees or similar rights to performance; and may recover directly from Trustor or any other person or entity: (1) any damages,costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any general partner or member of Trustor or any member,partner, shareholder, officer, director, agent or employee of(1)Trustor or(2)any general partner or member of Trustor or(3)any general partner or member of a general partner or member of Trustor; (ii) any damages,costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the acquisition and development of the Property, as described in the Secured Obligations, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; (iii) any and all amounts owing by Trustor pursuant to Trustor's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 32. Notwithstanding specific provisions ofthis Deed of Trust,non-monetaryperformance hereunder shall not be deemed to be in default where delays or defaults are proximately caused by any of the following Force Majeure events,provided such event actually delays and interferes with HOME DEED OF TRUST PAGE 13 of 18 the timely performance of the matter, and, despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor: War; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof, unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority(except acts or failure to act of the Beneficiary shall not excuse performance by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event,its cause,when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor shall deliver such written notice within ten (10) business days after it obtains actual knowledge of the event; 33. If the rights and liens created by this Deed of Trust shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations,the unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations; 34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further provisions of this Section 34, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust. (b) Beneficiary shall give written notice of default to Trustor and Investor Limited Partner, specifying the default complained of by the Beneficiary. Failure or delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary shall give Trustor written notice of such default. Trustor shall have a period HOME DEED OF TRUST PAGE 14 of 18 of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary. (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within thirty(30)days,Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (1) initiates corrective action within said period, and (ii) diligently,continually,and in good faith works to effect a cure as soon as possible,then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. If Trustor fails to take corrective action or cure the default within a reasonable time,Beneficiary shall give Trustor and,as provided in paragraph(f),below,the Investor Limited Partner,notice thereof,whereupon the Investor Limited Partner may remove and replace the general partner with a substitute general partner, who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. Beneficiary agrees to accept cures tendered by the Investor Limited Partner within the cure periods provided in this Deed of Trust or within the time periods provided in Civil Code Section 2924c,whichever is longer. Additionally,in the event the Investor Limited Partner is precluded from curing a non-monetary default due to an inability to remove the General Partner as a result of a bankruptcy, injunction, or similar proceeding by or against Trustor or its General Partner, Beneficiary agrees to forbear from completing a foreclosure (judicial or nonjudicial)during the period during which the Investor Limited Partner is so precluded from acting,not to exceed 90 days,provided such limited partner is otherwise in compliance with the foregoing provisions. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materiallyi eopardized by any failure to cure a default or the default is not cured within ninety(90) days after the first notice of default is given. (f) After Trustor gives written notice to Beneficiary that the Investor Limited Partner has been admitted to the Trustor, Beneficiary shall send to the Investor Limited Partner a copy of all notices of default and all other notices that Beneficiary sends to Trustor,at the address for the limited partner as provided by written notice to Beneficiary by Trustor. (g) Except as otherwise required to comply with the provisions of California Civil Code Section 2924 et seq. that are applicable thereto, any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a"hard"copy, shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service,courier service such as United Parcel Service or Federal Express,or by U.S.Postal Service),shall be deemed received on the documented date of receipt by Trustor; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. HOME DEED OF TRUST PAGE 15 of 18 35. This Deed of Trust shall be subordinate and junior to the Construction Deed of Trust. In the event of a default or breach by Trustor of any security instrument securing a senior loan, Beneficiary shall have the right to cure the default prior to completion of any foreclosure. In such event,Beneficiary shall be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid,with interest at the highest rate permitted by law; 36. This Deed of Trust shall be senior to the City of Huntington Beach NSP Deed of Trust to be recorded concurrently herewith against the Property in the Official Records of Orange County; and 37. The Trustor has informed the Beneficiary that Trustor intends that the Project qualify for an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code ("Nine Percent Tax Credit"). In order to receive an allocation of tax credits, the Trustor will be required to record in the real property records of the County of Orange an "extended low-income housing commitment"(as defined in Code Section 42(h)(6)(13))(the"Extended Use Agreement"). If the Trustor demonstrates to the reasonable satisfaction of Beneficiary that the California Department of Housing and Community Development or applicable federal law requires that the lien of this Deed of Trust be subordinate to the Extended Use Agreement, then the Beneficiary shall execute a subordination agreement("Extended Use Subordination Agreement")wherein the lien of this Deed of Trust is subordinated to the Extended Use Agreement. The Extended Use Subordination Agreement will: (a) provide that, if the Beneficiary or its successors or assigns (collectively, the "REO Owner') acquires the Property by foreclosure(or instrument in lieu of foreclosure),then the "extended use period" (as defined in Code Section 42(h)(6)(D)) shall terminate, except for the obligation of the REO Owner to comply with the limitations on evictions,termination of tenancy and increase in rents for the three year period following the REO Owner's acquisition of the mortgaged property, as set forth in Code Section 42(h)(6)(E)(ii); and [SIGNATURES APPEAR ON FOLLOWING PAGE] HOME DEED OF TRUST PAGE 16 of 18 (b) otherwise be in a form reasonably acceptable to Beneficiary. IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above. "TRUSTOR" PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Manag' g Ge eral P rtner By: Pamela Hope President By: CIC Pacific Sun Apartments, LLC, a California limited liability company its Administrative General Partner By: Chelsea Investme Corporation, a California co ration, its Manager Y: J mes J. Sc esid nt HOME DEED OF TRUST PAGE 17 of 18 APPROVED BY: THE CITY OF HUNTINGTON BEACH, a municipal co oration of the State of California By: City Manager ATTEST: By: City Clerk APPROVED AS TO FORM: ity Attorney By: KANE BALLMER&BERKMA Special Counsel HOME DEED OF TRUST PAGE 18 of 18 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of d'I A / A E g c i� b f m On e Gx: �' �° �V/ �4, /G,l ate Here Insert Nafne and Title of the Officer personally a P Y eared PP P_ Name(s)of Signer(s) f ,4 who proved to me on the basis of satisfactory evidence to be the person(sl whose name(sj is/ai; 'a asubscribed to the within instrument and acknowledged G.R..WITHERS to me that -he/she/tf'tey executed the same in F Commission# 1903166 e� Notary Public-California -his/her/their authorized capacity(fes), and that by San Diego County -hts/her/tt-elY signature* on the instrument the My Comm.Ex Tres See,6,2014 persorr(s), 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 F paragraph is true and correct. (4 , WITNESS my hand and official seal. ,f Signature: / . Place Notary Seal Above ! Signature of Notary Public OPTIONAL Though the information below is not required by law,it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document, Description of Attached Docum not C Title or Type of Document: '' tom: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Individual [I Individual o ` ❑ Partner—❑Limited ❑General Top of thumb here ❑Partner—❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact ❑ Trustee ❑Trustee ❑ Guardian or Conservator ❑Guardian or Conservator ❑.Other: ❑Other: Signer Is Representing: Signer Is Representing: 0 2009 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-800-876-6827) v Item#5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of Californ� f County of �- On;IK6L9l.- r11 before me, wit ^ Date j Insert N me and Title of the Officer �personally appeared �� . — fit'i w Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(&}whose name(4 is/are subscribed to the within instrument and acknowledged to me that G.R.WITHERS he/she/they executed the same in his/he#thtefr authorized Commission# 1903166 z capacity(t�, and that by his/h re'ir signatures) on the a �®PN Notary Public-California z z > instrument the person(*, or the entity upon behalf of a San 0iec,county which the person( acted, executed the instrument. My Comm.Expires Sep 6,2014 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my and and official seal. Signature "/-77- Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached ment Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact ❑Attorney in Fact • ❑ Trustee Top of thumb here ❑Trustee Top of thumb here ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other: ❑ Other: Signer Is Representing: Signer Is Representing: ©2007 National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402•www.NationalNotaryorg Item#5907 Reorder:Call Toll-Free 1-800-876-6827 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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. P L. ESPARZA Commission # 1857021 Notary Public-California z z Orange County D My Comm. Expires Aug 4, 2013 (Seal) (Notary Signaturey d EXHIBIT A LEGAL DESCRIPTION Real property in the City of Huntington Beach,County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO.79-577,IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE, STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED"RECIPROCAL EASEMENT AGREEMENT"RECORDED 3111 ,2011 AS INSTRUMENT NO. 2011 OLD ) � 3 129 OF OFFICIAL RECORDS. APN: 165-234-17 EXHIBIT 11 AMENDMENT TO REGULATORY AGREEMENT This Document was electronically recorded by DIPS Norwalk C RECORDED REQUEST OF First American Title Recorded in Official Records,Orange County SUBDIVISION MAPPING DEPT. A Tom Daly,Clerk-Recorder 1 FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: NO FEE w 2011000133130 04:30pm 03/1111 d 42 414 A17 9 ro� THE CITY OF HUNTINGTON BEACH 0.00 0.00 0.00 0.00 24.00 0.00 0.00 0.00 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk Sq7" (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 165-234-17 AMENDMENT TO REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS AMENDMENT TO REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement"), dated as of 3 , 2011, is made and entered into by and between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("City") and PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership ("Owner"). RECITALS: A. The City and Colette's Children Home, Inc., a California nonprofit public benefit corporation ("Colette's"), which is Owner's Managing General Partner and predecessor in interest, entered into that certain Subrecipient and Acquisition Loan Agreement, dated as of April 5, 2010 (the "Acquisition Loan Agreement"), providing for loans of NSP Funds and HOME Funds from the City to finance Colette's acquisition of that certain real property more particularly described in Exhibit No. 1 attached hereto and incorporated by reference herein (the "Property") for the development of a six unit affordable rental housing complex to be restricted to Very Low Income Households (the"Project"). B. Pursuant to the Acquisition Loan Agreement, Colette's and the City entered into that certain Regulatory Agreement and Declaration of Covenants and Restrictions (including rental restrictions) dated as of April 5, 2010 and recorded in the Official Records of Orange County on May 17, 2010 as Instrument No. 2010000231149 (the"Regulatory Agreement"). C. Owner is assuming all of Colette's right, title and interest in and to the Property and the Project and has entered into that certain Affordable Housing Agreement (the "Affordable Housing Agreement") with the City dated as of 119eal Z) , 2011, whereby the Owner is assuming Colette's obligations relating to development of the Project and whereby the City will make the NSP Loan and the HOME Acquisition Reimbursement Loan to Owner in the respective AMENDMENT TO REGULATORY AGREEMENT Page I of 4 amounts set forth in the Affordable Housing Agreement as reimbursement for a portion of Owner's costs to acquire the Property to develop the Project and in addition will make the HOME Development Loan in the amount not to exceed Five Hundred Thousand Dollars ($500,000.00) in HOME Funds to Owner to assist in paying the development costs of the Project. D. City and Owner desire to amend the Regulatory Agreement as set forth herein. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE CITY AND OWNER HEREBY AMEND THE REGULATORY AGREEMENT AS FOLLOWS: .TERMS 1. .Defined Terms.. Capitalized terms not otherwise defined herein shall bear the respective meanings set forth in the Regulatory Agreement. 2. Civil Rights, Fair Housing, and Age and Disability Discrimination Acts Assurances. Paragraph a.(i)(1) of Section 4.5 of the Regulatory Agreement is replaced in its entirety with the following: "During the performance of the Loan Agreement, Owner shall assure that no otherwise qualified person shall be excluded from participation or employment, denied program benefits, or be subjected to discrimination based on race, color, national origin, sex, sexual orientation, gender identity, age, handicap, religion, religious preference or source of income (including but not limited to Section 8 Rental Assistance, Temporary Assistance for Needy Families (TANF), Supplemental Security Income(SSI), Social Security Disability Insurance (SSDI) or earnings from seasonal employment), under any program or activity funded by this Agreement, as required by state law, the Fair Housing Act (42 U.S.C. 3601- 19) and implementing regulations at 24 CFR part 100 et seq., Executive Order 11063 as amended by Executive Order 12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107, title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d- 2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1, the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146, section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations." AMENDMENT TO REGULATORY AGREEMENT Page 2 of 4 3. Maintenance of Records. A new clause "m." is added to Section 3.7 of the Regulatory Agreement, as follows: "m. Records, data and documentation as required for the City's performance of its reporting obligations under the Federal Funding Accountability and Transparency Act of 2006 (FFATA), to the full extent applicable to the Project, which may include but is not necessarily limited to reporting of executive compensation received by executives of Owner and/or executives of Owner's partners or members and/or executives of partners or members of any of Owner's partners or members." 4. Notice. Section 10 of the Regulatory Agreement is amended to replace the Owner's address for receiving notice with the following: Owner: Pacific Sun Apartments CIC, L.P. c/o Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 With a copy to: CIC Pacific Sun Apartments, LLC c/o Chelsea Investment Corporation 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 And a copy to: Raymond James Tax Credit Funds, Inc. 880 Carillon Parkway St. Petersburg, FL 33716 Attention: Ronald M. Diner 5. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. This Amendment may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. 6. Agreement Remains in Effect. Except as amended hereby, the Regulatory Agreement is hereby ratified and confirmed, and continues in full force and effect IN WITNESS WHEREOF, the City and Owner have executed this Amendment to Regulatory Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. [SIGNATURES APPEAR ON NEXT PAGE] AMENDMENT TO REGULATORY AGREEMENT Page 3 of 4 "OWNER" "CITY" PACIFIC SUN APARTMENTS CIC,L.P., THE CITY OF HUNTINGTON BEACH, a a California limited partnership municipal corporation of the State of California By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing General Partner ty Manager By: ATTEST: Pamela Hope President City Jerk By: CIC Pacific Sun Apartments, LLC, a California limited liability company AP OVED AS TO FORM: its Administrative General Partner n By: Chelsea Investment City Attorney Corporation, a California corporation, its Manager KANE,BALLMER&BERKMA By: Special Counsel James J. Schmid President AMENDMENT TO REGULATORY AGREEMENT Page 4 of 4 "OWNER" "CITY" PACIFIC SUN APARTMENTS CIC, L.P., THE CITY OF HUNTINGTON BEACH, a a California limited partnership municipal corporation of the State of California By: Colette's Children Home,Inc., a California non-profit public benefit corporation its Managin Gen al Partner City Manager By: ATTEST: Pamela op President City Clerk By: CIC Pacific Sun Apartments, LLC, a California limited liability company APPROVED AS TO FORM: its Administrative General Partner By: Chelsea Investment City Attorney Corporation, a C fornia corporatio , i M ager KANE,BALLMER&BERKMAN By- Special Counsel ames J. Sc id President AMENDMENT TO REGULATORY AGREEMENT Page 4 of 4 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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. & & Bill P. L. ESPARZA WITNESS my hand and official seal. ? '' Commission # 1857021 Notary Public-California i z Orange County ' My Comm. Expires Aug4,2013 (Seal) (Notary Sig ature CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT (a r. State of California County of On >3 before r Date 4&_ re Insert Name and Title of the Officer personally appeared .�: Nary e(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the persontsy whose name(-s� is/are- G.R.WITHERS subscribed to the within instrument and acknowledged Commission#1903168 to me that -be/she/they executed the same in a Notary Public-California #is/her/them authorized capacity(ies), and that by Comm.Eire&Se 8,2014 San Diego County - his/her/tbek signature(&) on the instrument the AA person(&), or the entity upon behalf of which the persoi4(s) 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. F WITNESS my hand and official seal. Signature: Place Notary Seal Above A, —// Signature of Notary Public OPTIONAL (, . . Though the information Below is not required by law, it may prove valuable to persons relying 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: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) F Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Individual ❑ Individual e a ❑ Partner—❑Limited ❑General Top of thumb here ❑Partner—❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact ❑ Trustee ❑Trustee ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other- ❑Other: Signer Is Representing: Signer Is Representing: ©2009 National Notary Association•NationalNotary.org 1-800-US NOTARY(1-800-876-6827) Item#5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT ENT State of California County ofj�(_ On before me, � �.�/t-tfit�.f�, i �✓rJ� � <� , Date Herd Insert Name and Title of the Officer personally appeared ��- ' /C �// Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that G.R.WITHERS he/she/they executed the same in his/her/their authorized Commission# 1903166 capacity(ies), and that by his/her/their signature(s) on the Notary PubtiC-CSINO( a San Diec� County instrument the person(s), or the entity upon behalf of My Comm.Expires Seg 6,2014 which the person(s) 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: a Signature Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached D ment l /92 'G* y, � Title or Type of Document; tP 'r i .rye CG�r/ ' �` cS7/t Document Date: Number:of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact - ❑Attorney in Fact C ❑ Trustee Top of thumb here ❑Trustee Top of thumb here ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: 02007 National Notary Association-9350 De Soto Ave.,P.O.Box 2402-Chatsworth,CA 91 31 3-2402-www.NationaiNotaryorg Item#5907 Reorder:Call Toll-Free 1-800-876-6827 EXHIBIT NO. 1 LEGAL DESCRIPTION OF SITE Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED 31 ) I , 2011 AS INSTRUMENT NO. 2011 D Q )-53 1 2-9 OF OFFICIAL RECORDS. APN: 165-234-17 EXHIBIT 12 ENVIRONMENTAL INDEMNITY ENVIRONMENTAL INDEMNITY BY COLETTE'S CHILDREN HOME IN FAVOR OF THE CITY OF HUNTINGTON BEACH I THIS ENVIRONMENTAL INDEMNITY (this "Indemnity"), dated as of April 5, 2010, and made by COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation (referred to as "Borrower"), whose address for purposes of giving notices is 17301 Beach Blvd., #23, Huntington Beach, CA 92647, in favor of THE CITY OF HUNTINGTON BEACH (the "City"), whose address for purposes of giving notice is 2000 Main Street, Huntington Beach, California 92648. WITNESSETH WHEREAS, Borrower is the owner of the real property in the City of Huntington Beach described on Exhibit"A" attached hereto and made a part hereof, and the improvements thereon (collectively referred to as the"Property"); WHEREAS,Borrower and the City entered into that certain Subrecipient and Acquisition Loan Agreement, dated as of April 5, 2010 (the"Loan Agreement"),pursuant to which the City agreed to make loans to Borrower for the purpose of acquiring the Property for the development of affordable rental housing thereon (the "Loans") (the Loan Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the"Loan Documents"); WHEREAS, Borrower has agreed to execute and deliver to the City this Indemnity to induce the City to make the Loans. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth,Borrower hereby agrees with the City as follows: I. DEFINITIONS For the purpose of this Indemnity, "Hazardous Materials" or "Hazardous Substances" shall include, but not be limited to, oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances defined as "extremely hazardous substances," "hazardous substances," "hazardous materials," "hazardous waste" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, including the Superfund Amendments and Reauthorization.Act of 1986, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et sea.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Sections 6901, et sea.; the Toxic Substances Control Act, as amended, 15 ENVIRONMENTAL INDEMNITY PAGE 1 Environmental In demn ity[04,01.101.doc i I I i U.S.C. Section 2601 et sea.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seg.; the Federal Water Pollution Control Act, as emended, 33 U.S.C. Section 1251 et sea.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seg.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et sea..; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seg., and those substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code, as "infectious waste" in Section 25117.5 of the California Health and Safety Code, or as "hazardous substances" in Section 25316 of the California Health and Safety Code or"hazardous materials" as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and orders and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity shall have the meanings ascribed to them in the Loan Agreement with the same force and effect as if set forth in full below. 2. COVENANTS AND INDEMNITY The following covenants,and indemnities are hereby given and made by Borrower: 2.1 Covenants. (a) Borrower covenants that it will strictly comply with any and all laws, regulations, and/or orders which may be promulgated from time to time relating to Hazardous Materials ("Hazardous Materials Laws"), to immediately take, at Borrower's sole expense, all remedial action required by any Hazardous Materials Law or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claim (as defined herein below), and to keep the Property free of any lien imposed pursuant to any Hazardous Materials Law or in relation to any Hazardous Materials Claim. (b) Borrower covenants that the Property will not, while Borrower is the owner of any portion thereof, be used for any activities involving, directly or indirectly,the use, generation, treatment, storage, release, transportation, presence, discharge or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in strict compliance with all Hazardous Materials Laws and required in connection with the routine rehabilitation, operation and maintenance of the Property. (c) The City shall have the right, at any time, to conduct an environmental audit of the Property at the City's expense, unless Hazardous Materials are found, then at Borrower's sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower. Borrower shall give the City and its agents and employees access to the Property to remove, or otherwise to mitigate the effects of, Hazardous Materials and Borrower shall not unreasonably delay or condition such access. ENVIRONMENTAL INDEMNITY PAGE 2 Environmental Indemnityl04.01.10].doe (e) Borrower shall not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by any Hazardous Materials Laws, and, with respect to any such material currently present in the Property, Borrower shall promptly either (i) remove or cause to be removed any material that such Hazardous Materials Laws deem hazardous and require to be removed, or (ii) otherwise comply with such Hazardous Materials Laws, all at Borrower's sole cost and expense. If Borrower shall fail to so do within the cure period permitted under applicable law,regulation, or order, the City may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with all Hazardous Materials Laws, and the costs thereof shall be added to the Obligations(as hereinafter defined) of Borrower under this Section 2. (f) Borrower shall immediately advise the City in writing of any of the following: (i) any pending or threatened claim against Borrower or the Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws ("Hazardous Materials Claims"), (ii) any condition or occurrence on the Property that(A) results in noncompliance by Borrower with any Hazardous Materials Laws, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any Hazardous Materials Law, or (C) could reasonably be anticipated to form the basis of a Hazardous Materials Claim against the Property or Borrower. 2.2 Indemnity. Borrower hereby agrees to defend, indemnify, protect, and hold harmless the City and its members, officers, officials, employees, agents, representatives, servants, contractors, successors and assigns from and against any and all damages, losses, liabilities, obligations, penalties, claims (including, without limitation, any third party tort claims), litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any kind or of any nature whatsoever, whether foreseeable or unforeseeable, (collectively, the "Obligations") which may at any time be imposed upon, incurred by or asserted or awarded against the City as a direct or indirect consequence of: (a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property or any surrounding areas; (b) The breach of any covenant made by Borrower in Section 2.1 hereof; or (c) The enforcement by the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder. 3. BORROWER'S UNCONDITIONAL OBLIGATIONS 3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan ENVIRONMENTAL INDEMNITY PAGE 3 Environmental lndemn ity[04.01.10].doc Documents or affecting any of the rights of the City with respect thereto. The obligations of Borrower hereunder shall be absolute and unconditional irrespective of, and Borrower waives any defense based upon, (a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of,or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents; (c) Any extension of the maturity of the Loans or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; (d) Any exculpatory provision in any of the Loan Documents limiting the City's recourse to property encumbered by the Deeds of Trust securing the Loans, or to any other security, or limiting the City's rights to a deficiency judgment against Borrower; (e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Loans, or any release, amendment, waiver of, or consent to any departure from any provision of, any other surety or guarantee given in respect of the Loans; (f) The insolvency or bankruptcy of Borrower or Borrower's approved assignee's General Partners or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Loans; or (g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, Borrower's approved assignee's General Partners, or any other indemnitor or guarantor with respect to the Loans or any or all of the Obligations. 3.2 Continuation. The term of this Indemnity will continue until such time as no legal action can be successfully brought against the City due to applicable statutes of limitation. This Indemnity (a) is a continuing indemnity and shall remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Loans or the release or other extinguishment of the Deeds of Trust, or any other security for the Loans); and(b)shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the City upon the insolvency, bankruptcy, or reorganization of Borrower, Borrower's approved assignee's General Partners or otherwise,all as though such payment had not been made. 3.3 Survival. Borrower's duty to indemnify shall survive any judicial or non judicial foreclosure under the NSP Deed of Trust and/or the HOME Deed of Trust or transfer of the ENVIRONMENTAL INDEMNITY PAGE Environmental 1 ndemn ity[04.01.10].doc Property in lieu thereof, the release and reconveyance or cancellation of the NSP Deed of Trust and/or the HOME Deed of Trust, and the satisfaction of all of Borrower's obligations under the Loan Documents. 4. WAIVER Borrower acknowledges that possible defenses to the enforceability of the Obligations may presently exist and/or may arise hereafter and as part of the City's consideration for entering into the Loan Agreement, they have specifically bargained for the waiver and relinquishment by Borrower of all such defenses. Borrower agrees that it has had the opportunity to seek and receive legal advice from skilled legal counsel of its choosing and represents and confirms that Borrower is fully informed regarding, and thoroughly understands, the nature of such possible defenses,the circumstances under which they may arise,the benefits that they might confer upon Borrower and the legal consequences to Borrower of waiving such defenses. Borrower makes this Indemnity with the intent that this Indemnity and all of the waivers herein shall each and all be fully enforceable by the City and that the City are induced to enter into the Loan Agreement in material reliance upon such presumed full enforceability. Without limitation to the foregoing, Borrower hereby waives the following: (a) Promptness and diligence; (b) Notice of acceptance and notice of the incurrence of any Obligation by Borrower; (c) Notice of any action taken by the City, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto; (d) All other notices, demands,and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder; (e) The right to a trial by jury with respect to any dispute arising under,or relating to; this Indemnity; (f) Any requirement that the City protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the City exhaust any right or take any action against Borrower or any other person or collateral; and (h) Any defense that may arise by reason of: (1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons; ENVIRONMENTAL INDEMNITY PAGE 5 Environmental 1 ndemnity[04.01.10I.doe (2) The failure of the City to file or enforce any claim against the estate (in probate,bankruptcy,or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the City, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of Borrower or any other right of Borrower to proceed against a guarantor by the operation of Section 580d of the California Code of Civil Procedure or otherwise. 5. NOTICES Any notice, demand, statement, request, or consent made hereunder shall be in writing and shall be personally served, mailed by first-class registered mail, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, or given by electronic facsimile ("fax") transmission to the fax numbers stated below, with confirmations mailed by first class registered mail, return receipt requested to the address set forth above, of the party to whom such notice is to be given (or to such other address as the parties hereto, shall designate in writing): In the case of the City: 714-374-1590 In the case of Borrower: 714-848-1866 Any notice that is transmitted by fax transmission followed by delivery of a"hard" copy, shall be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail,postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 6. MISCELLANEOUS 6.1 Borrower shall make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the City at its address specified in the first paragraph hereof. 6.2 No amendment of any provision of this Indemnity shall be effective unless it is in writing and signed by Borrower and the City and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, shall be effective unless it is in writing and signed by the City, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. ENVIRONMENTAL INDEMNITY PAGE 6 Environmental Indemni ty[04.01.10].doe 6.3 No failure on the part of the City to exercise, and no delay in exercising, any right hereunder or under any Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the City provided herein and_in the Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the City hereunder or under any Loan Document against any party thereto are not conditional or contingent on any attempt by the City to exercise any of its rights hereunder or under any other Loan Document against such party or against any other person or collateral. 6.4 If any provision of this Indemnity shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, then that provision shall, as to such jurisdiction, be deemed ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting.the validity or enforceability of such provision in any other jurisdiction. 6.5 This Indemnity shall (a) be binding upon Borrower, and Borrower's successors and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of the City, its directors, officers, employees, and agents, any successors to the City's interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the City's rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence,the City may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any Loan Document, to any other person, and such other person shall thereupon become vested with all of the rights and obligations in respect thereof that were granted to the City herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the City. 6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non conveniens or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court. Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity or in any other manner provided by law. Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. ENVIRONMENTAL INDEMNITY PAGE 7 Environmental Indem nity[04.01.I0).doe 6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and shall in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof. 6.8 This Indemnity shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California. 6.9 This Indemnity may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] ENVIRONMENTAL INDEMNITY PAGE 8 Environmental indemnity[04.01.101.doc IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date set forth below. COLETTE'S CHILDREN HOME,INC., a California nonprofit public benefit corporation Date: /�/ , 2010 By Pamela Hope,P ent ENVIRONMENTAL,INDEMNITY PAGE 9 Environmental Indemnity[04,01.10j.doe EXHIBIT A LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Orange, and described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA. APN: 165-234-17 1 ENVIRONMENTAL INDEMNITY EXHIBIT A—LEGAL DESCRIPTION Environmental Indemnity[04.01.10].doc EXHIBIT 13 ASSIGNMENT OF AGREEMENTS ASSIGNMENT OF AGREEMENTS FROM COLETTE'S CHILDREN HOME TO THE CITE'OF HUNTINGTON BEACH 1. FOR VALUE RECEIVED, the undersigned, COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation ("Developer"), assigns to THE CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California ("Assignee"), all of its right, title and interest in and to: a. All architectural, design, engineering and development agreements, and any and all amendments,modifications, supplements, addenda and general conditions thereto (collectively, "Architectural Agreements"); and b. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively"Plans and Specifications") heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively "Architect"), for or on behalf of Developer in connection with the development of the Improvements on the Property described in Exhibit A attached. This assignment is subject to the prior rights, if any, of a lender approved by Assignee whose lien is senior to the Deed of Trust held by Assignee. The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to Assignee. The Architectural Agreements include, but are not limited to, the architectural contracts for this project between Developer and The Barratt Group. 2. This ASSIGNMENT OF AGREEMENTS ("Assignment") constitutes a present and absolute assignment to Assignee as of the Effective Date, subordinate to a lender approved by Assignee whose lien is senior to the Deed of Trust held by Assignee ("Senior Lender"); provided, however, Assignee confers upon Developer the right to enforce the terms of the Architectural Agreements and Developer's rights to the Plans and Specifications so long as no Default or event which would constitute a Default after notice or the passage of time, or both, has occurred under the Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010 between Assignee and Developer (the "Loan Agreement"). Upon the occurrence of a Default or event which would constitute a Default after notice or the passage of time, or both, under the Loan Agreement, Assignee may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Developer under the Architect Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Developer acknowledges that by accepting this Assignment, Assignee does not assume any of Developer's obligations under the Architectural Agreements or with respect to the Plans and Specifications. 3. Developer represents and warrants to Assignee, as of the Effective Date, that: (a) all Architectural Agreements entered into by Developer are in full force and effect and ASSIGNMENT OF AGREEMENTS PAGE I Assignment of Agreements[04.01.10).doc are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Assignee are complete and correct; and (c) Developer has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications except as expressly permitted by the Loan Agreement. . 4. Developer agrees: (a) to pay and perform all obligations of Developer under the Architectural Agreements; (b) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements; (c) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without Assignee's prior written approval except as otherwise expressly permitted in the Loan Agreement; and (d) not to further assign (other than assignment in connection with a loan which is senior in priority to Assignee's assignment), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without Assignee's prior written consent. 5. This Assignment secures performance by Developer of all obligations of Developer under the Loan Agreement. This Assignment is supplemented by the provisions of the Loan Agreement and said provisions are incorporated. herein by reference. 6. The term "Loan Agreement" as used herein shall mean the Subrecipient and Acquisition Loan Agreement dated as April 5, 2010 between Developer and Assignee, as well as any future amendments and implementation agreements between Developer and Assignee which refer to this Assignment. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Agreement. 7. This Assignment shall be governed by the internal laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Developer shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. 8. This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Developer and Assignee; provided, however, this shall not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Developer contained in the Loan Agreement. 9. The attached Architect's/Engineer's Consent, Schedule 1 and Exhibit A are incorporated by reference. ASSIGNMENT OF AGREEMENTS PAGE 2 Assignment of-Agreements[04.01.10].doc 10. The Effective Date of this Assignment shall be the date it is executed by Developer. IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the date set forth below. COLETTE'S CHILDREN HOME,INC., a California nonprofit public benefit corporation Date: 12010 By Pamela Ho ,President ASSIGNMENT OF AGREEMENTS PAGE 3 Assignment of Agreements[04.01.10].doc ARCHITECT'S CONSENT The undersigned architect ("Architect") hereby consents to the foregoing Assignment to which this Architect's Consent("Consent") is part, and acknowledges that there presently exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Developer and/or the performance of the Architect's obligations under the Architectural Agreements. Architect agrees that if, at any time, Assignee, pursuant to its rights under the Loan Agreement or the loan documents, elects to undertake or cause the completion of the rehabilitation of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; THEN, so long as Architect has received, receives or continues to receive the compensation called for under the Architectural Agreements, Assignee may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Architectural Agreements for the benefit and account of Assignee in the same manner as if performed for the benefit or account of Developer in the absence of the Assignment. Architect further agrees that, in the event of a breach by Developer of the Architectural Agreements, or any agreement entered into with Architect in connection with the Plans and Specifications, so long as Developer's interest in the Agreements and Plans and Specifications is assigned to Assignee, Architect will give written notice to Assignee of such breach at the address shown below. Assignee shall have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein shall require Assignee to cure said default or to undertake completion of the rehabilitation of the Improvements. Architect warrants and represents that it/he/she has no knowledge of any prior assignments) of any interest in the Plans and Specifications and/or the Architectural Agreements. Except as otherwise defined herein, the terms used herein shall have the meanings given them in the Assignment. Dated as of the date set forth below. THE BARRATT GROUP Date: 12010 By: Joe Barbaro Its: ASSIGNMENT OF AGREEMENTS ARCHITECT'S CONSENT Assignment of Agreements[04.01.10].doc Assignee's Address: City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 Attn: City Administrator With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Architect's Address: The Barratt Group 2055 Corte Del Nogal Carlsbad, CA 92011 Attn: Joe Barbano ASSIGNMENT OF AGREEMENTS ARCHITECT'S CONSENT Assignment of Agreements[04.01.10].doc SCHEDULE OF UNPAID CLAIMS Schedule 1 to Assignment of Agreements dated as of April 5,2010 between COLETTE'S CHILDREN HOME as Developer and THE CITY OF HUNTINGTON BEACH as Assignee. ASSIGNMENT OF AGREEMENTS ARCHITECT'S CONSENT Assignment of Agreements[04.01.10l.doc PROPERTY(DESCRIPTION Exhibit A to Assignment of Agreements dated as of April 5, 2010, between COLETTE'S CHILDREN HOME as Developer and THE CITY OF HUNTINGTON BEACH as Assignee. The land referred to herein is situated in the State of California, County of Orange,and described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-17 ASSIGNMENT OF AGREEMENTS Assignment of Agreements[04.01.10].doc •.r i beach Pacific Eacr®w Inc. 17301 Beach Boulevard) Suite 2A,.Huntington Beach, CA 9264 7-742 7 Phone: (714) 842-4594 Ext. 1#; Fax (714) 842-9934; a-mail-pj@escrow.net Date: May 19, 2010 ID V V y Attn: Sidney Stone MAY o fl i0 City of Huntington Beach 2000 Main Street ij.." ;.:�_.1 Ct Huntington Beach, CA 92647 � ��)t",ilC L) VELOPMENT Re: Escrow No: 7681 Borrower: COLETTE'S CHILDREN HOME Loan No: unknown Dear Sir/Madame: In connection with the above referenced transaction that this office has closed as of this date, we enclose the following per your request: ® Certified copy of escrow closing statement ❑ Certified copy of HUD/RESPA ® Original Policy of Title Insurance will follow from Lawyers Title Company ® Check in the amount of$12,817.40 ® Copies of Recorded Deed; Regulatory Agreement; Home TD; NSP ® Original executed documents for your loans, including Notes ❑ Other: Please forward to the new buyer, payment coupons, indicating amount, due date and address for remittance of first payment. Please do not hesitate to contact the undersigned if you have any questions regarding this matter. Sincerely, Escrow Officer 7681 WtCIoseLender.doo lyll old MI MVW IUC I IOU, 44O Huntington Beach,CA 92647 Huntington Beach,CA 92647 :Prsa :eit� :��� ���•:•:�.:. .�.�:....::::...:. 7:7: •.::':°:::....: : :. .Cif~:: ::` ':•::; .fir. : .�':�:�::::::: Consideration or sale price $650,000.00 Deposits Deposit 1 by Colette's Children Home,Inc. $5,000.00 Funds Held New Loans First Trust Deed-NSP LOAN $390 568.00 Second Trust Deed-HOME LOAN $284,432.00 Existing Loans qI Adjustments Unfunded loan reserve s12,817.40 Other Disbursements Notary fees to P.Garcia $60.00 Prior Release of funds to seller per instruction Weed Abatement to D.Tran Refund of Good Faith Deposit to buyer 1 $5 000.00 4alling Costs paid to Susan W.Case,Inc. 1 $500.00 Appraisal fee to Nagasaki&Associates I $1,000.00 Environmental fees to The Planning Center 1 $2.800.00 Reimburse Buyer for City Permit Fees $3,630.00 Fencin repair/installation to Starlight Contrction $950.00 NHD report fee to Disclosure Source Prorations County Taxes $4,222.24 every 6 months. From 05/17/10 to 07/01/10 $1,032.10 Commisions Paid To Keller Williams Realty Paid To First OI m is Realty,Inc. Termite Work Insurance Home Protection Plan HOA Land Lease PROS First Existing Loan to Residential Cn - Principal Balance - Interest Interest on$336,912.31 at 3.25%. From 04/01110 to 05/19/10 Late cha es Reconve ante fee - Escrow Shortage New Loan Charges Title Charges Title Premium-Owners Policy to Lawyers Title Title Premium-ALTA Loan Policy $884.00 Sub-Escrow fee to Lawyers Title Company $37.50 1.1 Documentary Transfer Tax Recording Deed $9.00 7911 Slater Avenue 17301 Beach Boulevard#23 Huntington Beach,CA 92647 Huntington Beach,CA 92647 Escrow Charges Escrow fee to Beach Pacific Escrow $1,280.00 Balance Due To You Balance Due From You Totals $680,000.00 $680,000.00 REOMI%REQUESTED BY Recorded In Officlat Records,Orange County LAVAIERS is.l r Tom Daly,Clark-Recorder RECORDING REQUESTED BY 9.00 2010000231148 01:06pm 05/17/10 WHEN RECORDED MAIL DOCUMENT AND, Be 404 G02 2 04 TAX STATEMENTS TO: 387.50 357.50 0.00 0.00 3.00 0.00 0.00 0.00 Colette's Children Home,Inc. 17301 Beach Boulevard,Suite 23 Hu.nii, ton Beach, CA 92 7 A.P.N. 165-23-417 SPACE ABOVE THIS LINE FOR RECORDER'S USE T DEED The undersigned grantor(s)declare(s): Documentary transfertax Is$715.00 ®computed on the consideration or value of property conveyed,or []computed on full value less value of liens and encumbrances remaining at time of sale. []Unincorporated area: ®City of Huntington Beach,and; FOR A VALUABLE CONSIDERATION,receipt of which is hereby acknowledged,KIET TRUONG,a married man as his sole and separate property,hereby GRANT(S)to COLETTE`S CHILDREN HOME,INC.,a California Public Benefit Corporation, the real property in the City of Huntington Beach,County of Orange,State of California,described as: Parcel 1 of Parcel Map No.79-577,as shown on a map flied In Book 143,Page 43 of Parcel Maps In the office of the County Recorder of Orange County,California. AKA: 7911 Slater Avenue,Huntington Beach,CA 92647 Dated.January 27,2010 c Klet Truong STATE OF COUNTY OF On _A P& -17.2ei(n before me, Zl (; •G-ARC A ,Notary Public. personally appeared Kiel Truong who proved to me on the basis of sat sfaotory evidence to be the personmvhose names)Wam subscribed to the within Instrument and acknowledged to me that he/she"executed the same in hisrhe"eir authorized capacitypes),and that by hlslherAWr signatures}on the Instrument the person(s),or the entity upon behalf of which the persons}acted,executed the instrument. i certify,under PENALTY OF PERJURY under the laws of the State of Cellfomia that the foregoing paragraph is true and correct, WITNESS my hand and,official seat. Signature (Seal) COMM.R, 6,91777341 to W m[r r' NOTARYPI18Wt n N7 Lot Angeln C=j -' Comm.Expires Not 20.2011 7681 Dced Urdnl.doe KANE, BALLMER & BERKMAN A LAW CORPORATI9N 515 SOUTH FIGUEROA STREET, Bruce D. Ballmer SUITE 1850 {Retired LOS ANGELES, CALIFORNIA 90071 Robert P. Berkman TELEPHONE (213) 617-0480 (1919-2001) FAX (213) 625-0931 www.kbblow.com Wdler: Deborah L.Rhoads May 12,2010 File No.15aa2 Via Overnite Express PJ Garcia,Escrow Officer Beach Pacific Escrow 17301 Beach Boulevard, Suite 2A Huntington Beach,CA 92647 Liz Ochoa,Title Officer Lawyers Title Insurance Corporation 1920 Main St.,Suite 500 Irvine,CA 92614 Re: Escrow No.768 LESC Title Order No.05387013-25 Dear Ms. Garcia and Ms. Ochoa, We are special counsel to the City of Huntington Beach in connection with the above-referenced transaction. These instructions are hereby submitted in connection therewith: I. PARTIES THE CITY OF HUNTINGTON BEACH,CALIFORNIA,A MUNICIPAL CORPORATION("City") 2000 Main Street Huntington Beach,CA 92648 Attn:Mr. Sidney Stone COLETTE'S CHILDREN HOME, INC., A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION("Borrower") 17301 Beach Blvd.,#23 Huntington Beach,CA 92647 Attn:Mr.William O'ConneIl May 12,2010 Escrow No.768LESC Page 2 Title Order No. 05387013-25 11. TRANSACTION SUMMARY The City and Borrower have entered into a Subrecipient and Acquisition Loan Agreement dated as of April 5,2010(the"Loan Agreement")with respect to that certain property located at 7911 Slater Avenue in the City of Huntington Beach and described in Exhibit A attached hereto(the "Property"). Pursuant to the Loan Agreement, the City will make a loan of Neighborhood Stabilization Program funds in the original principal amount of$390,568.00 (the "NSP Loan") and a loan of HOME Program funds in the amount of$284,432.00(the"HOMES Loan")to assist in paying the costs of acquiring the Property for the development of affordable rental housing. The NSP Loan and the HOME Loan are both secured by Deeds of Trust With Assignment of Rents(the"NSP Deed of Trust"and the"HOME]Deed of Trust",respectively). Pursuant to the Loan Agreement, the NSP Loan and the HOME Loan will fund the Borrower's cost of purchasing the Property from Kiet Truong (the "Seller") for a purchase price of $650,000.00(the"Purchase Price"). The NSP Loan and the HOME Loan will be deposited into Escrow to be applied toward payment of (i) that portion of the Sale Price remaining after crediting Borrower for the deposit previously paid to Seiler, (ii) closing and title costs, (iii) Borrower's pro-rated taxes and assessments on the Property,and(iv)reimbursement to Borrower of the deposit previously paid to Seller and (v) reimbursement to Borrower of the cost of obtaining an updated appraisal for the Property. Such payments shall be in amounts set forth in an estimated settlement statement prepared by the Escrow Agent and approved by the City and any remaining funds shall be returned to the City. In connection with the NSP Loan and the HOME Loan,the City and Borrower will execute and record against the Property a Regulatory Agreement and Declaration of Covenants and Restrictions restricting the use of the Property as affordable rental housing (the "Affordability Restrictions"). Title to the Property is to be delivered to Borrower free and clear of all monetary liens, so that the liens of the HOME Deed of Trust and the NSP Deed of Trust will be senior to all other monetary liens that may be recorded against the Property. The City and Borrower now wish to effectuate the Loan Agreement, by providing for the disbursement of the NSP Loan and the HOME Loan and the recordation of certain instruments described below. These escrow instructions are intended to supplement the Vacant Land Purchase Agreement and Joint Escrow Instructions dated January 5,2010 and all addendums and counteroffers and acceptances thereto (the "Purchase Agreement") and the Supplemental Escrow Instructions dated January 27,2010 between Borrower and Seller. II. DELIVERIES Previously delivered to you, or to be delivered to you, are the following documents, executed in connection with the above-described transaction: May 12,2010 Escrow No.7681.ESC Page 3. Title Order No. 05387013-25 A. The Grant Deed conveying the Property to Borrower, executed in Recordable form by the Seller(the"Deed"') B. The Affordability Restrictions, executed in recordable form by the City and Borrower; C. The NSP Deed of Trust,executed in recordable form by Borrower;and D. The HOME Deed of Trust,executed in recordable form by Borrower. M. CLOSING PROCEDURES You are instructed to close this transaction when and only when the following occur: A. Grant Deed. The Grant Deed conveying the Property to Borrower,executed in recordable form by the Seller(the"Grant Deed")has been deposited into Escrow. B. Tide Policies. Lawyers Title Insurance Corporation shall be prepared to issue the following title insurance policies: To Borrower, an owner's policy of title insurance ("13mrrower's owner's policy"). The liability amount and endorsements shall be as requested by Borrower and approved by City. To the City, a 2006 ALTA Extended Coverage Loan Policy of Title Insurance, with liability in the amount of$675,000.00 (the"City's lender policy") (it being understood that all assessments, taxes and "supplemental taxes" shall be paid current),with the following endorsements: CLTA 100 (comprehensive), showing Borrower as the fee title owner of the Property and insuring: May 12,2010 Escrow No.768 LESC Page 4 Title Order No. 05387013-25 (i) the first priority of the HOME Deed of Trust, subject to the Affordability Restrictions;and (ii) the second priority of the NSP Deed of Trust, subordinate only to the Affordability Restrictions and the HOME Deed of Trust. C. Payment of Recording_Costs. You will be in receipt of sufficient funds to record the Recording Documents(described below),or have made arrangements with Borrower satisfactory to you to provide for payment of same. D. City Authorization. You will have received final and unconditional written or telephonic authorization to record from the undersigned or Sidney Stone, on behalf of the City. E. Title Company Satisfaction. The title company will be satisfied that the foregoing conditions precedent to the recording have'been met. V. WHEN YOU ARE PREPARED TO RECORD THE DOCUMENTS A. From the NSP Loan and the HOME Loan, disburse $650,000 to the Seller less the amount of$5,000.00 previously paid by the Borrower to the Seller pursuant to the Purchase Agreement,and charge the City for the Purchase Price. B. Disburse the amount of$5,000.00 to the Borrower as reimbursement for the deposit paid to Seller and referenced in the Paragraph A above. C. Disburse the amount of $1,000.00 to the Borrower as reimbursement of Borrower's cost of obtaining an appraisal of the Property. D. Charge the City for any fees, charges and costs payable by it pursuant to these Instructions, up to $ 668,183.80. Before such payments are made, the Escrow Agent shall notify the City of the fees, charges and costs necessary to close the escrow. The premiums for the Borrower's Owner's Policy and•the City's Lender's Policy plus any other charges you incur associated with these instructions are to be paid from the funds deposited by the City into Escrow. The City will wire funds in the amount of$675,000 into Escrow, although Escrow is only authorized to charge the City for any fees, charges and costs payable by it pursuant to these Instructions, up to $ 668,183.80.All unused portions of funds deposited into Escrow by the City shall be nromntiy returned to the gty. E. Record, in the following order, the following documents (the "Recording Documents"): 1. Grant Deed; 2. Affordability Restrictions; 3. HOME Deed of Trust;and May 12,2010 Escrow No. 7681.ESC Page 5 Title Order No.05387013-25 4. NSP Deed of Trust. F. Promptly after recordation, please deliver to the City and Borrower conformed copies of the Recording Documents described above, showing the title company's certification that the same have been recorded and setting forth the date of recording and instrument number and a copy of these instructions signed by you in the space provided below to indicate your acceptance. Deliver the original executed counterpart of the Recorded Documents to the City. G. As soon as reasonably possible, but not later than two weeks after the date of recording, one original and one copy of the City's lender's policy shall be delivered to the City. H. We anticipate being in a position to authorize recording on or before May 15, 2010. If for any reason,this escrow cannot close on that date.or such later date as you may be advised by Sidney Stone of the City or the undersigned, you are to return all documents to the undersigned. Please notify us upon your receipt and review of the Recording Documents and these escrow instructions. I. Any documents signed by the City are entitled to free recording pursuant to Government Code §27383. Except as otherwise expressly provided, neither the City nor this firm shall incur any expense in connection with the fulfillment of these escrow instructions and all costs incurred by you with respect to this escrow shall be the sole obligation of the Borrower. If any of the instructions in this letter cannot be followed for any reason, or if you have any questions,please call Sidney Stone at 714-536-5901 or the undersigned at 213-617-0480. Please acknowledge your receipt and acceptance of these instructions by signing a copy of this letter and returning it to the undersigned. In any event, your recordation of any of the Recording Documents shall be deemed to be your acceptance of these instructions. In addition, you are hereby instructed to advise the undersigned by telephone or e-mail of your recordation of all or any of the Recording Documents. These instructions may be amended in writing, or telephonically,by the undersigned or Sidney Stone of the City. Very truly yours, KANE,BALLMER&BERKMAN Special Counsel for the City of Huntington Beach By: (;�,6 eborah L.Rhoads May 12,2010 Escrow No.768 LESC Page 6 Title Order No. 05387013-25 ACCEPTED BY BEACH PACIFIC ESCROW,INC. 0Vm vy.vq."bl PJ r. PJ Garcia By: Dr°100S 17W3 A -07°r Name:PJ Garcia Title: Escrow Officer ACCEPTED BY LAWYERS TITLE INSURANCE CORPORATION By: Name: Liz Ochoa Title: Title Officer May 12,2010 Escrow No.768 LESC Exhibit A—Legal Description Title Order No. 05387013-25 EMIT A Description of Pronerty Legal Description of Property Commonly Known As 7911 Slater Avenue Huntington Beach,California All that certain real property situated in the County of Orange, State of California, described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-17 escrow instructions(execution).doc EXHIBIT 14 ASSIGNMENT OF RENTS & LEASES P4 This Document was electronically recorded by RECORDED REQUEST OF DPS Norwalk C First American Title SUBDIVISION MAPPING DEPT. Recorded in Official Records, Orange County Tom Daly,Clerk-Recorder Q FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: I I III II I II II III III II I III I I NO FEE 2011000133138 04:30pm 03/11/11 THE CITY OF HUNTINGTON BEACH 42 aya A34 A36 12 "p`r 0.00 0.00 0.00 0.00 33.00 0.00 0.00 0.00 b 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code§ 27383) APN: 165-234-17 ASSIGNMENT OF RENTS AND LEASES FROM PACIFIC SUN APARTMENTS CIC,L.P. TO THE.CITY OF HUNTINGTON BEACH THIS ASSIGNMENT OF RENTS AND LEASES (the "Assignment") dated MQV,Clh I I , 2011 is made by PACIFIC SUN APARTMENTS CIC, L.P., a California. limited partnership '("Assignor"), in favor of THE CITY OF HUNTINGTON BEACH,:a municipal corporation(the "Assignee"). RECITALS A. Assignor is: the.owner of the real property described in Exhibit "A" attached hereto and the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the "Premises". B. The City has agreed to make a loan of NSP funds to Assignor in the original principal amount of FOUR HUNDRED ONE THOUSAND`FOUR HUNDRED EIGHTY TWO DOLLARS AND FIFTY CENTS ($401,482.50) (the"NSP Loan') and a loan of HOME Funds to ;Assignor:in'the original principal amount of SEVEN HUNDRED SEVENTY NINE THOUSAND TWO HUNDRED' ' FIVE DOLLARS AND THIRTY FOUR CENTS ($779,205.34) (the"HOME Loan") (individually and collectively, the "Loan ."),,Pursuant to the terms of that--certain Affordable Housing Agreement by and between Assignor and Assignee dated as of ; 2011 (the "Housing Agreement"). The NSP Loan 'and`the HOME'Loan are each evidenced by a Residual Receipts Promissory Note Secured by Deed of Trust, of even date herewith, executed by Assignor in favor of the City (with respect to each Loan,`the "Note"). The NSP Loan and the:HOME Loan are each secured by a Deed of Trust, Security Agreement, and, Fixture Filing. (With Assignment of Rents), of even date_ herewith, executed by Assignor; as Trustor,'for'the' benefit of the'Chy as Beneficiary (with'respect to`each Loan, the '` e'ed of Trust")'. ASSIGNMENT OF RENTS AND TEASES Page 1 of 9 r In order to induce the City to make the Loans to Assignor, Assignor has agreed to execute this Assignment. NOW THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt of which is hereby acknowledged, Assignor agrees as follows: AGREEMENT 1. All initially capitalized terms used herein, unless otherwise defined or required by context, shall have the meaning ascribed to them in the Housing Agreement. 2. Subject to the prior rights, if any, of a lender whose lien is approved by Assignee as senior to the Deed of Trust held by Assignee ("Senior Lender'), Assignor hereby absolutely grants, sells, assigns, transfers, and sets over to Assignee, by this Assignment, all of Assignor's interests, whether now existing or hereafter acquired, in all leases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises, together with all extensions, renewals, modifications, or replacements of said leases and occupancy agreements, and together with any and all guarantees of the obligations of the lessees and occupants (the "Lessees") thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. (Said leases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof, are hereinafter referred to collectively as the "Leases" and individually as a"Lease".) 3. Assignor's purpose in making this Assignment is to relinquish to Assignee its right to collect and enjoy the rents, royalties, issues, profits, income, and other benefits at any time accruing by virtue of the Leases (hereinafter called "Rents and Profits"). 4. The parties intend that this Assigmment shall be a present, absolute and unconditional assignment and shall, immediately upon execution, give the Assignee the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the indebtedness and other obligations under the Note and other loan documents, as well as all other sums payable under the Deed of Trust or any other instrument given as security for the indebtedness. However, the Assignee hereby grants to Assignor a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Leases, so long as there is no Default by Assignor in performance of the terms, covenants, or provisions of the Deed of Trust, the Note, or the Housing Agreement, this Assignment or any other loan document. Nothing contained herein, nor any collection of Rents and Profits by Assignee or by a receiver, shall be construed to make Assignee a "mortgagee in possession" of the Premises so long as Assignee has not entered into actual possession of the Premises. ASSIGNMENT OF RENTS AND LEASES Page 2 of 9 5. Upon the occurrence of any Event of Default under the terms and conditions of this Assignment, the Note, the Deed of Trust, the Housing Agreement or any other loan document, this Assigmment shall constitute a direction and full authority to each Lessee under any Lease and each guarantor of any Lease to pay all Rents and Profits to Assignee without proof of the Default relied upon. Assignor hereby irrevocably authorizes each Lessee and guarantor to rely upon and comply with any notice or demand by Assignee for the payment to Assignee of any Rents and Profits due or to become due. 6. Assignor represents and warrants as to each Lease now or hereafter covering all or any portion of the Premises, unless Assignee has been otherwise advised in writing by Assignor: a. That each Lease is in full force and effect; b. That no material default exists on the part of the Lessee thereunder or Assignor; C. That no rent in excess of one month's rent has been collected in advance, except for a one-month security deposit; d. That no Lease or any interest therein, except to the extent required by the Senior Lender, has been previously assigned or pledged; and e. That all rent due to date under each Lease has been collected and no concession has been granted to any Lessee in the form of a waiver, release, reduction, discount, or other alteration of rent due or to become due except as previously disclosed to Assignor in writing. 7. Assignor agrees with respect to each Lease: a. If any Lease provides for a security deposit paid by the Lessee to Assignor and subject to the prior rights, if any, of a Senior Lender, this Assignment transfers to Assignee all of Assignor's right, title, and interest in and to each such security deposit; provided, however, that Assignor shall have the right to retain said security deposit so long as Assignor is not in Default under this Assignment, the Deed of Trust, the Note, the Housing Agreement or any other Loan Document, subject to any applicable notice and cure period; and provided further that Assignee shall have no obligation to the Lessee with respect to such security deposit unless and until Assignee comes into actual possession and control of said security deposit. b. If any Lease provides for the abatement of rent during repair of the leased premises by reason of fire or other casualty, Assignor shall furnish rental insurance to Assignee, the policies to be with companies and in form, content, policy limits, and terms as are customary in the case of entities owning similar property or assets similarly situated. ASSIGNMENT OF RENTS AND LEASES Page 3 of 9 C. Each Lease shall remain in full force and effect despite any merger of the interest of Assignor and any Lessee thereunder. Except as otherwise provided in the Housing Agreement, Assignor shall not terminate any Lease (except pursuant to the terms of the Lease upon a default by any Lessee thereunder), or materially modify or amend any Lease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of Assignee, which consent shall not be unreasonably withheld. d. Assignor shall not collect any Rents and Profits more than thirty (30) days in advance of the date on which they become due under the terms of any Lease. e. Assignor shall not discount any future accruing Rents and Profits. f. Assignor shall not consent to any assignment of any Lease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm's length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without the prior written consent of Assignee, except as otherwise provided in the Housing Agreement. g. Except as otherwise provided in the Housing Agreement, Assignor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. h. Assignor shall faithfully perform and discharge all obligations of the lessor under each Lease, and shall give prompt written notice to Assignee of any notice of Assignor's default received from any Lessee or any other person and furnish Assignee with a complete copy of said notice. Assignor shall appear in and defend, at no cost to Assignee, any action or proceeding arising under or in any manner connected with any Lease. If requested by Assignee, Assignor shall enforce each Lease and all remedies available to Assignor against the Lessee in the case of default under the Lease by the Lessee. i. Except as otherwise provided in the Housing Agreement, and except for residential leases entered into in the ordinary course of business, Assignor shall give Assignee written notice immediately upon entering into a Lease of any part of the Premises and shall promptly upon request of Assignee provide to Assignee a true and correct copy of each executed Lease. Upon written notice from Assignee to Assignor, such Lease shall be deemed included in this Assignment as though originally listed herein. At Assignee's option, such notice may be recorded, without cost to Assignor, in the Official Records of Orange County, California, which notice shall refer to this Assignment. j. Except as otherwise provided in the Housing Agreement, Assignor shall not hire, retain, or contract with any third party for property management services with respect to the Premises without the prior written approval of Assignee, at Assignee's option, of such party and the terms of its contract for management services. ASSIGNMENT OF RENTS AND LEASES Page 4 of 9 k. Nothing herein shall be construed to impose any liability or obligation on Assignee under or with respect to any Lease. Assignor shall indemnify, defend, and hold Assignee, its officers, directors, agents, employees, and representatives (the "Indemnitee(s)") harmless from and against any and all liabilities, losses, and damages that any Indemnitee may incur under any Lease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any alleged obligations to be perfonned or discharged by Assignee under any Lease or this Assignment, unless any of the foregoing arises from or results from the active concurrent negligence, sole negligence or sole willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss, or damage under any Lease or by reason of this Assignment and such liability, loss, or damage falls within the foregoing indemnification, Assignor shall immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys' fees and court costs incurred by such Indemnitee. All of the foregoing sums shall bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by Assignee may be applied by Assignee, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense, or fees. 8. Assignor hereby grants to Assignee the following rights: a. Upon an Event of Default as defined in the Housing Agreement, Assignee shall be deemed to be the creditor of each Lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership, or other debtor relief proceedings affecting such Lessee, without obligation on the part of Assignee, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein. b. Assignee shall have the right to assign Assignor's right, title, and interest in the Leases to any subsequent holder of the Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Premises through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Assignee. C. Assignee shall have the right (but not the obligation), upon any Event of Default under the Deed of Trust or the Housing Agreement, to take any action as Assignee may deem necessary or appropriate to protect its security, including but not limited to appearing in any action or proceeding and performing any obligations of the lessor under any Lease; and Assignor agrees to pay, on demand, all costs and expenses, including without limitation reasonable attorneys' fees and court costs incurred by Assignee in connection therewith, together with interest thereon at the rate of ten percent (10%) per annum. d. Upon any Event of Default under this Assignment, the Deed of Trust, the Note, the Housing Agreement, or any other loan document (subject to all applicable notice and cure periods), and without notice to or consent of Assignor, Assignee shall have the following rights (none of which shall be construed to be obligations of Assignee): ASSIGNMENT OF RENTS AND LEASES Page 5 of 9 i. Assignee shall have the right under this Assignment to use and possess, without rental or charge, the Fixtures, Equipment, and Personal Property of the Assignor located in or on the Premises and used in the operation or occupancy thereof. Assignee shall have the right to apply any of the Rents and Profits to pay installments due for Personal Property rented or purchased on credit, insurance premiums on Personal Property, or other charges relating to Personal Property in or on the Premises. However, this Assignment shall not make Assignee responsible for the control, care, management, or repair of the Premises or any Personal Property or for the carrying out of any of the terms or provisions of any Lease. ii. Assignee shall have the right to apply the Rents and Profits and any sums recovered by Assignee hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises. iii. Assignee shall have the right to take possession of the Premises, manage and operate the Premises and Assignor's business thereon, and to take possession of and use all books of account and financial records of Assignor and its property managers or representatives relating to the Premises. iv. Assignee shall have the right to execute new Leases of any part of the Premises, including Leases that extend beyond the term of the Deed of Trust. V. Assignee shall have the right to cancel or alter any existing Leases. vi. Assignee shall have the irrevocable authority, as Assignor's attorney-in-fact, such authority being coupled with an interest, to sign the name of Assignor and to bind Assignor on all papers and documents relating to the operation, leasing and maintenance of the Premises. e. All of the foregoing rights and remedies of Assignee are cumulative, and Assignee shall also have upon the occurrence of any such Default or Event of Default all other rights and remedies provided under the Note, the Housing Agreement, the Deed of Trust, or any other loan document or other agreement between Assignor and Assignee, or otherwise available at law or in equity or by statute. 9. Failure of Assignee to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason shall not constitute a waiver thereof. 10. Notwithstanding any future modification of the terms of the Note, the Deed of Trust, the Housing Agreement, or any other loan document, this Assignment and the rights and benefits hereby assigned and granted shall continue in favor of Assignee in accordance with the terms of this Assignment. ASSIGNMENT OF RENTS AND LEASES Page 6 of 9 11. This Assignment shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors, and assigns of the parties hereto (including without limitation in the case of Assignee, any third parties now or hereafter acquiring any interest in the Indebtedness or other obligations of Assignor under the Note or Deed of Trust or a part thereof, whether by virtue of assignment,participation, or otherwise). The words Assignor, Assignee, and Lessee, wherever used herein, shall include the persons and entities named herein or in any Lease and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named Assignee (or any successor designated as such by an instrument recorded in the Official Records of Orange County, California referring to this Assignment) shall be sufficient for all purposes notwithstanding that Assignee may have theretofore assigned or participated any interest in the obligation to a third party. All words and phrases shall be taken to include the singular or plural number, and the masculine, feminine, or neuter gender, as may fit the case. 12. Any change, amendment, modification, abridgment, cancellation, or discharge of this Assignment or any term or provision hereof shall be invalid without the written consent of Assignee. 13. Upon payment to Assignee of the full amount of the Indebtedness and other obligations secured hereby and by the Note and Deed of Trust, as evidenced by a recorded satisfaction or release of the Deed of Trust, this Assignment shall be void and of no further effect. In such event, Assignee shall cooperate with Assignor to execute such instruments as may be reasonably necessary to remove the lien of this instrument from the Official Records of Orange County. 14. All notices, demands, approvals, and other communications provided for in this Assignment shall be sufficiently given if. (1) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt 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 Assignor: Pacific Sun Apartments CIC, LP c/o Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 With a copy to: CIC Pacific Sun Apartments, LLC c/o Chelsea Investment corporation 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 ASSIGNMENT OF RENTS AND LEASES Page 7 of 9 And a copy to: Raymond James Tax Credit Funds, Inc. 880 Carillon Parkway St. Petersburg, FL 33716 Attention: Ronald M. Diner If to City: The City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Notices personally delivered or delivered by courier shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of(1)receipt of refusal to accept delivery, or(ii)noon on the second business day following deposit in the United States mail. 15. This Assignment may be recorded in the Official Records of Orange County, California, and Assignor shall pay all fees, charges, costs, and expenses of such recording. 16. If any provision hereof is determined to be illegal or unenforceable for any reason, the remaining provisions hereof shall not be affected thereby. 17. This Assignment shall be governed by and construed in accordance with the internal laws of the State of California. 18. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Assignor shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. 19. This Assignment shall be subject to the terms and conditions set forth in that certain Subordination Agreement dated on or about the date hereof, by and among Assignor, Raymond James Tax Credit Funds, Inc. and Assignee, as the same may be amended, restated, supplemented or modified from time to time. [SIGNATURES APPEAR ON FOLLOWING PAGE] ASSIGNMENT OF RENTS AND LEASES Page 8 of 9 IN WITNESS WHEREOF, the undersigned Assignor has executed this Assignment as of the date first above written. PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing General Partner By: _ 0, ./, ) X Pamela Hope President By: CIC Pacific Sun Apartments,LLC, a California limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager B James J. S mid Preside ASSIGNMENT OF RENTS AND LEASES Page 9 of 9 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of Califo a Y County of ae' On �1 Zl/ < /l before me, / gate Here Insert Nasne and Title of the Officer personally appeared ti "'Name(s)of Signer(s) 4 who proved to me on the basis of satisfactory evidence to be the person(s) whose names) is/afe subscribed to the within instrument and acknowledged to me that fie/she/their- executed the same in -his/her/them authorized ca acit�f�s), and that by p G.R."THERS. h4s/her/their signatur*) on the instrument the Commission# 1903166.: personO, or the entity upon behalf of which the Notary Public-California persor4s) acted, executed the instrument. San Diego County. Mi Comm.Ex Tres Sep,6,2014 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. r Signature:' I� Place Notary Seal Above / p� Signature of Notary Public 4 OPTIONAL Though the information below is not required bylaw,it may prove valuable to persons relying on the document . and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document F Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Individual ❑ Individual o ❑ Partner—❑Limited ❑General Top of thumb here ❑ Partner—❑ Limited ❑General Top of thumb here ❑ Attorney in Fact O Attorney.in Fact O Trustee ❑Trustee O Guardian or Conservator O Guardian or Conservator ❑ Other: O Other: Signer Is Representing: Signer Is Representing: 02009 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-800-876-6827) Item#5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of r ... !' t✓l / )me, On � cd l� be#o / f0ate Here nsert Name and Title of the Officer personally appeared Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person W whose name(s) is/are subscribed to the G. R.WITHERS within instrument and acknowledged to me that Commission s 1903166 he/sf y-executed the same in his/herAheir authorized M notary Public-California capacity#es),and that by his/het eif signature(sj on the San DieC County instrument the person(s), or the entity upon behalf of L" iftA Comm.Expires Se 6�2014 which the person(s-}-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 Place Notary Seal Above g� p�/� Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this /form to another document./ Description of Attached�Document f2y? n ©t J 57//'.fin Title or Type of Document:/ Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer—Title(s): ❑ Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact mmus&MRIM ❑Attorney in Fact ❑ Trustee Top of thumb here ❑Trustee Top of thumb here ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: 02007 National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402•www.NationaiNotaryorg Item#5907 Reorder:Call Toll-Free 1-800-876-6827 EXHIBIT A LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED S I C M , 2011 AS INSTRUMENT NO. 2011 DOO 133 ) 219 OF OFFICIAL RECORDS. APN: 165-234-17 EXHIBIT 15 FORM OF RELEASE OF CONSTRUCTION COVENANTS 1 i Orcler.N'4b. 0 Escrow No. Loan No. WHEN RECORDED MAIL TO: Recorded in Official Records, Orange County Tom Daly, Clerk-Recorder • IIIIIIIIIIIIIIIIIINIIIIIIIIIIIIIIIIIBIIIIIIIIINIIgIIIINB Pacific Court Apartments,LP g.00 P.O.Box 311 201000017463610:42 am 04/14/10 Tustin,CA 92781 143 414 NI 2 0.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 � 1 SPACE ABOVE THIS LINE FOR RECORDER'S USE NOTICE OF COMPLETION NOTICE IS HEREBY GIVEN THAT: 1. The undersigned is OWNER or agent of the OWNER of the interest or estate stated below in the property hereinafter described. 2. The FULL NAME of the OWNER is Pacific Court Apartments 3. The FULL ADDRESS of the OWNER is P.O. Box 311 Tustin,CA 92781 4. The NATURE OF THE INTEREST or ESTATE of the undersigned is: In fee. 5. The FULL NAMES and FULL ADDRESSES of ALL PERSONS, if any, WHO HOLD SUCH INTEREST or ESTATE with the undersigned as JOINT TENANTS or as TENANTS IN COMMON are: NAMES ADDRESSES Not Applicable 6. The full names and full addresses of the predecessors in interest of the undersigned if the property was transferred subsequent to the commencement of the work of improvement herein referred to: NAMES ADDRESSES Not Applicable 7. A work of improvement on the property hereinafter described was COMPLETED 04/07/2010 8. The work of improvement completed is described as follows: Rehabilitation 9. The NAME OF THE ORIGINAL CONTRACTOR, if any, for such work of improvement is Owner Builder 10. The street address of said property is 2200 Delaware Street, Huntington Beach, CA 92648 11. The property on which said work of improvement was completed is in the city of Huntington Beach, County of Orange, State of California, and is described as follows: Situs: 2200 Delaware Street, Huntington Beach, CA 92648 Parcel Number: 025-121-50 (CONTINUED ON NEXT PAGE) 1054(1/94) Page 1 of 2 Date. F I�'� �' U Signature of Owner or agent of owner Verification for INDIVIDUAL owner I, the undersigned, declare under penalty of perjury under the laws of the State of California that I am the owner of the aforesaid interest or estate in the property described in the above notice; that I have read said notice,that I know and understand the contents thereof,and that the facts stated therein are true and correct. Date and Place (Signature of owner named in paragraph 2) Verification for NON-INDIVIDUAL owner: I,the undersigned,declare under penalty of perjury under the laws of the State of California that I am the Authorized Signatory of the aforesaid interest or estate in the property described in the above notice; that I have read the said notice,that I know and understand the contents thereof,and that the facts stated therein are true and correct. Date and Place (Signature of person signing on behalf of owner) 3054(1194) Page 2 of 2 Pacific Court Apartments,LP Subcontractor Agreement Exhibits&Attachment A EXHIBIT E UNCONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT The undersigned has been paid in full for all labor services,equipment or material fintnished to Pacific Court Apartments,L.P. on the job of 2200 Delaware St., Huntington Beach, CA, 92648 and does hereby release any tight to a mechanics lien, stop notice, or any right against a labor and material bond on the job, except for disputed claims for extra work in the amount of$_0 Dated: l�" C) _C&C Construction Services, Inc._ (Company Name) By Name: J j d toitt� Title: ,, NOTICE: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT,EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID,USE A CONDITIONAL RELEASE FORM. 5 EQUAL HOUSING OPPORTUNITY This Document was electronically recorded by City of Huntington Beach Recorded in Official Records, Orange County FREE RECORDING REQUESTED BY Tom Daly, Clerk-Recorder AND WHEN RECORDED MAIL TO: II III III II �� 111111111111111111111111111111111111111 II N® FEE 2012000192300 04:04pm 04/04/12 THE CITY OF HUNTINGTON BEACH 90 416 R08 1 2000 Main Street 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Huntington Beach, CA 92648 Attn: City Manager (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code§27383) APN: 165-234-17 991i RELEASE OF CONSTRUCTION COVENANTS BY THE CITY OF HUNTINGTON BEACH TO PACIFIC SUN APARTMENTS CIC,L.P. WHEREAS, Pacific Sun Apartments CIC, L.P., a California limited partnership (the "Developer") is the owner of that certain real property situated in the City of Huntington Beach, California described in Exhibit"A"which is attached hereto and made a part hereof(the"Site"),and has agreed to construct the improvements thereon(the "Improvements"); and WHEREAS, the Regulatory Agreement and Declaration of Covenants and Restrictions entered into by and between the City of Huntington Beach (the "City") and the Developer and recorded in the Official Records of Orange County on May 17, 2010 as Instrument No.2010000231149, as amended by that certain Amendment to Regulatory Agreement dated as of March 11, 2011 and recorded in the Official Records of Orange County on March 11, 2011 as Instrument No. 2011000133130 (collectively referred to herein as the "Regulatory Agreement") obligates the Developer and its successors or assigns to construct the Improvements in accordance with the Affordable Housing Agreement("Housing Agreement")dated as of March 7,2011 by and between the City and the Developer. WHEREAS, pursuant to the Housing Agreement, the City has agreed to furnish the Developer with a Release of Construction Covenants ("Release") upon the completion of the Improvements,and such certificate is to be in such form as to permit it to be recorded in the Official Records of Orange County; and RELEASE OF CONSTRUCTION COVENANTS PAGE Pacific Sun Pacific Sun-Release of Construction Covenants.doc WHEREAS, the Housing Agreement states that the Release shall be conclusive determination of satisfactory completion of the rehabilitation of the Improvements as required by the Housing Agreement; and WHEREAS,the City has determined that the construction of the Improvements on the Site as required by the Housing Agreement has been satisfactorily completed. NOW THEREFORE, it is hereby acknowledged and agreed by the Party hereto that: l. The City hereby certifies that the construction of the Improvements on the Site has been fully and satisfactorily performed and completed as required by the Housing Agreement and the Regulatory Agreement. 2. Nothing contained in this instrument shall modify any provisions of the Housing Agreement or the Regulatory Agreement. "CITY" THE CITY OF HUNTINGTON BEACH, a municipal c oration of the State of California By: City Manager ATTEST: B : City Clerk APPR VED AS TO FORM: By•_ City Attorney 3 _ l KANE BALLMER& BE N Special Counsel RELEASE OF CONSTRUCTION COVENANTS PAGE Pacific Sun Pacific Sun-Release of Construction Covenants.doc State of California ) County of Orange ) On /�P"U. 03 eA0/o2, before me, . L- LS00^1-24-, a Notary Public,personally appeared Z-f-' 4A) ,who proved to me on the basis of satisfactory evidence to be the persor o)whose narnekJ410 subscribed to the within instrument and acknowledged to me that1e�sh die executed the same in ref; authorized capacity, and that by 4isAw signature0on the instrument the persorto or the entity upon behalf of which the persorepacted, 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. P. L. ESPARZA WITNESS;; and official seal. Commission# 1857021 Z , Notary Public-California z Z Orange County 1 Signature (Seal) My Comm.Ex Tres Au2 4,2013 RELEASE OF CONSTRUCTION COVENANTS Pacific Sun Pacific Sun-Release of Construction Covenants.doc EXHIBIT A LEGAL DESCRIPTION OF SITE Real property in the City of Huntington Beach, County of Orange, State of California,described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO.79-577,IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE, STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED MARCH 11, 2011 AS INSTRUMENT NO. 2011000133129 OF OFFICIAL RECORDS. APN: 165-234-17 RELEASE OF CONSTRUCTION COVENANTS LEGAL DESCRIPTION OF SITE Pacific Sun Pacific Sun-Release of Construction Covenants.doc This Document was electronically recorded by RECORDED REQUEST OF DPS Norwalk C Fiat American Title SUBDIVISION MAPPING DEPT. Recorded in Official Records,Orange County a Tom Daly,Clerk-Recorder Order No. ) ; b 0641 ) NO FEE Pj Escrow No. ) 2011000133139 04:30pm 03/11/11 Senior Loan No. �o V Junior HOME Loan No. 42 414 Al2 14 w ) 0.00 0.00 0.00 0.00 39.00 0.00 0.00 0.00 b Junior NSP Loan No: ) om ) WHEN RECORDED MAIL TO: THE CITY OF HUNTINGTON BEACH ) 2000 Main Street ) Huntington Beach, CA 92648 ) Attn: City Clerk ! ) SPACE ABOVE THIS LINE]-OR RECORDER'S USE EXEMPT FROM RECORDING FEE PER GOV.CODE§27383 APN: 165-234-17 PRIORITY AND SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN A SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER INSTRUMENT. This Priority and` Subordination Agreement ("Agreement") is entered into as of 2011, by and among PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership("Borrower"),THE CITY OF HUNTINGTON BEACH,a municipal corporation of the State of California("Junior Lender"),and RAYMOND JAMES TAX CREDIT FUNDS,INC., a Florida corporation, ('`Senior Lender''). Borrower, Junior Lender, and Senior Lender are individually referred to in this Agreement as a "PP" and are collectively referred to in this Agreement as the "Parties." Senior Lender and Junior Lender are individually referred to in this Agreement as a"Lender" and are collectively referred to in this Agreement as the "Lenders." RECITALS . A. Borrower has executed or is about to execute a Deed of Trust (the '`Senior Lender Deed of Trust'°) for,the benefit,of;Senior I Lender, to secure a promissory note in the amount of $1,218,548.00. The Senior Lender Deed of Trust encumbers, among other things,the real property more particularly described in Exhibit A attached to this Agreement (the "Land'') and is to be recorded concurrently herewith against the Property (as defined below) in the Official Records of Orange County. California("Official Records"). The Land,together with all improvements now or hereafter located on the Land and all fixtures and personal property located on the Land and encumbered by any of the Recorded Items (as defined below) are referred to, collectively, as the "Property." SUBORDINATION AGREEMENT PAGE 1 B. Borrower has executed or is about to execute the Senior Lender Assigmment of Rents and Leases ("Senior Lender Assignment of Rents") for the benefit of the Senior Lender, which encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. C. Pursuant to that certain Affordable Housing Agreement ("Affordable Housing Agreement")entered into by and between Borrower(referred to as Developer therein)and the Junior Lender(referred to as the City therein)dated as of/Y)976 l- C1 ,2011,Borrower has executed or.is about to execute the Deed of Trust, Security Agreement and Fixture Filing(With Assignment of Rents) the ("Junior Lender HOME Deed of Trust") for the benefit of Junior Lender, to secure a promissory note in the amount of$779,205.34. The Junior Lender HOME Deed of Trust encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. D. Pursuant to the Affordable Housing Agreement,Borrower has executed or is about to execute the Deed of Trust, Security Agreement and Fixture Filing(With Assignment of Rents) the ("Junior Lender NSP Deed of Trust")for the benefit of Junior Lender,to secure a promissory note in the amount of$401,482.50. The Junior Lender NSP Deed of Trust encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. E. Pursuant to the Affordable Housing Agreement,Borrower has executed or is about to execute the Assignment of Rents and Leases("Junior Lender Assignment of Rents")for the benefit of the Junior Lender, which encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. F. Junior Lender and Colette's Children Home, Inc., a California nonprofit public benefit corporation and Borrower's predecessor in interest in the Property ("Colette's"), executed that certain Regulatory Agreement and Declaration of Covenants and Restrictions(including rental restrictions)dated as of April 5,2010 and recorded against the Property in Official Records on May 17, 2010 as Instrument No. 2010000231149 ("RegulatoryAgreement"). Borrower and Colette's have executed or are about to execute an Assignment and Assumption Agreement whereby Colette's assigns and Borrower assumes all of Colette's rights, interests and obligations stated in the Regulatory Agreement. G. Pursuant to the Affordable Housing Agreement, Borrower and Junior Lender have executed or are about to execute the Amendment to Regulatory Agreement and Declaration of Covenants and Restrictions("Amendment to Regal, atoa Agreement")which encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. H. The Senior Lender Deed of Trust,the Senior Lender Assignment of Rents,the Junior Lender HOME Deed of Trust,the Junior Lender NSP Deed of Trust,the Junior Lender Assignment of Rents,the Regulatory Agreement,and the Amendment to Regulatory Agreement are collectively referred to in this Agreement as the "Recorded Items." SUBORDINATION AGREEMENT PAGE 2 I. It is the intent of the Parties that the order of priority of the Recorded Items as liens on or charges against the Property shall be as follows: 1. Regulatory Agreement 2. Amendment to Regulatory Agreement 3. Senior Lender Deed of Trust 4. Senior Lender Assignment of Rents 5. Junior Lender HOME Deed of Trust 6. Junior Lender NSP Deed of Trust 7. Junior Lender Assignment of Rents. In consideration of the mutual benefits accruing to the Parties and other valuable consideration,the receipt and sufficiency of which are hereby acknowledged, and in order to induce each Party to enter into the Recorded Items to which it is a party, the Parties agree as follows: AGREEMENT 1. Priority and Subordination. (a) Each Recorded Item, and any and all renewals and extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property, having the relative priority with respect to the other Recorded Items as set forth in Recital I above. In addition, the Senior Lender Deed of Trust shall be senior and prior to the Affordable Housing Agreement and any and all Uniform Commercial Code Financing Statements filed by or on behalf of Junior Lender with the Office of the California Secretary of State and/or recorded by or on behalf of Junior Lender in Official Records. Subject to Paragraph L(b)below, each Party intentionally and unconditionally waives,relinquishes and subordinates the lien or charge of the Recorded Items to which it is a party in favor of the lien or charge upon the Property of the other Recorded Items to the extent necessary so that the Recorded Items have the relative priority set forth in Recital I above, provided that the indebtedness secured by the Senior Lender Deed of Trust does not exceed the sum of the principal amount of One Million Two Hundred Eighteen Thousand Five Hundred Forty Eight Dollars ($1,218,548.00)plus interest and all other amounts accruing pursuant to the terms of the promissory note secured by the Senior Lender Deed of Trust and/or the terms of the Senior Lender Deed of Trust,plus costs and expenses, including attorneys' fees, of collection under that note and/or under the Senior Lender Deed of Trust. (b) Each Party acknowledges that it has been offered a satisfactory opportunity to review each of the Recorded Items and related documents to the extent that it wishes to review them. 2. Reliance. The Parties would not enter into the Recorded Items to which they are parties without this Agreement. 3. Recording. Each Party consents to the recording of each of the Recorded Items and this Agreement. SUBORDINATION AGREEMENT PAGE 3 4. No Obli-2ation. No Lender is under any obligation to the other Lender to, nor has either Lender represented that it will, see to the application of any proceeds of any loan secured by any of the Recorded Items except as may otherwise be set forth in a written agreement(other than this Agreement) executed by the Lender sought to be charged with such an obligation. 5. Notice of Default; Opportunity to Cure. (a) Senior Lender shall endeavor to give the Junior Lender notice of an occurrence of breach or default under the Senior Lender Deed of Trust concurrently with giving such notice to Borrower and, in any event, prior to enforcing remedies for such default against Borrower or the Property,and Senior Lender agrees that it will not commence foreclosure proceedings until sixty(60) days after Borrower's receipt of notice of an occurrence of breach or default under the Senior Lender Deed of Trust. (b) Junior Lender shall have each of the following rights so long as the Junior Lender HOME Deed of Trust or the Junior Lender NSP Deed of Trust encumbers any portion of the Property or interest therein: (i) To cure any breach or default under the Senior Lender Deed of Trust at any time prior to: (a) a judicial foreclosure of the Senior Lender Deed of Trust; or(b)a non-judicial foreclosure by trustee sale under the Senior Lender Deed of Trust; or(c)the recordation in Official Records of a deed in lieu of foreclosure with respect to the Senior Lender Deed of Trust(the events referenced in (a), (b), and (c) above are collectively referred to herein as a "Foreclosure"); and (ii) To negotiate with the Senior Lender in good faith regarding the noticed default at any time prior to the foreclosure of the Senior Lender Deed of Trust or other lien(without any party having an obligation to continue or enter into any final agreement). (ill) To negotiate with Borrower in good faith to purchase the Property from Borrower at any time prior to a Foreclosure of the Senior Lender Deed of Trust, subject to the Senior Lender Deed of Trust and without the consent of the holder of the Senior Lender Deed of Trust(without any Party having an obligation to continue or enter into any final agreement). . (c) If,prior to a Foreclosure of the Senior Lender Deed of Trust,the Junior Lender takes title to the Property and cures the default under the Senior Lender Deed of Trust, then Senior Lender will not exercise any right it may have to accelerate the indebtedness secured by the Senior Lender Deed of Trust solely by reason of that transfer (or will accept reinstatement if acceleration has already occurred). 6. Miscellaneous. (a) Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the priority of the lien and charge of the Recorded Items against the SUBORDINATION AGREEMENT PAGE 4 Property and all prior understandings and agreements on that subject, if any, are superseded and replaced by this Agreement. (b) Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California. (c) Successors:Assignment. This Agreement is for the benefit of the Lenders and their respective successors and assigns, and any provision hereof may be waived or modified by written agreement of the Lenders without the consent of Borrower,and without affecting the priority of the liens and charges of the Recorded Items as provided in this Agreement. The heirs, administrators, assigns and successors-in-interest of the Parties shall be bound by this Agreement. This Agreement may be assigned by a Party only as a part of an assignment of such Party's interest in the Property. (d) Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand-delivered,or two business days after deposit in the U.S.mail, postage prepaid, to the Parties at the addresses set forth below,or to such other place as a Party may from time to time designate for itself by notice to the other Parties. No successor or assign of a Party shall be entitled to notices or opportunity to cure defaults hereunder unless notice of the transfer is given in accordance with this subsection. To Borrower: Pacific Sun Apartments CIC, L.P. c/o Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 Attn: Pamela Hope With a copy to: CIC Pacific Sun Apartments, LLC c/o Chelsea Investment Corporation 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 Attn: James J. Schmid To Senior Lender: Raymond James Tax Credit Funds, Inc. 880 Carillon Parkway St. Petersburg, FL 33716 Attn: Ronald M. Diner SUBORDINATION AGREEMENT PAGE 5 To Junior Lender: The City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: City Manager With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 (e) Amendment. This Agreement may be amended only by a writing signed by the Parties,but this clause shall not impair the validity of any further agreements among fewer than all of the Parties as among themselves. (f) Legal Costs. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. (g) Severability. If any teen,provision,condition or covenant of this Agreement or the application thereof to any Party or circumstances shall, to any extent, be held invalid or unenforceable, then the remainder of this instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. (h) Counterparts. This Agreement may be executed in any number of counterparts,all of which taken together shall constitute one and the same instrument and whether or not all Parties execute each counterpart. (1) Completion of Recording Information. If this Agreement is signed without completion of certain recording information called for above, any Party or any escrow agent or title insurance company acting on the instructions of any Party is hereby authorized to insert such information prior to recording this Agreement. (Remainder of page intentionally left blank) SUBORDINATION AGREEMENT PAGE 6 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. BORROWER: PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing Ge ral artne By: kY Parnell Hope President By: CIC Pacific Sun Apartments, LLC, a California limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, i anager By: James J. Sc President SENIOR LE ER: RAYMOND JAMES TAX CREDIT FUNDS, INC., a Florida corporation By: Name: Ronald M. Diner Its: President [Signatures continue on the following page] I NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. BORROWER: PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing General Partner By: Pamela Hope President By: CIC Pacific Sun Apartments, LLC, a California limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager By: James J. Schmid President SENIOR LENDER: RAYMOND JAMES TAX CREDIT FUNDS, INC., a Florida corporation By: Na 'S--/ 1� [Signatures continue on the following page) SUBORDINATION AGREEMENT PAGE 7 State of C"�"� ) one-tko-S County of g- ) On Ph�,.���. ` ti Zo 1 I before me, a Notary Public, personally appeared ;Stev e- Kre , who proved to mJ on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of-Era that the foregoing paragraph Is true and correct. WITNESS my hand and official seal. s.�t sac ate of F'o"'a Signature T (Seal) °;, ,�,1'a '" ' s fly Tres 061:2i/ ;D2i793537 arm :cPire 4i'2012012 State Jf California ) County of Orange ) On before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed 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 (Seal) JUNIOR LENDER: THE CITY OF HUNTINGTON BEACH, a municip corporation of the State of California fa, Ci Manager ATTEST: ity Clerk , � ,P VED AS TO FORM: City Attorney KANE, BALLMER&BE Special Counsel SUBORDINATION AGREEMENT PAGE 8 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT . i State of Califor ' 4 County of c11 ' On r?Vw before me, a ( ate Here Insert Name and Title of the Offic r personally appearedl��fc%�/ /Y ; Na (s)'of Signer(s) I, , who proved to me on the basis of satisfactory evidence to be the person(stwhose name(s) is/are subscribed to the within instrument and acknowledged to me that -ate/she/tf'tey executed the same in G.R.WITHERS 11*&/her/their authorized capacity(es), and that by Commission# 1903166 hWher/their signatures) on the instrument the z -s Notary Public-California person(** or the entity upon behalf of which the San Diego County persons) acted, executed the instrument. My Comm.Expires Sep 6,2014 - - - - - - - - - - - - - - I certify under PENALTY OF PERJURY under the i laws of the State of California that the foregoing paragraph is true and correct. WITNESS my ha d and official seal. Signature: Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law,it may prove valuable to persons relying on the document F and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: F Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: Y ❑ Corporate Officer—Title(s): ❑Corporate Officer—Title(s): ❑ Individual ❑ Individual ❑ Partner—❑Limited ❑General Top of thumb here ❑Partner—❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact ❑ Trustee ❑Trustee ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing- Signer Is Representing: 0 2009 National Notary Association-NationalNotary.org•1-800-US NOTARY(1-800-876-6827) Item#5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT 4 State of Califon County of - r` 1 On r before me, �t//� � /✓ar f'�'1 r Date are sert me and Title of the Officer I4 personally appeared :/r-�J j Name(s)of Signer(s) 4 , who proved to me on the basis of satisfactory evidence to be the person(,4-whose name(s) is/are- subscribed to the within instrument and.acknowledged ` to me that he/she/they G.R.WITHERS executed the same in Commission# 1903166 his/heNtheir authorized capacity(ies), and that by i ,•cs fdotary Public-California m his/hea4heir- signatures) on the instrument the z San Diet,County person(sl, or the entity upon behalf of which the M Comm.Ex Tres Se 6,2014 person(s)-acted, executed the instrument. t-< I certify, under PENALTY OF PERJURY under the laws of the State of California that the foregoing t paragraph is true and correct. WITNESS my hand and official seal. 4 Signature: . Place Notary Seal Above gignature bf Notary Public F OPTIONAL Though the information below is not required by law,it may prove valuable to persons relying 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: F Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑Corporate.Officer—Title(s): F ❑ Individual ❑Individual o a ❑ Partner—❑Limited ❑General Top of thumb here ❑Partner—❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact ❑ Trustee ❑Trustee ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: ©2009 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-600-876-6627) Item#5907 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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. P L. ESPARZA Commission # 1857021 Z .•� Notary Public-California i Z ' Orange County D � y Comm. Expires ii 4,2013 (Seal) otary, S'gnat ) EXHIBIT A LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO.79-577,IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE, STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED"RECIPROCAL EASEMENT AGREEMENT"RECORDED 3 11 1 ,2011 AS INSTRUMENT NO. 2011 00013:� )2-9 OF OFFICIAL RECORDS. APN: 165-234-17 This Document was electronically recorded by DPS Norwalk C RECORDED REQUEST OF First American Title Recorded in Official Records, Orange County v SUBDIVISION MAPPING DEPT. Tom Daly,Clerk-Recorder Q b FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: I I III II I II II III III II I II II 110.00 �w 2011000133125 04:30pm 03/11/11 42414S15R014 b THE CITY OF HUNTINGTON BEACH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 U 2000 Main Street Huntington Beach, CA 92648 ,.Attn: City Clerk (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code§27383) APN: 165-234-17 SUBSTITUTION OF TRUSTEE AND FULL RECONVEYANCE DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) [HOME PROGRAM] The undersigned, THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California, as beneficiary and holder of the promissory note secured by the Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents), made and executed by COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation, as Trustor to LAWYERS TITLE as Trustee, dated April 19, 2010 and recorded on May 17, 2010, as Instrument No. 2010000231150, in the Official Records of the Office of the Recorder of Orange County, State of California ("Deed of Trust"), hereby substitutes THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California, whose address is 2000 Main Street, Huntington Beach, California 92648, as trustee in lieu'of the trustee named therein. THE CITY OF HUNTINGTON BEACH hereby accepts the appointment as trustee under the Deed of Trust and as successor trustee, and pursuant to the request of said beneficiary and holder and in accordance with the provisions of said Deed of Trust, DOES HEREBY RECONVEY, in accordance with said request, without warranty, to the person or persons legally entitled thereto, all of the estate, title and interest heretofore acquired and now held by said Trustee, in and to the real property located in the County of Orange, State of California, and described in Exhibit "A" attached hereto. [remainder of page intentionally blank] [signatures on following page] Page 1 IN WITNESS WHEREOF, THE CITY OF HUNTINGTON BEACH, has caused its duly authorized representative to acknowledge this instrument. Trustee/Beneficiary: THE CITY OF HUNTINGTON BEACH, a municip corporation of the State of California Rea., Ci Manager ATTEST: t erk AP VED AS TO FORM: City ttorney KANE,BALLMER&BERKMA Special Counsel Page 2 A ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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. P. L. ESPARZA WITNESS my hand and official seal. Commission# 1857021 Z x` Notary Public-California z Orange County D P Comm. Expires Aug 4.2 13 (Seal) (Notary Signat re) EXHIBIT"A" LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED 3 1 1 , 2011 AS INSTRUMENT NO. 2011000 J 3 j Z6) OF OFFICIAL RECORDS. APN: 165-234-17 This Document was electronically recorded by DPS Norwalk C RECORDED REQUEST OF First American Title Recorded in Official Records, Orange County SUBDIVISION MAPPING DEPT. Tom Daly,Clerk-Recorder a Q �f FREE RECORDING REQUESTED BY b �I AND WHEN RECORDED MAIL TO: I I III II I II II III III II I II III 10.00 2011000133126 04:30pm 03/11/11 g w 42 414 S15 R01 4 ° THE CITY OF HUNTINGTON BEACH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 �w b o 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk �j (Space Above This Line for Recorder's Office Use Only) Lam`9(/7 7—6 (Exempt from Recording Fee per Gov. Code§27383) APN: 165-234-17 SUBSTITUTION OF TRUSTEE AND FULL RECONVEYANCE DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) [NEIGHBORHOOD STABILIZATION PROGRAM] The undersigned, THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California, as beneficiary and holder of the promissory note secured by the Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents), made and executed by COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation, as Trustor to LAWYERS TITLE as Trustee, dated April 19, 2010 and recorded on May 17, 2010, as Instrument No. 2010000231151, in the Official Records of the Office of the Recorder of Orange County, State of California ("Deed of Trust"), hereby substitutes THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California, whose address is 2000 Main Street, Huntington Beach, California 92648, as trustee in lieu of the trustee named therein. THE CITY OF HUNTINGTON BEACH hereby accepts the appointment as trustee under the Deed of Trust and as successor trustee, and pursuant to the request of said beneficiary and holder and in accordance with the provisions of said Deed of Trust, DOES HEREBY RECONVEY, in accordance with said request, without warranty, to the person or persons legally entitled thereto, all of the estate, title and interest heretofore acquired and now held by said Trustee, in and to the real property located in the County of Orange, State of California, and described in Exhibit "A" attached hereto. [remainder of page intentionally blank] [signatures on following page] Page 1 IN WITNESS WHEREOF, THE CITY OF HUNTINGTON BEACH, has caused its duly authorized representative to acknowledge this instrument. Trustee/Beneficiary: THE CITY OF HUNTINGTON BEACH, a municip0lco oration of the State of California 6-1 ti6 Manager ATTEST: ZAOVED C erk AS TO FFORM: 6 orney NE, BALLMER&BERKMO Special Counsel Page 2 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On March 10, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Fred A. Wilson who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons 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. P. L. ESPARZA WITNESS my hand and official seal. Commission # 1857021 ilie Notary Public-California z Orange County D My Comm. Expires Aug 4, 2013 (Seal) (Notary Signatu ) EXHIBIT"A" LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED 3 2011 AS INSTRUMENT NO. 2011 0 0� 1-53 ► Z q , OF OFFICIAL RECORDS. APN: 165-234-17 RECORDED KEQUEN I Ur. �) First American Title ,g y SUBDIVISION MAPPING DEPT. This Document was electronically recorded by DPS Norwalk C 7 7 Recorded in Official Records,Orange County Tom Daly,.Clerk-Recorder UCC FINANCING STATEMENT I I III II I II II III III II I III II 18.00 Cl)I FOLLOW INSTRUCTIONS front and back CAREFULLY 201 10001331 35 04:30pm 03/11/11 d �I A.NAME&PHONE OF.CONTACT AT FILER[optional]. 42 414 U04 5 o .. B.SEND ACKNOWLEDGEMENT TO: (Name and Address) 0.00 0,00 0.00 0.00 12.00 0.00 0.00 0.00 �w a O [ c I THE CITY OF HUNTINGTON BEACH o 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk L ✓ I!/ �Ql Q�� THE ABOVE SPACE IS FOR FILING'OFFICE USE ONLY 1.DEBTOR'S EXACT FULL LEGAL NAME—insert only one debtor name(1a or 1b)—do not abbreviate or combine names 1a.ORGANIZATION'S NAME OR PACIFIC SUN APARTMENTS CIC,L.P. 1b.INDIVIDUAL'S LAST NAME - FIRST NAME MIDDLE NAME SUFFIX 1c.MAILING ADDRESS CITY STATE., POSTAL CODE COUNTRY c/o Colette's, 17301 Beach Blvd.,#23 Huntington Beach CA 92647 USA ADD'L INFO RE .1e.TYPE OF ORGANIZATION 1f.JURISDICTION OF ORGANIZATION tg.ORGANIZATIONAL ID#,if any ORGANIDEBTOR LP LP CA 201019600005 - ❑NONE 2.ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME—insert only one debtor name(2a or 2b)—do not abbreviate or combine names 2a.ORGANIZATION'S NAME - - - -- OR 2b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 2c.MAILING ADDRESS - CITY STATE- POSTALCODE COUNTRY ADUL INFO RE :2e.TYPE OF ORGANIZATION :2f.JURISDICTION OF ORGANIZATION :2g;ORGANIZATIONAL ID#,if any ORGANIZATION DEBTOR ❑NONE 3.SECURED PARTY'S NAME(or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P)—insert only one secured party name(3a or 3b) 3a.ORGANIZATION'S NAME OR City of Huntington.Beach 3b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 3c.MAILING ADDRESS CITY - STATE POSTAL CODE. COUNTRY 2000 Main Street Huntington Beach CA 92648 4.This FINANCING STATEMENT covers the following collateral: A security interest is granted in all of Debtor's right,title,and interest in and to all of the Collateral more fully described in the Attachment to UCC 1 Financing Statement,attached hereto and incorporated herein by this reference. 5.ALTERNATIVE DESIGNATION[if applicable]:❑LESSEE/LESSOR ❑CONSIGNEE/CONSIGNOR ❑BAILEEBAILOR ❑SELLERBUYER _]AG.LIEN ❑NON-UCC FILING 6. x This FINANCING STATEMENT is to be filed[for record](or recorded)in 7.Check to REQUEST SEARCH REPORT(S)on Debtors) All Debtors Debtor 1 Debtor 2 the REAL ESTATE RECORDS. Attach Addendum [if applicable] [ADDITIONAL FEE] [optional] 8.OPTIONAL FILER REFERENCE DATA FILING OFFICE COPY—NATIONAL UCC FINANCING STATEMENT(FORM UCC1)—CALIFORNIA(REV.01/01/08), UCC FINANCING STATEMENT ADDENDUM FOLLOW INSTRUCTIONS(front and back)CAREFULLY 9.NAME OF FIRST DEBTOR(ta or Ib)ON RELATED FINANCING STATEMENT 9a.ORGANIZATION NAME PACIFIC SUN APARTMENTS CIC,L.P. OR 9b INDIVIDUALS LAST NAME FIRST NAME MIDDLE NAME,SUFFIX 10.MISCELLANEOUS: THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 11.ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME—insert only one name(I I or 11b)—do not abbreviate or combine names 11a.ORGANIZATIONS NAME OR 11b.INWADVAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1Ila MAILING ADDRESS CITY - STATE POSTAL CODE COUNTRY ADD'L INFO RE- ;11e.TYPE OF ORGANIZATION ;I If.JURISDICTION OF ORGANIZATION :11g.ORGANIZATIONAL ID#,if any ORGANIZATION DEBTOR ❑NONE R12. ADDITIONAL SECURED PARTY'S or U ASSIGNOR S/P's NAME—insert only.gne name(12a or 12b) 12a.ORGANIZATION'S NAME OR 12b.INDIVIDUA12S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 12c.MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 13.This FINANCING STATEMENT covers❑timber to be cut or❑as-extracted 16.Additional collateral description: collateral,or is filed as a®fixture filing. See,Attachment to UCC 1 Financing Statement,attached hereto and 14.Description of real estate: incorporated herein by this reference. 7911 Slater Avenue,Huntington Beach, California. Real property in the City of Huntington Beach,County of Orange,State of California,described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO.79-577,IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE,STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B:ALL RECIPROCAL EASEMENTS BENEFITTING SUCH PROPERTY.APN 165-234-17 15.Name and address of a RECORD OWNER of above-described real estate (if Debtor does not have a record interest): 17.Check only if applicable and check only one box. Debtor is a❑Trust or❑Trustee acting with respect to property,held in trust or❑Decedent's Estate 18.Check only I applicable andcheck only one box. ❑Debtor is a TRANSMITTING UTILITY Filed in connection with a Manufactured-Home Transaction—effective 30 years IE]Filed in connection with a Public-Finance Transaction—effective 30 years FILING OFFICE COPY—NATIONAL UCC FINANCING STATEMENT ADDENDUM(FORM UCC1Ad)—CALIFORNIA(REV.01/01/08) a ATTACHMENT UCC-1 Financing Statement Debtor: PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership. Secured Party: The City of Huntington Beach,a municipal corporation of the State of California. UCC-1 ATTACHMENT HOME LOAN EXHIBIT"A" LEGAL DESCRIPTION 7911 Slater Avenue Huntington Beach, California Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED .3 1] ) , 2011 AS INSTRUMENT NO. 2011 OF OFFICIAL RECORDS. APN: 165-234-17 UCC-1 ATTACHMENT HOME LOAN SCHEDULE "A" Item 4: Collateral Description. This Financing Statement covers all of the following items and/or types of property, whether any of the foregoing is owned now or acquired later; and all accessions, additions, replacements, and substitutions relating to any of the foregoing: (1) All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and (2) Together with the rents, issues and profits thereof, and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and (3) Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and (4) Together with all plans, drawings, specifications, etc., and articles of personal property 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 completion 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 therefor, whether or not the same are, or shall be attached to said building or buildings in any manner. UCC-1 ATTACHMENT SCHEDULE A-COLLATERAL DESCRIPTION RECORDED REQUEST OF 3 First American Title SUBDIVISION IV1.9PPING.DEPT. ' This Document was electronically recorded by ®PS Norwalk C Recorded in Official Records,Orange County a Tom Daly,Clerk-Recorder �q UCC FINANCING STATEMENT I I III II I II II III III II I III II 15.00 A FOLLOW INSTRUCTIONS front and back CAREFULLY .. A.NAME&PHONE OF CONTACT AT FILER[optional] 201 10001331 37 04:30pm 03/11/11 p;p 42 414 U04 4 G B.SEND ACKNOWLEDGEMENTTO: (Name and Address) 0.00 0.00 0.00 0.00 9.00 0.00 0.00 0.00 [THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach,CA 92648 Attn: City Clerk THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1.DEBTOR'S EXACT FULL LEGAL NAME-insert only one debtor name(1 a or 1 b)-do not abbreviate or combine names la.ORGANIZATION'S NAME OR PACIFIC SUN APARTMENTS CIC,L.P. 1b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1c.MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY Go Colette's, 17301 Beach Blvd.,#23. Huntington Beach CA 92647 1 USA ADD'L INFO RE 1e.TYPE OF ORGANIZATION 1f.JURISDICTION OF ORGANIZATION 1g.ORGANIZATIONAL ID#,If any ORGANIDEBTOR LP - CA - 201019600005 ❑NONE 2.ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME-insert only one debtor name(2a or 2b)-do riot abbreviate or combine names 2a.ORGANIZATION'S NAME OR 2b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 2c.MAILING ADDRESS - - CITY STATE POSTAL CODE - COUNTRY WDE DD'L INFO RE :2e.TYPE OF ORGANIZATION :2f.JURISDICTION OF ORGANIZATION :2g.ORGANIZATIONAL ID#,if anyR'G IZATIONBTOR ❑NQNE 3.SECURED PARTY'S NAME or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P -insert only one secured party name(3a or 3b) 3a.ORGANIZATION'S NAME OR City of Huntington Beach: 3b.INDIVIDUAL'S LAST NAME - FIRST NAME - MIDDLE NAME, SUFFIX 3c.MAILING ADDRESS - CITY STATE IPOSTALCODE COUNTRY 2000 Main Street Huntington Beach CA 92648 4.This FINANCING STATEMENT covers the following collateral: A security interest is granted in all of Debtor's right,title,and interest in and to all of the Collateral more fully described in the Attachment to UCC 1 Financing Statement, attached hereto and incorporated herein by this reference. 5.ALTERNATIVE DESIGNATION[if applicable]:❑LESSEE/LESSOR []CONS IGNEE/CONSIGNOR ❑BAILEE/BAILOR ❑SELLER/BUYER ❑AG.LIEN []NON-UCC FILING 6. ❑ This FINANCING STATEMENT is to be filed[for record)(or recorded)in 17.Check to REQUEST SEARCH REPORT(S)on Debtors)) ❑ ❑ ❑ the REAL ESTATE RECORDS. Attach Addendum [if applicable) [ADDITIONAL FEE) - [optional) All Debtors Debtor 1 Debtor 2 8.OPTIONAL FILER REFERENCE DATA FILING OFFICE COPY-NATIONAL UCC FINANCING STATEMENT(FORM UCC1)-CALIFORNIA(REV.01/01/08) UCC FINANCING STATEMENT ADDENDUM FOLLOW INSTRUCTIONS(front and back)CAREFULLY 9.NAME OF FIRST DEBTOR(1a or 1b)ON RELATED FINANCING STATEMENT aa.ORGANIZATION NAME PACIFIC SUN APARTMENTS CIC,L.P. OR 9b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME,SUFFIX 10.MISCELLANEOUS: THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 11.ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME—insert only orLee name(11a or 11b)—do not abbreviate or combine names 11a.ORGANIZATION'S NAME OR 11b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1 It.MAILING ADDRESS CITY - STATE POSTAL CODE COUNTRY ADD'L INFO RE :Ile.TYPE OF ORGANIZATION 11f.JURISDICTION OF ORGANIZATION ;11g.ORGANIZATIONAL ID#,if arty ORGANIZATION DEBTOR ❑NONE M12AMDDfTIONAL SECURED PARTY'S or ASSIGNOR SIP's NAME—insert only one name(12a or 12b) 12a.ORGANIZATION'S NAME OR 12b.INDIVIDUA12S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 12c.MAILING ADDRESS CITY STATE =STAL COUNTRY 13.This FINANCING STATEMENT covers❑timber to be cut or❑as-extracted %Addfional collateral description: collateral,or is filed as a®fixture Tiling. See,Attachment to UCC 1 Financing Statement,attached hereto and 14.Description of real estate: incorporated herein by this reference. 7911 Slater Avenue,Huntington Beach,California. Real property in the City of Huntington Beach,County of Orange,State of California,described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE,STATE OF CALIFORNIA,AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B:ALL RECIPROCAL EASEMENTS BENEFITTING SUCH PROPERTY.APN 165-234-17 15.Name and address of a RECORD OWNER of above-described real estate (if Debtor does not have a record interest): 17.Check only if applicable and check only one box. Debtor is a❑Trust or❑Trustee acting with respect to property held in trust or❑Decedent's Estate 1 B.Cheedc only if applicable and check only one box. ❑Debtor is a TRANSMITTING UTILITY Filed in connection with a Manufactured-Home Transaction—effective 30 years ❑Filed in connection with a Public-Finance Transaction—effective 30 years FILING OFFICE COPY—NATIONAL UCC FINANCING STATEMENT ADDENDUM(FORM UCC1Ad)—CALIFORNIA(REV.01/01/08) I EXHIBIT"A" LEGAL DESCRIPTION 7911 Slater Avenue Huntington Beach, California Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 1 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: AN EASEMENT FOR A PEDESTRIAN WALKWAY AND FOR PEDESTRIAN ACCESS AND INGRESS AND EGRESS AS SET FORTH AND DESCRIBED IN THAT CERTAIN DO UMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" RECORDED .3 , 2011 AS INSTRUMENT NO. 2011 WO 1?)3 � Z`� OF OFFICIAL RECORDS. APN: 165-234-17 UCC-1 ATTACHMENT NSP LOAN SCHEDULE"A" Item 4: Collateral Description. This Financing Statement covers all of the following items and/or types of property,whether any of the foregoing is owned now or acquired later; and all accessions, additions, replacements, and substitutions relating to any of the foregoing: (1) All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and (2) Together with the rents, issues and profits thereof, and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, whether mechanical or otherwise,cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and (3) Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and (4) Together with all plans, drawings, specifications, etc., and articles of personal property 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 completion 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 therefor, whether or not the same are, or shall be attached to said building or buildings in any manner. UCC-1 ATTACHMENT SCHEDULE A-COLLATERAL DESCRIPTION EXHIBIT 7 ,- NSP PROMISSORY NOTE I RESIDUAL RECEIPTS PROMISSORY NOTE SECURED BY DEED OF TRUST TO THE CITY OF HUNTINGTON BEACH CALIFORNIA (NEIGHBORHOOD STABILIZATION PROGRAM) DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust'securing same, must be surrendered to Trustee for cancellation before reconveyance or partial reconveyance will be made. 3% Interest Hun<i gton Beach, California .[$390,568 + accrued interest] , 2011 FOR VALUE RECEIVED,PACIFIC SUN APARTMENTS CIC,L.P.,a California limited partnership ("Borrower"), hereby promises to pay to THE CITY OF HUNTINGTON BEACH ("City"), a municipal corporation of the State of California or order, a principal amount of Dollars($ )],or so much thereof as may be advanced by the City to the Borrower as the NSP Loan pursuant to the Affordable Housing Agreement dated as of 2011 (the"Housing Agreement")between Borrower("Developer"therein)and the City, incorporated herein by this reference.The Housing Agreement is a public record on file in the offices of the City. The Borrower shall pay interest at the rate, in the amount and at the time hereinafter provided. 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Housing Agreement. The term"Net Proceeds"shall mean the amount,if any,by which a refinancing exceeds the amount needed to repay a Senior Loan/,in full,including principal and interest,any early redemption or prepayment penalty, and customary and reasonable fees and costs of the transaction. The term"HOME Loan'shall mean the City's loan to Borrower in a principal amount not.to exceed ( /DOLLARS ($___] of HOME Funds, as evidenced by the HOME Note and secured fb,°the HOME Deed of Trust. !The term Pro Rata Percentages"shall mean the pro rata application of Residual Receipts to the repayment of the HOME Loan and the NSP Loan,reflecting the relative amounts of the HOME Loan and the NSP Loan.The Pro Rata Percentages shall be sixty-seven percent(67%)for the HOME Loan and thirty-t ee percent (33%) for the NSP Loan. The to "Residual Receipts"shall mean,in each calendar year,the amount by which Gross Revenue(as defined below)exceeds Annual Operating Expenses(as defined below),as determined by an auditP be completed not later than ninety(90)days after the end of each calendar year by an NSP PROMISSORY NOTE Page 1 of 10 independent certified public accountant first approved in writing by the City, using generally accepted accounting principles and based on the accrual method (the"Audit"). (1) "Gross Revenue,"with respect to each calendar year,shall mean all revenue, income,receipts,and other consideration actually received from operation or leasing of the Project. "Gross Revenue" shall include, but not be limited to: all rents, fees and charges paid,+y tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants,all cancellation fees,price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period. "Gross Revenue" shall also include the/fair market value of any goods or services provided in consideration for the leasing or other used dany portion of the Proj ect, except that the value of services provided by on-site manager(s) shall not be treated as "Gross Revenue" if no more than one dwelling unit is leased to or otherwise used by on-site manager(s). "Gross Revenue" shall not include tenants' security deposits, proceeds from the Senior Loan, the HOME Loan,the NSP Loan,Developer Equity,including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts. ii "Annual Operating Ex enses,"with respect to each calendar year shall mean ( ) P g P the costs reasonably and actually incurred for operati onand maintenance of the Project,which may e e include, without limitation, the following, to thxtent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles: property and other taxes and assessments imposed on the Project;premiums for property damage and liability insurance; utility services not paid for directly or reimbursed by tenants, including but not limited to water,sewer,trash collection,gas and electricity;maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary utility services; any license or certificate of occupancy fees required for operation of the Project; general administrative expenses including but not limited to advertising and marketing, security services and systems, professional fees for legal, audit, accounting and tax returns for the limited partnership, and simil /customary administrative expenses; property management fees, expenses and costs,not to ex-eed $5,809 per unit per month in the first year with annual increases thereafter in proportion tot e increases in Affordable Rent for the Projector six and one-half percent (6 1/2%)of Revenue,whichever is higher,and pursuant to a management contract approved by the City; an asset management fee payable to the Limited Partnership's Investor Limited Partner in a non-cumulative amount not to exceed two thousand five hundred dollars ($2,500) in the first year and, to the extent required by the Limited Partnership Agreement, increased thereafter at an annual rate not to exceedee and one-half percent(3.5%); payments to the Investor Limited Partner as a result of any sh Afalls or recapture of Tax Credits in accordance with the terms of Borrower's partnership agr ement;cash deposited into a replacement reserve in the amount of$600 per unit per year, subject annual increases not to exceed three percent(3%); cash deposited into an operating reserve in s ch reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee,and the tax credit investor from time to time,and approved by the City;and, NSP PROMISSORY NOTE Page 2 of 10 fixed debt service payments (excluding debt service contingent upon the availability of residual receipts or surplus cash of the Project)on loans associated with the Project and approved by the City. "Annual Operating Expenses"shall not include the following:depreciation,amortization,depletion or other non-cash expenses or any amount expended from a reserve account, or anypartnership management fees payable to the Limited Partnership's Managing General Partner.Annual Operating Expenses shall be subject to the reasonable approval of the City. k f¢ 2. This Note evidences the obligation of the Borrower to the City°for the repayment of the NSP Loan. Borrower may prepay the principal balance of this Note at any time without penalty. However,even if Borrower prepays the entire balance of this Note including all accrued interest,costs and penalties, the covenants, conditions and restrictions imposed on/the Site by the Regulatory Agreement shall remain in full force and effect for the full 60-year term as specified therein. 3. This Note is payable at the principal office of City, 2000 Main Street, Huntington Beach, California 92648, or at such other place as the holder hereof may inform the Borrower in writing, in lawful money of the United States. ` 4. This Note is secured by the NSP Deed if Trust. 5. This Note shall accrue simple interes at the rate of three percent(3%)per annum on of disbursement. Interest under this Note shall be the principal amount outstanding, from the date computed on the basis of a year of 365 days and the actual number of days elapsed. However,if any event occurs giving the City the right to accelerate repayment of this Note,the entire unpaid principal balance owing hereunder shall, as of the date of such default, commence to accrue interest at a rate equal to two percentage points above theireference rate published by Bank of America N.A., or the maximum non-usurious interest rate permitted by law,whichever is less(the"Default Rate").Further, in the event Borrower fails to reimburse the City for any amount advanced by or for the account of the City which is due hereunder or�under the NSP Deed of Trust within ten (10) days after written notice of such advance is made.�by the City to Borrower, then such unreimbursed amount shall thereafter bear interest at the Default Rate until paid 6. The unpaid principal balance of this Note and all accrued but unpaid interest shall be due and payable on the earliest to occur of the following (which shall be referred to herein as the "Maturity Date"): ' (a) June 30, 2071; 6 the sixtieth(601h)anniversary of the date on which a Release of Construction Covenants for/the Project is recorded in the Official Records of Orange County; (c) the date the Property or the improvements thereon or any portion thereof or interest t erein is sold,transferred,assigned or refinanced,without the prior written approval of the City, e cept as permitted by the provisions of the Housing Agreement; or NSP PROMISSORY NOTE Page 3 of 10 (d) the date on which there is a Default by the Borrower under the terms of this-- Note,the Housing Agreement,the NSP Deed of Trust,the Regulatory Agreement,the Environmental Indemnity, or any deed of trust or other instrument securing the Senior Loan or the HOME Loan, which is not cured or waived within the respective time period provided herein and then. 7. Prior to the Maturity Date, Borrower shall be obligated to repay the NSP Loan as follows: (a) Borrower must utilize seventy-five percent(75%)of Residual Receipts with respect to each calendar year to repay the HOME Loan and the NSP Loan through the pro rata application of such share of Residual Receipts, reflecting the relative amounts of the HOME Loan and the NSP Loan.The Pro Rata Percentages shall be sixty-seven percent/67%)for the HOME Loan and thirty-three percent(33%)for the NSP Loan.However,the City agrees that Borrower may first utilize Residual Receipts,with respect to each calendar year,to.pay the sponsors of the Project the theretofore unpaid portion of the Deferred Developer Fee. Payments due hereunder must be made no later than one hundred twenty(120) days following the end of/the applicable calendar year. b In the event Borrower refinances the Senior Loan at any time prior to the Maturity Date, seventy-five percent(75%)of the Net Proceeds shall be allocated and paid to the City to reduce the HOME Loan and the NSP Loan based f fi the Pro Rata Percentages. (c) All payments to the City shall be applied first to the payment of all expenses, charges, costs and fees incurred by or payable�City by Borrower pursuant to the terms of the NSP Loan Documents (in such order and manner/as City, in its sole discretion, may elect), then to the payment of all interest accrued to the date of such payment,and then to reduce the principal amount owed. All prepayment of principal on tdis Note shall be applied to the most remote principal installment or installments until paid Notwithstanding anything to the contrary contained herein, after the occurrence and during the continuation of an uncured default under the NSP Deed of Trust, all amounts received by the City from any party shall be applied in such order as the City, in its sole discretion, may elect. 8. Any breach by Borrower of the provisions of Section 204 (entitled "Prohibition Against Transfers;Right of/First Refusal")of the Housing Agreement,unless otherwise permitted by the terms thereof, shall onstitute a default under this Note. The cure periods under the Housing Agreement and this Note in connection with such a default shall run concurrently. 9. Borrower waives presentment for payment,demand,protest,and notices of dishonor and of protest; th benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension o extensions of the time of payment or of any due date under this Note,in whole or in part,whetheryfore or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Note, the NSP Deed of Trust or any term or provision of either. NSP PROMISSORY NOTE Page 4 of 10 10. Upon the failure of Borrower to perform or observe any term or provision of this Note,or upon the occurrence of any event of default after the expiration of any applicable notice and cure periods under the terms of the Housing Agreement, the NSP Deed of Trust, the NSP Loan Documents,the Environmental Indemnity or-the Regulatory Agreement,the holder may exercise its rights or remedies hereunder or thereunder.All such rights and remedies shall be cumul tive. Upon the event of a default that is not cured or waived within the time provided therefore,the whole of the unpaid principal and interest owing on this Note shall, at the option of City and without notice, become immediately due and payable. This option may be exercised at any time�after any such event and the acceptance of one or more payments from any person thereafter shall.not constitute a waiver of City's option. City's failure to exercise said option in connection with any particular event or series of events shall not be construed as a waiver of the provisions hereof as regards that event or any subsequent event. 11. (a) Subject to the extensions of time set forth in Section 12, and subject to the further provisions of this Section 11, failure or delay by Borrower to perform any material term or provision of this Note, the Housing Agreement, the NIP Deed of Trust, the HOME Loan Documents, the Environmental Indemnity,or the Regulatory Agreement constitutes a default under this Note. (b) City shall give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving suc notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of its rights and/remedies shall not deprive City of its right to institute and maintain any actions or proceedings,which it may deem necessary to protect, assert,or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,the City shall give/the Borrower written notice of such default. The Borrower shall have a period of fifteen (15) days after,such notice is given within which to cure the default prior to exercise of remedies by the City. (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder, the inured party shall give the party in default notice of such default. If the default is reasonably capable of being cured within thirty(30)days,the party in default shall have such period to effect a cure'pnor to exercise of remedies by the injured party. If the default is such that it is not reasonably;eapable of being cured within thirty (30) days, and the party in default (i) initiates corrective ction within said period,and(ii)diligently, continually,and in good faith works to effect a cure as soon as possible, then the party in default shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured party. If Borrower fails NSP PROMISSORY NOTE Page 5 of 10 to take corrective action or cure the default within a reasonable time, the City shall give Borrower and,as provided in paragraph(e),below,the Investor Limited Partner,notice thereof,whereupon the Investor Limited Partner may remove and replace the general partner with a substitute general partner,who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. The City agrees to accept cures tendered by the Investor Limited Partner within the cure periods provided in this Agreement or within the time periods provided in Civil Code Section 2924c;� whichever is longer. Additionally,in the event the Investor Limited Partner is precluded from curing a non-monetary default due to an inability to remove the General Partner as a resulWf a bankruptcy, injunction, or similar proceeding by or against Borrower or its General Partner/the City agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which the Investor Limited Partner is so precluded from acting,not to exceed 90 days/ !'provided such limited partner is otherwise in compliance with the foregoing provisions. In no event shall the injured party be precluded from exercising remedies if its security becomes or is a'bout to become materially jeopardized by any failure to cure a default or the default is not cur d within ninety(90) days after the first notice of default is given. (f) After Borrower gives written notice toCity that the Investor Limited Partner has been admitted to the Limited Partnership,City shall send to the Investor Limited Partner a copy of all notices of default and all other notices that Citysends to Borrower, at the address for the Investor Limited Partner given in Section 16 of this Note. An notice of default shall'be deemed given only if either(i) dispatched by (g) Y g Y first class mail, registered or certified, postagelrepaid, return receipt requested, to the addresses specified for the Borrower and the Investor timited Partner in Section 16 of this Note, or (ii) by electronic facsimile transmission to the facsimile numbers specified for the Borrower and the Investor Limited Partner in Section 16 of this Note,followed by delivery by the method described in clause (i), or (iii) by personal delivery0(including by means of professional messenger or courier service such as United Parcel Service/or Federal Express)to the addresses specified for the Borrower and the Investor Limited Partner An Section 16 of this Note. Receipt shall be deemed to have occurred on the earlier of(i)the ate of successfully completed electronic facsimile transmission or (ii)the date marked on a written postal service or messenger or courier service receipt as the date of delivery or refusal of deliveryI(or attempted delivery if undeliverable).If either party gives notice of a change of address in�the manner specified in this paragraph, all notices, demands and communications originated after receipt of the change of address(or the effective date specified in the notice of change of address, if later) shall be transmitted, delivered or sent to the new address. 12. No withstandin specific provisions of this Note, non-monetary performance g P hereunder shall not be deemed to be in default where delays are due to causes beyond the control and without the fadIt of the party claiming an extension of time to perform(a"Force Majeure Delay"), provided that they actually delay and interfere with the timely performance of the matter to which they would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference, including: war; insurrection; strikes; lock-outs;riots;floods; earthquakes;fires; casualties;acts of God;acts of the public enemy; NSP PROMISSORY NOTE Page 6 of 10 epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof;unusually severe weather;inability to secure necessary labor,materials or tools.- delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure 6 act of any Governmental agency(except acts or failure to act of the City shall not excuse performance by the City); the imposition of any applicable moratorium by a Governmental Agencyr any other causes which despite the exercise of diligence and good business practices are or w ld be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure De layless and until the party claiming such delay and interference delivers to the other party written�+hotice describing the event, its cause, when and how such party obtained knowledge,the date therevent commenced,and the estimated delay resulting therefrom. Any party claiming a Force ?V ajeure Delay shall deliver such written notice within ten(10) business days after it obtains actuZurt alknowledge of the event. 13. If the rights created b this Note shall be held b a of competent jurisdiction to g Y Y be invalid or unenforceable as to any part of the obligation/described herein, the remaining obligations must be completely performed and paid. 14. The NSP Deed of Trust securing this Noe shall be subordinate and junior to the Senior Deed of Trust,to the extent and in the manner pro ided in that certain subordination agreement dated on or about the date hereof(the"Subordination Agreement"). The NSP Deed of Trust securing this Note is and shall be subject and subordinate ilall respects to the liens, terms, covenants and conditions of the Senior Deed of Trust as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the NSP Deed of Trust securing this Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder's acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the City under the Subordination Agreement. 15. (a) The obligati to repay the NSP Loan is a nonrecourse obligation of the Borrower and its partners. Neither the Borrower nor any of its general or limited partners, nor any other party,shall have any personal liability for repayment of the loan. The sole recourse of the City with respect to repayment of tjle NSP Loan shall be the exercise of its rights against the Property and the improvements thereon and any related security for the NSP Loan. Provided,however, that the foregoing shall not (i) constitute a waiver of any obligation evidenced by the HOME Loan Documents,the NSP L�ron Documents,the Regulatory Agreement or the Environmental Indemnity; (ii) prevent or in anray hinder the City from exercising, or constitute a defense, an affirmative defense,a counterclaim,or other basis for relief in respect of the exercise of,any remedy prescribed by law or in eq 'ty in case of default, other than repayment of the NSP Loan; or (iii) relieve Borrower of a of its obligations under any indemnity delivered by Borrower to the City. The foregoing pro isions of this paragraph are limited by the provision that in the event of the occurrence of a default orrower and its successors and assigns shall have personal liability hereunder for any deficiency judgment,but only if and to the extent Borrower,its principals,shareholders,partners or i NSP PROMISSORY NOTE Page 7 of 10 its successors and assigns received rentals,other revenues,or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property,ordinary and reasonable capital improvements to the mortgaged Property, debt service,real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees,payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. (b) Notwithstanding the foregoing, the City may obtain a judgment or order(including, without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the NSP Loan; may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and may recover directly fro , any Person: Z (i) any damages, costs and expenses incurred City as a result of fraud or any criminal act or acts of Borrower or any me"ber,partner,shareholder,officer, director or employee of(a) Borrower or�(b) any of Borrower's members or general partners or(c)any member or partner of any of Borrower's members or general partners; 7 (ii) any damages, costs and expenses incurred by City as a result of any misappropriation of funds prided for the construction of the Project,rents and revenues from the op7eation of the Project, or proceeds of insurance policies or condemnation roceeds; (iii) any and all amour s owing by Borrower pursuant to Borrower's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upo Rany of the foregoing exceptions. 16. The address of Borrower for purposes of receiving notices pursuant to this Note is as follows: c/o Colette's Children Home,Inc., 17301 Beach Blvd.,#23,Huntington Beach,CA 92647, Attention: ,with copy to CIC Pacific Sun Apartments,LLC,c/o Chelsea Investment Corporation, 5993 Avenida�Encinas, Suite 101, Carlsbad, CA 92008. The address of Investor Limited Partner for purposes of receiving notices pursuant to this Note is as follows: Raymond James Tax Credit Funds, nc.,880 Carillon Parkway,St.Petersburg,FL 33716,Attention:Ronald M. Diner. 17. In addition to the other terms of this Note, the Borrower hereby agrees and acknowledges that,notwithstanding any internal accounting procedures or provision pertaining to the use of receipt /payments, reserves and distributions contained in its agreement of partnership or other organizational document,the terms of this Note and the Housing Agreement shall control as to NSP PROMISSORY NOTE Page 8 of 10 the use of the City funds provided under the Housing Agreement and all operating income from the Project. 18. Neither this Note nor any term hereof may be waived,amended,discharged,modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by City and Borrower. 19. Notwithstanding any provision in this Note,the NSP Deed of Trust or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 20. This Note has been executed and delivered by Borrower in the ate of California and is to be governed and construed in accordance with the internal laws thereof 21. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever, such illegality, inv I'dity or unenforceability shall not affect the balance of the terms and provisions hereof, whicterms and provisions shall remain binding and enforceable,and this Note shall be construed as if such illegal,invalid or unenforceable term or provision had not been contained herein. 22. Time is of the essence in the performance of each provision hereof. [SIGNATURES APPEAR ON FOLLOWING PAGE] f NSP PROMISSORY NOTE Page 9 of 10 IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth above. BORROWER: PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc.; a California non-profit public benefit corporation '?` its Managing General Bartner By: Y Pamela Hope President r By: CIC Pacific Sun Apartments, LLC, ,,a California limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager By: James J. Schmid President NSP PROMISSORY NOTE Page 10 of 10 EXHIBIT 8 HOME PROMISSORY NOTE ✓ `' �i �f f .y RESIDUAL RECEIPTS PROMISSORY NOTE SECURED BY DEED OF TRUST TO THE CITY OF HUNTINGTON BEACH, CALIFORNIA (HOME PROGRAM) DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance or partial reconveyance will be made. 3% Interest Huntington Beach, California [$284,432 + accrued interest+ $500,0001 12011 FOR VALUE RECEIVED,PACIFIC SUN APARTMENTS CIC,L.P.,a California limited partnership ("Borrower"), hereby promises to pay to THE CITY OF HUNTINGTON_B_EACH ("City"), a municipal corporation of the State of California, or order, a principal amount of [ Dollars($ or so much thereof as may be advanced by the City to the Borrower as the HOME Loan pursuant to the Affordable Housing Agreement dated as of .2011 (the"Housing Agreement")between Borrower("Developer"therein)and the City, incorporated herein by this reference.The Housing Agreement is a/public record on file in the offices of the City. The Borrower shall pay interest at the rate, in thr' ount and at the time hereinafter provided. ,� f 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Housing Agreement. 1`y The term"Net Proceeds"shall mean the,a ount,if any,by which a refinancing exceeds the amount needed to repay a Senior Loan,in full,including principal and interest,any early redemption or prepayment penalty, and customary and reasonable fees and costs of the transaction. The term "NSP Loan" shall mean the City's loan to Borrower in the principal amount of [ DOLLARS($__)] of NSP Funds,as evidenced by the NSP Note and secured by the NSP Eked of Trust. The term"Pro Rata Percentages"shall mean the pro rata application of Residual Receipts to the repayment of the HOME Loan and the NSP Loan,reflecting the relative amounts of the HOME 11 Loan and the NSP Loan.The/Pro Rata Percentages shall be sixty-seven percent(67%)for the HOME Loan and thirty-three per cent (33%) for the NSP Loan. The term"Residual Receipts"shall mean,in each calendar year,the amount by which Gross Revenue(as defined below)exceeds Annual Operating Expenses(as defined below),as determined by an audit to be completed not later than ninety(90)days after the end of each calendar year by an HOME PROMISSORY NOTE PAGE 1 of 10 independent certified public accountant first approved in writing by the City, using generally accepted accounting principles and based on the accrual method (the"Audit"). (i) "Gross Revenue,"with respect to each calendar year,shall mean all revenue, income,receipts,and other consideration actually received from operation or leasing of the Project. "Gross Revenue" shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants,all cancellation fees,price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project; and condemnation awards for a taking of part or all of theme' Project for a temporary period. "Gross Revenue" shall also include the fair market valueof�any goods or services provided in consideration for the leasing or other use of any portion of the Project, except that the value of services provided by on-site manager(s) shall not be treated as "Gross Revenue" if no more than one dwelling unit is leased to or otherwise used by on s to manager(s). "Gross Revenue" shall not include tenants' security deposits, proceeds from-the Senior Loan, the HOME Loan,the NSP Loan,Developer Equity,including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts. �' (ii) "Annual Operating Expenses,"with respect to each calendar year shall mean the costs reasonably and actually incurred for operation and maintenance of the Project,which may include, without limitation, the following, to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles:property and other taxes and assessments imposed on the Project;premiums for property damage and liability insurance; utility services not paid for directly or reimbursed by tenants, including but not limited to water, sewer,trash collection,gas and electricity;maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary utility services; any license or certificate of occupancy fees required for operation of the Project; general administrative expenses including but not limited to advertising and marketing, security services and systems, professional fees for legal, audit, accounting and tax returns for the limited partnership, and similar customary administrative expenses; property management fees, expenses and costs, not to exceedj$5,809 per unit per month in the first year with annual increases thereafter in proportion to the increases in Affordable Rent for the Project or six and one-half percent (6 1/2%)of Revenue, whichever is higher,and pursuant to a management contract approved by the City; an asset management fee payable to the Limited Partnership's Investor Limited Partner in a non-cumulative amount not to exceed two thousand five hundred dollars ($2,500) in the first year and,to the extent required by the Limited Partnership Agreement, increased thereafter at an annual rate not to exceed thre�and one-half percent(3.5%); payments to the Investor Limited Partner as a result of any shortf s or recapture of Tax Credits in accordance with the terms of Borrower's partnership agreement;cash deposited into a replacement reserve in the amount of$600 per unit per year, subject to ai}i ual increases not to exceed three percent(3%); cash deposited into an operating HOME PROMISSORY NOTE PAGE 2 of 10 reserve in such reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee, and the tax credit investor from time to time,and approved by the City;and, fixed debt service payments (excluding debt service contingent upon the availability of residual receipts or surplus cash of the Project)on loans associated with the Project and approved by the City. "Annual Operating Expenses"shall not include the following: depreciation,amortization,depletion or other, non-cash expenses or any amount expended from a reserve account, or.=any partnership'' management fees payable to the Limited Partnership's Managing General Partner.Annual Operating� Expenses shall be subject to the reasonable approval of the City. 2. This Note evidences the obligation of the Borrower to the City for the repayment of the HOME Loan. Borrower may prepay the principal balance of this Note at any t erne without penalty. However,even if Borrower prepays the entire balance of this Note including all crued interest,costs and penalties, the covenants, conditions and restrictions imposed on the ite by the Regulatory Agreement shall remain in full force and effect for the full 60-year term qs specified therein. 7 3. This Note is payable at the principal office of City,;2000 Main Street, Huntington Beach, California 92648, or at such other place as the holder hJeof may inform the Borrower in writing, in lawful money of the United States. 4. This Note is secured by the HOME Deed,of Trust. 5. This Note shall accrue simple interes�'at the rate of three percent(3%)per annum on the principal amount outstanding, from the date �✓disbursement. Interest under this Note shall be computed on the basis of a year of 365 days and .he actual number of days elapsed. However,if any event occurs giving the City the right to accel� e repayment of this Note,the entire unpaid principal balance owing hereunder shall, as of the date of such default, commence to accrue interest at a rate equal to two percentage points above the/6erence rate published by Bank of America N.A., or the maximum non-usurious interest rate permitted by law,whichever is less(the"Default Rate").Further, in the event Borrower fails to reimburse the City for any amount advanced by or for the account of the City which is due hereunder or udider the HOME Deed of Trust within ten(10)days after written notice of such advance is made�y the City to Borrower, then such unreimbursed amount shall thereafter bear interest at the D fault Rate until paid 6. The unpaidyrincipal balance of this Note and all accrued but unpaid interest shall be due and payable on the earliest to occur of the following (which shall be referred to herein as the "Maturity Date"): (a) June 30, 2071; (b) the sixtieth(60t")anniversary of the date on which a Release of Construction Covenants for the Project is recorded in the Official Records of Orange County; HOME PROMISSORY NOTE PAGE 3 of 10 (c) the date the Property or the improvements thereon or any portion thereof or interest therein is sold,transferred,assigned or refinanced,without the prior written approval of the City, except as permitted by the provisions of the Housing Agreement; or (d) the date on which there is a Default by the Borrower under the terms of this Note, the Housing Agreement, the HOME Deed of Trust, the Regulatory Agreement, the Environmental Indemnity, or any deed of trust or other instrument securing the Senior Loan or the.- NSP Loan, which is not cured or waived within the respective time period provided herein/ nd therein. 7. Prior to the Maturity Date, Borrower shall be obligated to repay the HOME Loan as follows: ' ercent 75% of Residual Receipts with (a) Borrower must utilizeseventy-five p ( ) p respect to each calendar year to repay the HOME Loan and the NSP Loan through the pro rata application of such share of Residual Receipts, reflecting the relative amounts of the HOME Loan and the NSP Loan.The Pro Rata Percentages shall be sixty-seven percent(67%)for the HOME Loan and thirty-three percent(33%)for the NSP Loan. However,the City agrees that Borrower may first utilize Residual Receipts, with respect to each calendar year, topay the sponsors of the Project the theretofore unpaid portion of the Deferred Developer Fee.Payments due hereunder must be made no later than one hundred twenty (120) days following the end/of the applicable calendar year. (b) In the event Borrower refinances the Senior Loan at any time prior to the Maturity Date,seventy-five percent(75%)of the Net Proceeds shall be allocated and paid to the City to reduce the HOME Loan and the NSP Loan based on the Pro Rata Percentages. c All payments to the Cit shall be applied first to the payment of all expenses, ( ) p Y Y p charges, costs and fees incurred by or payable to City by Borrower pursuant to the terms of the HOME Loan Documents(in such order and manner as City, in its sole discretion,may elect),then to the payment of all interest accrued to/the date of such payment, and then to reduce the principal amount owed. All prepayment of pri-ncipal on this Note shall be applied to the most remote principal installment or installments until paid. Notwithstanding anything to the contrary contained herein, after the occurrence and during"'the continuation of an uncured default under the HOME Deed of Trust, all amounts received by'the City from any party shall be applied in such order as the City, in its sole discretion, may elect 8. Any breach by Borrower of the provisions of Section 204 (entitled "Prohibition Against Transfers;Right of First Refusal")of the Housing Agreement,unless otherwise permitted by the terms thereof, shall constitute a default under this Note. The cure periods under the Housing Agreement and this Note in connection with such a default shall run concurrently. HOME PROMISSORY NOTE PAGE 4 of 10 9. Borrower waives presentment for payment,demand,protest,and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note,in whole or in part,whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Note,the HOME Deed of Trust or any term or provision of either. 10. Upon the failure of Borrower to perform or observe any term or provision of this Note,or upon the occurrence of any event of default after the expiration of any applicable notice and cure periods under the terms of the Housing Agreement, the HOME Deed of Trust, the NSP Loan Documents,the Environmental Indemnity or the Regulatory Agreement,the.,liolder may exercise its rights or remedies hereunder or thereunder.All such rights and remediess Ball be cumulative. Upon the event of a default that is not cured or waived within the time provided therefore,the whole of the unpaid principal and interest owing on this Note shall, at the option of City and without notice, become immediately due and payable. This option may be exercised at any time after any such event and the acceptance of one or more payments from any person thereafter shall not constitute a waiver of City's option. City's failure to exercise said option in connection with any particular event or series of events shall not be construed as a waiver of thevovisions hereof as regards that event or any subsequent event. 11. (a) Subject to the extensions A time set forth in Section 12, and subject to the further provisions of this Section 11, failure or,'delay by Borrower to perform any material term or provision of this Note, the Housing Agreement, the HOME Deed of Trust, the NSP Loan Documents,the Environmental Indemnity,or the Regulatory Agreement constitutes a default under this Note. (b) City shall give written notice of default to Borrower, specifying the default complained of by the City. Delay/in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any/failures or delays by City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of/its rights and remedies shall not deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert,or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,the City shall give the Borrower written notice of such default. The Borrower shall have-: a period of een (15) days after such notice is given within which to cure the default prior to exercise of remedies by the City. HOME PROMISSORY NOTE PAGE 5 of 10 (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder, the injured party shall give the party in default notice of such default. If the default is reasonably capable of being cured within thirty(30)days,the party in default shall have such period to effect a cure prior to exercise of remedies by the injured party. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the party in default (i) initiates corrective action within said period,and(ii)diligently,continually,and in good faith works to effect a cure as soon as possible,then the party in default shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured party. If Borrower fails,•'` to take corrective action or cure the default within a reasonable time, the City shall give Borrower and,as provided-in paragraph(e),below,the Investor Limited Partner,notice thereof,whereupon the Investor Limited Partner may remove and replace the general partner with a substitute°`general partner,who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. The City agrees to accept cures tendered by the Investor Limited Partnerwithin the cure periods provided in this Agreement or within the time periods provided in Civil Code Section 2924c, whichever is longer. Additionally, in the event the Investor Limited Partner isprecluded from curing a non-monetary default due to an inability to remove the General Partner as'a result of a bankruptcy, injunction, or similar proceeding by or against Borrower or its Gener�l"Partncr, the City agrees to forbear from completing a foreclosure(judicial or nonjudicial) during the period during which the Investor Limited Partner is so precluded from acting,not to exceed 90 days, provided such limited partner is otherwise in compliance with the foregoing provisions In no event shall the injured party be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the defaul is not cured within ninety(90) days after the first notice of default is given. / (f) After Borrower gives written notice to City that the Investor Limited Partner has been admitted to the Limited Partnership, City shall send to the Investor Limited Partner a copy of all notices of default and all other notices that City sends to Borrower, at the address for the Investor Limited Partner given in Section,16 of this Note. (g) Any notice ofdefault shall be deemed given only if either(i) dispatched by first class mail, registered or certified, postage prepaid, return receipt requested, to the addresses specified for the Borrower and the Investor Limited Partner in Section 16 of this Note, or (ii) by electronic facsimile transmission to the facsimile numbers specified for the Borrower and the Investor Limited Partner in Section 16 of this Note,followed by delivery by the method described in clause (i), or (iii) by personal delivery (including by means of professional messenger or courier service such as United Parcel Service or Federal Express)to the addresses specified for the Borrower and the Investor Limited Partner in Section 16 of this Note. Receipt shall be deemed to have occurred on the earlier of(i)the date of successfully completed electronic facsimile transmission or (ii)the date marked on a written postal service or messenger or courier service receipt as the date of delivery or reftusal of delivery(or attempted delivery if undeliverable).If either party gives notice of a change of address in the manner specified in this paragraph, all notices, demands and HOME PROMISSORY NOTE PAGE 6 of 10 communications originated after receipt of the change of address(or the effective date specified in the notice of change of address, if later) shall be transmitted, delivered or sent to the new address. 12. Notwithstanding specific provisions of this Note, non-monetary performance hereunder shall not be deemed to be in default where delays are due to causes beyond the control and without the fault of the party claiming an extension of time to perform (a"Force Majeure Delay"), provided that they actually delay and interfere with the timely performance of the matter to which they would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference,including: war; insurrection; strikes;lock-outs;riots;floods;earthquakes;fires;casualties;acts of God;acts of the public-enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this4ansaction or any element thereof;unusually severe weather;inability to secure necessary labor,materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; a is or failure to act of any Governmental agency(except acts or failure to act of the City shall not excuse performance by the City); the imposition of any applicable moratorium by a Governmental Agency; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force'Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge,the date the event commenced,and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within ten(10)business days after it obtains actual knowledge of the event. 13. If the rights created by this Note/shall be held by a court of competent jurisdiction to 11 be invalid or unenforceable as to any part,-of the obligations described herein, the remaining obligations must be completely performed and paid. f. 14. The HOME Deed of Trust securing this Note shall be subordinate and junior to the Senior Deed of Trust,to the extent and in the manner provided in that certain subordination agreement dated on or about the date hereof (the "Subordination Agreement"). The HOME Deed of Trust securing this Note is and shall be subject and subordinate in all respects to the liens,terms,covenants and conditions of the Senior Deed of Trust as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the HOME Deed of Trust securing this Note�;are subject to the restrictions and limitations set forth in the Subordination Agreement. Each sub"sequent holder of this Note shall be deemed, by virtue of such holder's acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the City under the Subordination Agreement. 15. 1( ) The obligation to repay the HOME Loan is a nonrecourse obligation of the Borrower andits partners. Neither the Borrower nor any of its general or limited partners, nor any other party,shall have any personal liability for repayment of the loan. The sole recourse of the City HOME PROMISSORY NOTE PAGE 7 of 10 with respect to repayment of the HOME Loan shall be the exercise of its rights against the Property and the improvements thereon and any related security for the HOME Loan. Provided,however,that the foregoing shall not (i) constitute a waiver of any obligation evidenced by the HOME Loan Documents,the NSP Loan Documents,the Regulatory Agreement or the Environmental Indemnity; (ii) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense,a counterclaim,or other basis for relief in respect of the exercise of,any remedy prescribed by law or in equity in case of default, other than repayment of the HOME Loan; or (iii) relieve Borrower of any of its obligations under any indemnity delivered by Borrower to the City. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Borrower and its successors and assigns shall have personal liability hereunder for any deficiency judgment,but only if and to the extent Borrower,its principals,shareholders,?partners or its successors and assigns received rentals,other revenues,or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property,ordinary and reasonable capital improve/nts to the mortgaged Property,debt service,real estate taxes in respect of the mortgaged Property and basic management fees,but not incentive fees,payable to an entity or person unaffiliated wit,`Borrower in connection with the operation of the mortgaged Property, which are then due and payable. b Notwithstanding the foregoing,the City may obtain fa judgment or order(including, ( ) g without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the HOME Loan;may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters o'f credit, reimbursement agreements or similar rights to payment or performance; and may recover directly from any Person: (i) any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Borrower or any member,partner,shareholder,officer, director or employee of(a) Borrower or (b) any of Borrower's members or general partners or(c) any member or partner of any of Borrower's members or general partners•,,e;6' (ii) any damages, costs and expenses incurred by City as a result of any misappropriation of funds provided for the construction of the Project,rents and revenues from the operation of the Project, or proceeds of insurance policies or`condemnation proceeds; (iii) any and all amounts owing by Borrower pursuant to Borrower's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. HOME PROMISSORY NOTE PAGE 8 of 10 16. The address of Borrower for purposes of receiving notices pursuant to this Note is as follows: c/o Colette's Children Home,Inc., 17301 Beach Blvd.,#23,Huntington Beach,CA 92647, Attention: ,with a copy to CIC Pacific Sun Apartments,LLC,c/o Chelsea Investment Corporation, 5993 Avenida Encinas, Suite 101, Carlsbad, CA 92008. The address of Investor Limited Partner for purposes of receiving notices pursuant to this Note is as follows: Raymond James Tax Credit Funds,Inc., 880 Carillon Parkway,St.Petersburg,FL 33716,Attention:Ronald M. Diner. 17. In addition to the other terms of this Note, the Borrower hereby/agrees and acknowledges that,notwithstanding any internal accounting procedures or provision pertaining to the use of receipts, payments, reserves and distributions contained in its agreement di partnership or other organizational document,the terms of this Note and the Housing Agreement shall control as to the use of the City funds provided under the Housing Agreement and all operating income from the Proj ect. 18. Neither this Note nor any term hereof may be waived,amended,discharged,modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by City and Borrower. 19. Notwithstanding any provision in this Note, the HOME Deed of Trust or other document securing same, the total liability for payment,in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of,Califomia. 20. This Note has been executed and del vi ered by Borrower in the State of California and is to be governed and construed in accordance with the internal laws thereof. 21. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever, such illegality, invalidity or unenforceability shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable,and this Note shall be construed as if such illegal,invalid or unenforceable term or provision had not been contained herein. 22. Time is oft e essence in the performance of each provision hereof. i; i [SIGNATURES APPEAR ON FOLLOWING PAGE] HOME PROMISSORY NOTE PAGE 9 of 10 IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth above. BORROWER: PACIFIC SUN APARTMENTS CIC, L.P., , a California limited partnership f:. By: Colette's Children Home, Inc.,,,,' a California non-profit publ c'benefit corporation , its Managing General Partner By: f Pamela,,Hope President By: CIC Pacific Sun Apartments, LLC, a California limited liability company its Administrative General Partner By: Chelsea Investment ;f Corporation, a California corporation, its Manager By: James J. Schmid President i' HOME PROMISSORY NOTE PAGE 10 of 10 EXHIBIT 12 ENVIRONMENTAL INDEMNITY f gar E i' F r t if df a �Y f 1 ENVIRONMENTAL INDEMNITY BY PACIFIC SUN APARTMENTS CIC, L.P. IN FAVOR OF THE CITY OF HUNTINGTON BEACH THIS ENVIRONMENTAL INDEMNITY (this "Indemnity"), dated/asof 2011, and made by PACIFIC SUN APARTMENTS CIC, L.P.,,a California limited partnership (referred to as "Borrower"), whose address for purposes of giving notices is c/o Colette's Children Home, 17301 Beach Blvd., #23, Huntington Beach, CA 92647, in favor of THE CITY OF HUNTINGTON BEACH (the "City"), whose address for purposes of giving notice is 2000 Main Street, Huntington Beach, California 92648. WITNESSETH �, WHEREAS Borrower is the owner of the real property in the City of Huntington Beach described on Exhibit "A" attached hereto and made a part hereofpand the improvements thereon (collectively referred to as the "Property"); WHEREAS, Borrower and the City entered int6 that certain Affordable Housing Agreement, dated as of , 2011 (the "Loan Agreement"), pursuant to which the City agreed to make loans to Borrower for the purpose /f acquiring and developing the Property as affordable rental housing (the "Loans") (the L/oan Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the "Loan Documents" a WHEREAS, Borrower has agreed to ,execute and deliver to the City this Indemnity to induce the City to make the Loans. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth;,Borrower hereby agrees with the City as follows: 1. DEFINITIONS F Hazardous Materials" or "Hazardous Substances" For the purpose of this Indemnity, "H shall include, but not be limited to, oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances defined as "extremely hazardous substances," "hazardous substances," "hazardous materials," "hazardous waste" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, including the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 96T et seg. ("CERCLA"); the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S:C. Sections 6901, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et se .; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Wat/ Pollution Control Act, as emended, 33 U.S.C. Section 1251 et seq.; the ENVIRONMENTAL INDEMNITY Page 1 of 9 Occupational Safety and Health Act as amended, 29 U.S.C. Section 651; the Emerge'ncy p Y Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seQ.;Athe Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and those substances/defined as "hazardous waste" in Section 25117 of the California Health and Safety Code, as "infectious waste" in Section 25117.5 of the California Health and Safety Code, or as "hazardous substances" in Section 25316 of the California Health and Safety Code or "hazardous materials" as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and orders and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity shall have the meanings ascribed to them in the Loan Agreement with the same force and effect as if set forth in full below. l� 2. COVENANTS AND INDEMNITY The following covenants, and indemnities are hereby given and made by Borrower: f! 2.1 Covenants. (a) Borrower covenants that it will' strictly comply with any and all laws, regulations, andlor orders which may be promulgated from time to time relating to Hazardous Materials ("Hazardous Materials Laws"), to immediately take, at Borrower's sole expense, all remedial action required by any Hazardous Materials Law or any judgment, consent decree, settlement or compromise in respect to any/Hazardous Materials Claim (as defined herein below), and to keep the Property free of any/lien imposed pursuant to any Hazardous Materials Law or in-relation to any Hazardous Materials Claim. (b) Borrower covenants that the Property will not, while Borrower is the owner of any portion thereof, be used/for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, transportation, presence, discharge or disposal of any Hazardous Materials, except for de'minimis quantities used at the Property in strict compliance with all Hazardous Materials Laws and required in connection with the routine rehabilitation, operation and maintenance of the Property. (c) The Ci y shall have the right, at any time, to conduct an environmental audit of the Property at,,the City's expense, unless Hazardous Materials are found, then at Borrower's sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower. Borrower shall give/the City and its agents and employees access to the Property to remove, or otherwise to mitigate the effects of, Hazardous Materials and Borrower shall not unreasonably delay or condition such access. /(e) Borrower shall not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by any Hazardous ENVIRONMENTAL INDEMNITY Page 2 of 9 Materials Laws, and, with respect to any such material currently present in the,Property, Borrower shall promptly either (i) remove or cause to be removed any material/that such Hazardous Materials Laws deem hazardous and require to be removed, or (ii) otherwise comply with such Hazardous Materials Laws, all at Borrower's sole cost and expense. If/Borrower shall fail to so do within the cure period permitted under applicable law, regulation,or order, the City may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with all Hazardous Materials Laws, and the costs thereof shall be added to the Obligations'(as hereinafter defined) of Borrower under this Section 2. P (f) Borrower shall immediately advise the City/'in writing of any .of the following: (i) any pending or threatened claim against Borrower or the Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws ("Hazardous' Materials Claims"), (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower with any Hazardous Materials Laws, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy/Use or transferability of the Property under any Hazardous Materials Law, or (C) could reasonably be anticipated to form the basis of a Hazardous Materials Claim against the Property or Borrower. 3 2.2 Indemnity. Borrower hereby agrees to defend, indemnify, protect, and hold harmless the City and its members, officers; officials, employees, agents, representatives, servants, contractors, successors and assigns/(collectively, the "Indemnitees"), except to the extent of the Indemnitees' gross negligence or willful misconduct, from and against any and all damages, losses, liabilities, obligations, penalties, claims (including, without limitation, any third party tort claims), litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including; without limitation, attorneys' and experts' fees and disbursements) of any kind or of any`6iature whatsoever, whether foreseeable or unforeseeable, (collectively, the "Obligations") which may at any time be imposed upon, incurred by or asserted or awarded against the City as a direct or indirect consequence of: f (a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property; (b) The breach of any covenant made by Borrower in Section 2.1 hereof; or I (c) The enforcement by the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder. 3. BORROWERS UNCONDITIONAL OBLIGATIONS 3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the City with respect thereto. The obligations of ENVIRONMENTAL INDEMNITY Page 3 of 9 Borrower hereunder shall be absolute and unconditional irrespective of, and Borrower waives any defense based upon, ' (a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents; (c) Any extension of the maturity of the Loans oyany waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; d An exculpatory provision in any of the Loan Documents limiting the ( ) Y p Y City's recourse to property encumbered by the Deeds of Trujst securing the Loans, or to any other security, or limiting the City's rights to a deficiency judgment against Borrower; e Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Loans, or any release, amendment, waiver of, or consent to any departure from any pr vision of, any other surety or guarantee given in respect of the Loans; (f) The insolvency or bankruptcy of Borrower or Borrower's approved assignee's General Partners or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Loans;or (g) Any other ci umstance that might otherwise constitute a defense available to, or a discharge of, Bo ower, Borrower's approved assignee's General Partners, or any other indemnitor or guarantor ith respect to the Loans or any or all of the Obligations. 3.2 Continuation. T e term of this Indemnity will continue until such time as no legal action can be successfully br ught against the City due to applicable statutes of limitation. This Indemnity (a) is a contin Mg indemnity and shall remain in full force and effect until the satisfaction in full of all o the Obligations (notwithstanding the payment in full of the Loans or the release or other ext! guishment of the Deeds of Trust, or any other security for the Loans); and (b) shall continue o be effective or shall be reinstated, as the case may be, if at any time any payment of any of t e be is rescinded or must otherwise be returned by the City upon the insolvency, b/pnkruptcy, or reorganization of Borrower, Borrower's approved assignee's General Partners r otherwise, all as though such payment had not been made. 3.3 Survival. Borrower's duty to indemnify shall survive any judicial or non judicial foreclosure under the NSP Deed of Trust and/or the HOME Deed of Trust or transfer of the Property in lieu thereof, the release and reconveyance or cancellation of the NSP Deed of Trust ENVIRONMENTAL INDEMNITY Page 4 of 9 and/or the HOME Deed of Trust, and the satisfaction of all of Borrower's obligations under the Loan Documents. 4. WAIVER Borrower acknowledges that possible defenses to the enforceability of/,the Obligations may presently exist and/or may arise hereafter and as part of the City's consideration for entering into the Loan Agreement, they have specifically bargained for the waiver aA relinquishment by Borrower of all such defenses. Borrower agrees that it has had the opportunity to seek and receive legal advice from skilled legal counsel of its choosing and represents and confirms that Borrower is fully informed regarding, and thoroughly understands Ythe nature of such possible defenses, the circumstances under which they may arise, the benefits that they might confer upon Borrower and the legal consequences to Borrower of waiving such defenses. Borrower makes this Indemnity with the intent.that this Indemnity and all of the,waivers herein shall each and all be fully enforceable by the City and that the City are induced to enter into the Loan Agreement in material reliance upon such presumed full enforceability. Without limitation to the foregoing, Borrower hereby waives the following: (a) Promptness and diligence; (b) Notice of acceptance and notice of the incurrence of any Obligation by Borrower; (c) Notice of any action taken by/the City, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto; (d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder; (e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity; (f) Any requirement that the City protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the City exhaust any right or take any action against Borrower or any other person or collateral; and (h) Any defense that may arise by reason of: (1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons; ENVIRONMENTAL INDEMNITY Page 5 of 9 (2) The failure of the City to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the City,,/including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of Borrower or any other right of Borrower to proceed against a guarantor by the operation of Section 580d of the California Code of Civil Procedure or otherwise. " 5. NOTICES Any notice, demand, statement, request, or consent made hereunder shall be in writing 11 and shall be personally served, mailed by first-class registered mail`, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, (and to Borrower's Administrative General Partner at the address set forth in the Loan Agreement) or given by electronic facsimile ("fax") transmission to the fax numbers/stated below, with confirmations mailed by first class registered mail, return receipt requested to the address set forth above, of the party to whom such notice'is to be given (or to such other address as the parties hereto, shall designate in writing): In the case of the City: �� 714-374-1590 In the case of Borrower: , 71 4-848-1866 In the case of Borrower's Administrative General Partner: 760-456-6001 Any notice that is transmitted by fax transmission followed by delivery of a"hard" copy, shall be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal/Service), shall be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 7 6. MISCELLANEOUS 6.1 Borrower shall make any payment required to be made hereunder in lawful money of the United/States of America, and in same day funds, to the City at its address specified in the first paragraph hereof. Indemnity 6.2 No amendment of any provision of this I y shall be effective unless it is in writing and signed by Borrower and the City and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, shall be ENVIRONMENTAL INDEMNITY Page 6of9 effective unless it is in writing and signed by the City, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 6.3 No failure on the part of the City to exercise, and no delay in exercising;`any right hereunder or under any Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any right preclude any other or further exercisxthereof or the exercise of any other right. The rights and remedies of the City provided herein and in the Loan Documents are cumulative and are in addition to, and not exclusive of, any/rights or remedies provided by law. The rights of the City hereunder or under any Loan Document against any party thereto are not conditional or contingent on any attempt by the City to exercise any of its rights hereunder or under any other Loan Document against such party or against any other person or collateral. �y 6.4 If any provision of this Indemnity shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, then,,that provision shall, as to such jurisdiction, be deemed ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction. p' 6.5 This Indemnity shall (a) be binding upon Borrower, and Borrower's successors and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of the City, its directors, officers, employees, and agents, any successors to the City's interest in the Property, any other person ,who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the City's rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, the City may, subject to, and in accordance with, the provisions of the Loan Documents, assign ors`otherwise transfer all or any portion of its rights and obligations under any Loan Document, to any other person, and such other person shall thereupon become vested with all of the rights and obligations in respect thereof that were granted to the City herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise,transferred without the prior written consent of the City. 6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non conveniens or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or'proceeding may be heard and determined in such California or federal court. Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity or in any other manner provided by law. Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. ENVIRONMENTAL INDEMNITY Page 7 of 9 6.7 The title of this document and the captions used herein are inserted only s a matter of convenience and for reference and shall in no way define, limit, or describe he scope or the intent of.this Indemnity or any of the provisions hereof. 6.8 This Indemnity shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California applicable to con tracts/inade and to be performed therein, except to the extent that the laws of the United States pre pt the laws of the State of California. 6.9 This Indemnity may be executed in any number of co terparts, each of which shall constitute an original and all of which together shall constitute ne agreement. [SIGNATURES APPEAR ON FOLLO ING PAGE] ENVIRONMENTAL INDEMNITY Page 8 of 9 r- IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date set forth below. PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit public benefit corporation its Managing General Partner By: Pamela Hope' President By: CIC Pacific Sun Apartments, LLC, a California,'limited liability company its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager By: James J. Schmid President ENVIRONMENTAL INDEMNITY Page 9 of 9 EXHIBIT A , LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Orange,and described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP F/ILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-17 { 1 �r f. r' 1 J i r f� /r r' EXHIBIT 13 ASSIGNMENT OF AGREEMENTS �,r ASSIGNMENT OF AGREEMENTS , FROM PACIFIC SUN APARTMENTS CIC, L.P. TO THE CITY OF HUNTINGTON BEACH 1. FOR VALUE RECEIVED, the undersigned, PACIFIC SUN APA�VTMENTS CIC, L.P., a California limited partnership ("Developer"), assigns to THE CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California ("Assignee"), all of its right, title and interest in and to: a. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements addenda and general conditions thereto (collectively, "Architectural,A°�greements"); and b. All p p p lans and specifications, shop drawings, working drawings, amendments, modifications, changes, suppI Lents, general conditions and addenda thereto (collectively "Plans and Specifications") heretofore or hereafter entered into or prepared b a y a chitect, engineer or other person e p p y � or entity (collectively "Architect"), for or on behalf of Developer in connection with the development of the Improvements on the Property described in Exhibit A attached. This assignment is subject to the prior rights, if any,lof a lender approved by Assignee whose lien is senior to the Deed of Trust held by Assignee. The Plans and Specifications, as of the date hereof, are those which Developer/has heretofore, or will hereafter deliver to Assignee. The Architectural Agreements include, but are not limited to, the architectural contracts for this project between Developer and Starck Architecture +Planning. 2. This ASSIGNMENT OF AGREEMENTS ("Assignment") constitutes a present and absolute assignment to Assignee as of the Effective Date, subordinate to a lender approved by Assignee whose lien7is senior to the Deed of Trust held by Assignee ("Senior Lender"); provided, however, Assignee confers upon Developer the right to enforce the terms of the Architectural Agreements and Developer's rights to the Plans and Specifications so long as 4 event which would constitute a Default after notice or the passage of time has occurred under the Affordable Housing Agreement dated as of 2011 be'ttween Assignee and Developer (the "Loan Agreement"). Upon the occurrence of an event which would constitute a Default after notice or the passage of time under t e Loan Agreement, Assignee may, in its sole discretion, give notice to Architect ofrts intent to enforce the rights of Developer under the Architect Agreements and of/,ts rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Developer acknowledges tha by accepting this Assignment, Assignee does not assume any of Developer's o4gations under the Architectural Agreements or with respect to the Plans and Specifications. Effective Date that: a 3. Devveloper represents and warrants to Assignee, as of the ( ) all Architectural Agreements entered into by Developer are in full force and effect and ASSIGNMENT OF AGREEMENTS Page 1 of 3 are enforceable in accordance with their terms and, to the best of Developer's knowledge' no default, or event which would constitute a default after notice or the passage of tire, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Assignee are complete and orrect in all material respects; and (c) Developer has not assigned any of its rights rider the Architectural Agreements or with respect to the Plans and Specification except as expressly permitted by the Loan Agreement. 4. Developer agrees: (a) to pay and perform all obligations of D-veloper under the Architectural Agreements; (b) to enforce the payment and perform cc of all obligations of any other person or entity under the Architectural Agreemen ; (c) not to materially modify the existing Architectural Agreements nor to enter int any future Architectural Agreements without Assignee's prior written approval exc pt as otherwise expressly permitted in the Loan Agreement; and (d) not to further assign (other than assignment in connection with a loan which is senior in priority to Assi,nee's assignment), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without Assignee's prior wr' en consent. 5. This Assignment secures performanceby Developer of all obligations of Developer under the Loan Agreement. Th' Assignment is supplemented by the provisions of the Loan Agreement and said provisions are incorporated herein by reference. 6. The term "Loan Agreement" as sed herein shall mean the Affordable Housing Agreement dated as , 201 between Developer and Assignee, as well as any future amendments and implementation agreements between Developer and Assignee which refer to this Assignment. /apitalized terms not otherwise defined herein shall have the meaning set forth in the oan Agreement. 7. This Assignment.shall be governed by the internal laws of the State of California, except to the extent that Feral laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder. If Assignee hould bring any action to enforce its rights hereunder at law or at equity, Developer shay reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. 8. This Assi ent shall be binding upon and inure to the benefit of the heirs, legal representatives,/assigns, and successors-in-interest of Developer and Assignee; provided, however, this hall not be construed and is not intended to waive any restrictions on assignment,ele, transfer, mortgage, pledge, hypothecation or encumbrance by Developer cantarned in the Loan Agreement. 9. The attached Architect's/Engineer's Consent, Schedule 1 and Exhibit A are incorporated by reference. ASSIGNMENT OF AGREEMENTS Page 2 of 3 10. The Effective Date of this Assignment shall be the date it is execut2date y Developer.IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the set forth below. PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership By: Colette's Children Home, Inc., a California non-profit publi enefit corporation its Managing General Partner By: Pamela Hope' President By: CIC Pacific Shun Apartments, LLC, a Califorma,i�limited liability company its Adminigtrative Genera_l Partner By: Chelsea Investment Corporation, a California corporation, its Manager By: James J. Schmid President ASSIGNMENT OF AGREEMENTS Page 3 of 3 ARCHITECT'S CONSENT The undersigned architect ("Architect") hereby consents to the foregoing Assignment to which this Architect's Consent ("Consent") is part, and acknowledges that there presently exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Developer and/or the performance of the Architect's obligations under the Architectural Agreements. Architect agrees that if, at any time, Assignee, pursuant to its rights unde r the Loan Agreement or the loan documents, elects to undertake or cause the completion of the rehabilitation of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; THEN, so long as Architect has received, receives or continues to,�receive the compensation called for under the Architectural Agreements, Assignee may'at its option, use and rely on the Plans and Specifications for the purposes for whichfthey were prepared, and Architect will continue to perform its obligations under the Architectural Agreements for the benefit and account of Assignee in the same manner as if performed for the benefit or account of Developer in the absence of the Assignment. Architect further agrees that, in the eventXfbreach by Developer of the Architectural Agreements, or any agreement entered into o with Architect in connection with the Plans and Specifications, so long as Developer's interest in the Agreements and Plans and Specifications is assigned to Assignel Architect will give written notice to Assignee of such breach at the address shown below. Assignee shall have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein shall require Assignee to cure said default or to undertake completion of the rehabilitation of the Improvements. Architect warrants and represents that it/he/she has no knowledge of any prior assignment(s) of any interest in the Plans and Specifications and/or the Architectural Agreements. Except as otherwisedefined herein, the terms used herein shall have the meanings given them in the Assignment. Dated as of the date set forth below. STARCK ARCHITECTURE +PLANNING Date: , 2011 By: Name: Its: I 1 Assignee's Address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 , Attn: City Manager With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Architect's Address: Starck Architecture +Planning 2045 Kettner Blvd., Suite 100 ell San Diego, CA 92104 Attn: i 2 SCHEDULE OF UNPAID CLAIMS Schedule I to Assignment of Agreements dated as of , 2011 between PACIFIC SUN APARTMENTS CIC, L.P. as Developer and THE CITY OF HUNTINGTON BEACH as Assignee. C�3r4 PROPERTY DESCRIPTION Exhibit A to Assignment of Agreements dated as of , 2011, be O tween PACIFIC SUN APARTMENTS CIC, L.P. as Developer and THE CITY OF HUNTINGTON BEACH as Assignee. The land referred to herein is situated in the State of California, County o.f" range, and described as follows: PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THFCOUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-17 ,e0 e ;r J