HomeMy WebLinkAboutRDA Packet 2001/09/25
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CIlY OF
(HUlA VISfA
TUESDAY. SEPTEMBER 25. 2001 COUNCIL CHAMBERS
6:00 P.M. PUBLIC SERVICES BUILDING
(immediately following the City Council meeting)
ADJOURNED JOINT MEETING OF THE
REDEVELOPMENT AGENCY I CITY COUNCIL
OF THE CITY OF CHULA VISTA
CALL TO ORDER
ROLL CALL
Agency/Council Members Davis, Padilla, Rindone, Salas; Chair/Mayor Horton
ORAL COMMUNICATIONS
This is an opportunity for the general public to address the Redevelopment Agency on any subject matter
within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits
the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish
to address the Agency on such a subject, please complete the "Request to Speak Under Oral Communications
Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to
the meeting. Those who wish to speak, please give your name and address for record purposes and follow up
action.
ACTION ITEMS
The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by
the Agency, staff, or members of the general public. The items will be considered individually by the Agency
and staff recommendation may in certain cases be presented in the alternative. Those who wish to speak,
please fill out a Request to Speak form available in the lobby and submit it to the Secretary to the
Redevelopment Agency or City Clerk prior to the meeting.
1. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA APPROVING FIRST AMENDMENT TO THE GATEWAY CHULA VISTA
PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT (DDA)
PROVIDING FOR THE EARLY ADVANCE OF $1.3 MILLION OF THE
AGENCY'S FIRST INSTALLMENT PAYMENT AND APPROPRIATING FUNDS
THEREFOR -On 6/6/00, the Council/Agency approved a Disposition and
Development Agreement (DDA) with Gateway Chula Vista LLC for
development of a 347,000 sq. ft. office and retail project at the northwest
corner of Third Avenue and "H" Street. The Agency at that time approved
disbursement of several installment payments providing a phased subsidy for
the project. The first installment payment was to be disbursed upon
completion of a number of conditions, including lease-up of 50 percent of
the first phase of the development and successful closing of construction
loan financing. In August 2001, the project developer approached the City
to request early disbursement of the cash portion ($1.3 million) of the first
installment payment, citing a softening office leasing market and cash flow
concerns. [Community Development Director] 4/5ths VOTE REQUIRED
STAFF RECOMMENDATION: Agency adopt the resolution.
OTHER BUSINESS
2. DIRECTOR'S REPORT(S)
3. CHAIR/MAYOR REPORTlS)
4. AGENCY/COUNCIL COMMENTS
ADJOURNMENT
The meeting will adjourn to a closed session and thence to a regular meeting of the
Redevelopment Agency on October 2, 2001 at 4:00 p.m., immediately following
the City Council meeting in the City Council Chambers.
CLOSED SESSION
Unless Agency Counsel, the Executive Director, City Councilor the Redevelopment Agency states otherwise at
this time, the AgencyfCouncil will discuss and deliberate on the following item(s) of business which are
permitted by law to be the subject of a closed session discussion, and which the AgencyfCouncil is advised
should be discussed in closed session to best protect the interests of the City. The AgencyfCouncil is required
by law to return to open session, issue any reports of final action taken in closed session, and the votes taken.
However, due to the typical length of time taken up by closed sessions, the videotaping will be terminated at
this point in order to save costs so that the AgencyfCouncil's return from closed session, reports of final action
taken, and adjournment will not be videotaped. Nevertheless, the report of final action taken will be recorded
in the minutes which will be available in the Office of the Secretary to the Redevelopment Agency and the City
Clerk's Office.
5. CONFERENCE WITH REAL PROPERTY NEGOTIATOR -- Pursuant to
Government Code Section 54956.8
a. Property: Agency-owned parcels at the northwest corner
of Third Avenue and H Street
Negotiating Parties: Redevelopment Agency (Chris Salomone) and
Gateway Chula Vista, LLC (Jim Pieri)
Under Negotiations: Revised price and terms for
disposition/acquisition
Redevelopment Agency. September 25. 2001 Page 2
b. Property: Assessor Parcel Nos. 568-270-03; 568-270-
11 (approximately 2.85 acres located at the
southeast corner of Fourth Avenue and F
Street)
Negotiating Parties: City Council / Redevelopment Agency (Sid
Morris/ Chris Salomone) and Various Tenant
Interests
Under Negotiations: Lease terms
6. CONFERENCE WITH LEGAL COUNSEL REGARDING ANTICIPATED
LITIGATION -- Pursuant to Government Code Section 54956.9(b)
One Case
7. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION --
Pursuant to Government Code Section 54956.9(a)
Agency vs. Rados Bros. [Case No. GIC734557-1]
8. CONFERENCE WITH REAL PROPERTY NEGOTIATOR - Pursuant to
Government Code Section 54956.8
Property: Assessor Parcel Nos. 568-270-2200; 760-106-
9205 (31,673 sq. ft. at 320 Third Avenue)
Negotiating Parties: Redevelopment Agency (Chris Salomone) and
CinemaStar/Trigild (Bill Huffman) and/or
Midland Loan Services/LaSalle Bank (Chris
Cimino)
Under Negotiations: Price and terms for acquisition
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COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT
The City of Chula Vista, in complying with the Americans with Disabilities Act (ADA), request individuals who
require special accommodates to access, attend, andfor participate in a City meeting, activity, or service
request such accommodation at least 46 hours in advance for meetings and five days for scheduled services
and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (619)
691-5047 or Telecommunications Devices for the Deaf (TDD) at (619) 565-5647. California Relay Service is
also available for the hearing impaired.
Redevelopment Agency, September 25, 2001 Page 3
REDEVELOPMENT AGENCY
AGENDA STATEMENT
ITEM NO.: I
MEETING DATE: 09/25/01
ITEM TITLE: RESOLUTION APPROVING FIRST AMENDMENT TO THE GATEWAY
CHULA VISTA PROJECT DISPOSITION AND DEVELOPMENT
AGREEMENT (DDA) PROVIDING FOR THE EARLY ADVANCE OF $1.3
MILLION OF THE AGENCY'S FIRST INSTALLMENT PAYMENT AND
APPROPRIATING FUNDS THEREFOR
SUBMITTED BY: COMMUNITY D ~LOPMENT DIRECTOR l\1-~ <':-5
REVIEWED BY: CITY MANAG XECUTIVE DIRECTOR
4/5THS VOTE: YES0NOD
BACKGROUND
The City and Redevelopmenf Agency approved a Disposition and Development Agreement (DDA)
on June 6, 2000 with Gateway Chula Vista LLC for development of a 347,000 square foot office
and retail project at the northwest corner of Third Avenue and "H" Street. The Agency at that time
approved disbursement af several installment payments providing a phased subsidy for the project.
The first installment payment was to be disbursed upon completion of a number of conditions,
including lease-up of 50 percent of the first phase of the development and successful closing of
construction loan financing. In August, the project developer approached the City to request early
disbursement af the cash portion ($1.3 million) of the first installment payment, citing a softening
office leasing market and cash flow concerns. Agency staff have analyzed this request and, if the
Developer agrees to the requested means of security, are prepared to recommend approval of the
request. However, as of the date of the Agenda packet was released, staff has not received
confirmation of the Developers acceptance of all terms and conditions. Staff will keep Council
apprised as developments occur.
RECOMMENDATION
Approve the Resolution adopting the First Amendment to the Gateway Chula Vista Project
Disposition and Development Agreement (DDA), appropriating $1.3 million of the available fund
balance in the Merged Project Area Fund for repayment of advances to Bayfront/T own Centre I
Project Area Fund and appropriating $1.3 million from unanticipated revenues in the
Bayfront/T own Centre I Project Area Fund.
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PAGE 2, ITEM NO.:
MEETING DATE: 09/25/01
BOARDS/COMMISSIONS RECOMMENDATION
The Town Centre Project Area Committee reviewed the proposed amendment at their meeting of
September 12, 2001, and voted 4-0 to recommend approval of the First Amendment, with
appropriate security.
DISCUSSION
The Gateway Project development team has requested early disbursement of the Agency's First
Installment Payment. The First Installment Payment consists of $1.3 million in cash, $209,607.88
in land, up to $91,000 in reimbursements for Phase I building permit fees, and reimbursement of
up to $300,000 in public improvements. Disbursement of the cash portion of the initial subsidy
payment is predicated on completion of a number of conditions detailed in the DDA. The
developer has not yet achieved two primary conditions for disbursement of the First Installment
Payment. These include closing and funding of their construction loan (all construction to date
has been funded through developer equity) and successful lease-up of 50 percent of the first
phase's gross leasable floor space (the project is currently 38 percent pre-leased.) The following
information provides context for the developer's request:
GMAC Construction Loan: GMAC is indicating its intention to provide construction financing of
$13,750,000 for Phase I. Actual funding of the loan is dependent on GMAC's internal underwriting
criteria and involves reaching a break-even point on debt service. The break-even point is reached
when leasing activity and equity reach a satisfactory level. Currently, GMAC indicates that the
project will require approximately 53-58% lease-up before reaching the break-even point. If all the
current Letters of Interest (LOis) are converted into signed leases, the project will be very close to the
break-even point.
In order to reach that threshold, the project will need to achieve a combination of additional signed
leases andlor additional equity contributions. GMAC indicates that another 3,000 - 8,000 sq. ft. of
leases at the average lease rate now being received could get the project to the break-even point.
Additional equity of $1.35 - $1.65 million would also potentially be sufficient to reach break-even.
GMAC has also indicated, however, that the Agency's first installment payment has already been
factored into project equity.
Equity Contributions to Date: The total cost of Phase I is estimated at $23,931,135. The
development team has contributed $12,549,216 in equity to date, of which $8,113,719 has been
for Phase I. The GMAC construction loan amount is $13,750,000. The substantial developer equity
of $8,113,719 and the Agency's pending contributing of $1,300,000 plus $209,607.88 in land
value, will leave an equity gap to $557,808.12. This remaining gap is expected to be filled with
additional equity from the development team.
Leasing Activity: Approximately 38 percent of Phase I has been leased and another 16 percent
has signed letters of interest (LOI.) Leasing has been accomplished by MountainWest Real Estate,
associated with Jim Pieri and Chris Lewis and primarily responsible for office leasing, and BRE, which
has focused on retail leasing. MountainWest has been responsible for 56 percent of the lease
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PAGE 3, ITEM NO.:
MEETING DATE: 09/25/01
activity and B8 percent of the signed leases, but BRE has brought in 78 percent of the LOis. Nearly
half (17,610 sq. ft.) of the signed leases are represented by speculative executive suites located on
Floor 3. Leasing activity has been mixed. On the one hand, triple net lease rates of $2.50 - $2.85
have been higher than expected. On the other hand, the pace of lease-up activity has been slower
than anticipated.
Two primary factors appear to be in play. First, downtown Chula Vista is an unknown quantity and
this is the first true Class A development in the urban core. The immediate vicinity of the project site
has some quality structures, but lacks cohesive urban design. "H" Street is visually unappealing and
the improvements along Third Avenue are now over 25 years old and dated looking. The second
factor is some perceived softening in the high-end office market, coupled with prospects for
economic softening in the broader market. The development team, however, remains optimistic that
healthy leasing levels of over 75 percent can be achieved in the coming months.
Analysis from Agencýs Financial Consultant: The Agency's financial consultant, Keyser
Marston Associates, has reviewed the developer's request. KMA has indicated that "front-loading"
of the Agency's First Installment Payment is an acceptable practice with a redevelopment project like
Gateway Chula Vista, although not without risks. KMA was specifically asked to provide insight into
the current status of office leasing activity, and has indicated that the office leasing market in San
Diego remains stable without the large scale declines being experienced in certain other markets in
the State. Second quarter vacancy rates stood at 5.2 percent, which indicates continuing vitality.
With respect to the sub-regional market, KMA feels that demographic trends continue to support
steady demand for additional office and retail space. South County office vacancy rates are lower
than county-wide, standing at 3.7 percent and with projected high demand. National City does
have the vacant GMAC center with 161,000 sq. ft. that will need to be absorbed (likely with a call
center operation.) Including Gateway, 284,000 sq. ft. of office is currently under construction in
South County (adding to an existing 426,910 sq. ft. inventory.) Gateway is a Class A product in a
market that traditionally has produced very little of this type of office development. For a project at
this point in its development cycle, leasing activity to date is likely not a cause for concern.
Project Marketing: The project team prepared an initial marketing plan in September 2000.
Print media has focused on the San Diego Daily Transcript, the San Diego Business Journal, the
local Chula Vista Star News and in Tijuana media. Direct mail and radio media have also been
utilized. Many of the print ads have highlighted Chula Vista as a destination for businesses on the
Pacific Rim as well as a good location for relocation. Print ads have also been translated into
Spanish. Over 40 print ads have appeared in the media noted above. Internet banner ads have
been used on the San Diego Source website. Other marketing has included widespread use of
press-releases with a number of quality pieces done by the Transcript and the Union Tribune.
Telephone direct calls have also been used extensively. In addition to the above, the project has
been presented at the International Council of Shopping Centers convention in Las Vegas and the
team has given a bus tour to the San Diego County Association of Commercial Realtors. Back-up
detail for the marketing effort, in considerable detail, has been provided to staff for review.
Construction Expenses: Pending project construction draws include $1,164,000 on September
25th, $1,389,000 on October 25th, and $1,589,000 on November 25th. DPR Construction is the
1-3
PAGE 4, ITEM NO.:
MEETING DATE: 09/25/01
largest share of each of these project draws. The development team has indicated that DPR will
have a difficult time extending credit for these project draws due to recent unforeseen construction
project cancellations in Silicon Valley. Pending Agency and development team equity contributions
are sufficient to carry the project through the September draw date, after which GMAC construction
funding needs to be in place or additional developer equity will need to be extended.
The Level of Mr. Pieri's Involvement/Participation: 1) The development agreement with the
Agency requires that the local development partner, Jim Pieri/Coast Pacific Properties retain a 25
percent equity stake in the project. The developer indicates a potential that additional unplanned
equity contributions by the other partners to keep project construction underway may dilute his share
below the agreed level. Agency staff feel strongly about Mr. Pieri's ability to get development
projects off the ground and his vision for future development of Chula Vista's urban core. These are
assets which the Agency should strongly seek to retain. Additionally, Mr. Pieri is expected to continue
to spearhead development of Phases II and III which are more speculative than Phase I.
Provisions of First Amendment
1. Immediate payment of "Agency Advance" of the cash portion of the First Installment Payment
($1.3 million), subject to the following requirements:
A. Payable for "qualified" project development costs directly to the construction contractor,
DPR, after submittal of a draw request from the developer;
B. Closing of the construction loan by GMAC or a letter or estoppel certificate from GMAC
identifying acceptable conditions still to be addressed prior to closing;
C. Agreement by the members of the Developer LLC that they will contribute sufficient capital
to cause the construction loan to be funded no later than June 1, 2002;
D. The "Agency Advance" will be treated as a bridge loan to the developer and shall be due
and payable on June 1, 2002, and begin to accrue interest at 10 percent per annum
beginning January 15, 2002;
E. The bridge loan will be secured by an insured first Deed of Trust recorded on the
property, with coverage against mechanic's liens.
2. Agency agrees to reduce Lease-Up Requirements for Phase I from 50% to 38% of building
space (signed leases).
3. Agency agrees to modify requirement for a general contractor performance bond from a
surety company in favor of a performance guarantee by DPR Construction.
4. All other existing terms and conditions to Agency's obligation to pay the First Installment shall
be satisfied.
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PAGE 5, ITEM NO.:
MEETING DATE: 09/25/01
Elements of Risk and Risk Manaaement
The early release of Agency participation in the project represents a degree of risk for the City.
The development may not receive construction financing if insufficient lease activity is generated;
in which case the development team would either need to fund the remaining construction costs
directly or put construction on hold.
Agency staff has attempted to mitigate this risk by negotiating the terms and conditions set forth
above. The following risks remain:
1. Distressed Proiect as Security. Using the project itself as security is appropriate, but not
without risk. If Developer defaults, the Agency may need to foreclose on the proiect. If
the Agency successfully forecloses, it would own a partially completed project with few if
any remaining leases. These risks are substantially mitigated by Developer's
approximately $9 million investment in the property and the Guaranty we have required
(but not yet received) from the LLC members.
2. GMAC Loan Uncertain. The GMAC Loan has not been finalized, and, for reasons
beyond our control, may not close. Alternative funding may not be readily available on
good terms, or without additional Agency subsidy. GMAC is a quality lender, however,
and they have expressed confidence in this project and this Developer. We are requiring
GMAC to close their loan or obtain an estoppel certificate prior to the Agency advance of
funds.
Guaranty Unsecured/Uncertain. The LLC members future promise to contribute sufficient capital to
cause full-funding of the GMAC loan is not secured. The Developer has indicated an intent to keep
funding the project after the Agency advance runs out (October 25), but they have (to date) been
unwilling to commit this promise to a legal contract. Additional capital will be needed before June 1
to keep the Contractor on the job and to preserve existing signed leases.
The early release would allow project construction to continue without interruption and improve
chances for on-time completion. Ramp-down and ramp-up costs would be saved. Lease-up would
be encouraged. The worst case scenario would be for the Agency to advance its $1.3 million cash
contribution and to not obtain the necessary lease-up activity and/or additional equity contribution to
cause the funding of the GMAC construction loan. Agency staff and counsel have crafted
appropriate means of securing repayment of the Agency advance to mitigate the risk of an early
release.
FISCAL IMPACT
Early disbursement of the cash portion of the Agency's First Installment Payment will require that
$1.3 million in Agency funds generated from a recent land swap and be appropriated and in the
Merged Project Area Fund and transferred to the Bayfront/T own Centre I Proiect Area Fund as
repayment of prior loans from Bayfront/T own Centre I to Otay Valley Road. $1.3 million of these
funds will then be appropriated as unanticipated revenues. This transfer is required because of
legal and tax considerations associated with the use of tax allocation bond proceeds that would
be secured by a First Deed of Trust.
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PAGE 6, ITEM NO.:
MEETING DATE: 09/25/01
ATTACHMENTS
First Amendment to Disposition and Development Agreement (in DRAFT form)
Exhibit A - Application for GMAC Construction Loan (including GMAC Commitment)
Exhibit B - GMAC Letter
Exhibit C - Promissory Note Bridge Loan
Exhibit D - Construction Deed of Trust
Exhibit E - Capital Call Guaranty
Exhibit F - Completion Guarantee
Exhibit G - Assignment of Construction Agreements
Exhibit H - Assignment of Architectural Agreements
j,\COMMDEV\STAFF.REP\O9-25-01\GATEWAY 1ST AMEND.doc
/- G.
AGENCY RESOLUTION NO.
RESOLUTION APPROVING FIRST AMENDMENT TO THE
GATEWAY CHULA VISTA PROJECT DISPOSITION AND
DEVELOPMENT AGREEMENT (DDA) PROVIDING FOR THE EARLY
ADVANCE OF $1.3 MILLION OF THE AGENCY'S FIRST
INSTALLMENT PAYMENT AND APPROPRIATING FUNDS THEREFOR
WHEREAS, on June 6, 2000 the City Council of the City af Chula Vista and
Redevelopment Agency of the City of Chula Vista approved a Disposition and Development
Agreement ("DDA") between the Agency and Gateway Chula Vista, LLC for develapment and
operation of the Gateway Chula Vista Project; and
WHEREAS, capitalized terms used in this resolutian are as defined in the DDA, unless
otherwise defined herein; and
WHEREAS, the Project includes the development of a 347,000 square faat mixed-use
office and retail development at the northwest corner of Third Avenue and H Street in the
Town Centre I Redevelapment Project Area; and
WHEREAS, a Specific Plan entitlement, General Plan Amendment, and Mitigated
Negative Declaration were adopted by the Agency and City Council on December 12, 2000, to
allow for development of the Project; and
WHEREAS, the Developer Gateway Chula Vista LLC successfully obtained building
permits far construction of the First Phase of the Project and has made significant progress on
said canstruction funded through private equity contributions of over $8 millian ta the Project;
and
WHEREAS, the Developer requested the Agency provide an early release af the cash
portion of the First Installment Payment of Agency Participation in order to help ensure
construction continues until Phase I Constructian Financing is in place and funded and all other
Conditions Precedent to the First Installment Payment are met; and
WHEREAS, the Agency and Developer desire to enter inta a First Amendment ta
Disposition and Development Agreement ("First Amendment") to provide the early release of
the First Installment Payment af Agency Participation and make other madificatians to the
terms and canditions of the DDA related thereto; and
WHEREAS, the Agency has reviewed the leasing activity of Mountain West Real Estate
and BRE associated with the development, market canditions, and the extent of pending
construction financing and has determined there will be adequate for the Agency's early
release af funds through the amended Conditions Precedent set forth in the First Amendment;
and
WHEREAS, the Praject entitlement has been previously reviewed and appraved by the
Planning Commissian of City, the City Council, and Agency, including all necessary finding
under the California Environmental Quality Act, and the Project as described and defined in
such environmental documentation supporting the entitlement is not madified by the First
Amendment; and
WHEREAS, the requirements under the California Cammunity Redevelapment Law,
Health and Safety Cade Section 33000, et seq., in particular section 33433, relating ta
DOCSOC\846929v2\24212.0002 1- 7
disposition of property acquired with tax increment funds were satisfied at the June 6, 2000
actian of the City Council and Agency approving the DDA; and
WHEREAS, the First Amendment does not modify the Project entitlement, nor the
Agency casts therefor under the DDA, nar the total amaunt of Agency Participatian under the
DDA, but modifies Canditions Precedent and timing of the release and payment of the First
Installment af Agency Participation; and
WHEREAS, funding far the "Agency Advance" will be provided by an appropriation in
the Merged Project Area for $1.3 million to repay advances fram the Bayfront/Tawn Centre I
Project Area and then apprapriated in the Bayfrant/Tawn Centre I Praject Area for the afares¡¡id
purpose.
NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula
Vista does hereby resalve as fallows:
Section 1. The foregoing recitals are true and correct and are hereby incarporated as a
substantive part af this resolution.
Section 2. The First Amendment to Dispasition and Development Agreement is hereby
approved in substantially the farm presented subject to minor madifications as may be required
or appraved by the City Attorney.
Section 3. The Chairman of the Agency is hereby authorized and directed to execute all
documents necessary and appropriate to carry out and implement the First Amendment and
DDA, as amended, and Agency staff is hereby authorized and directed ta take 'all necessary
and appropriate actions ta implement same.
Section 4. The First Amendment and the Project, as modified by the First Amendment,
is consistent with the Implementation Plan of the Agency adopted pursuant ta CRL Section
33490.
Section 5. Approving appropriation af $1.3 million of the available fund balance in the
Merged Praject Area Fund for repayment of advances ta Bayfront/Town Centre I Praject Area
Fund and apprapriating $1.3 million fram unanticipated revenues in the Bayfront/Town Centre I
Project Area Fund.
Presented by Approved as to Form by
Chris Salamone John M. Kaheny
Directar of Cammunity Develapment City Attorney and Agency Counsel
J:ICOMMOEV\RESOSIGATEWAY 1 sT AMEND. DOC
DOCSOC\846929v2\242 12,0002 1- f
FIRST AMENDMENT TO DR4¡:r
DISPOSITION AND DEVELOPMENT AGREEMENT
(Phase I of Gateway Project to Provide Bridge Loan)
This FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT ("First Amendment") is entered into as of September -' 200 I
("Date of First Amendment") by and between the REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA, a public body corporate and politic ("Agency") and
GATEWAY CHULA VISTA, LLC, a California limited liability company ("Developer".)
The Agency and the Developer are parties to that certain Disposition and
Development Agreement dated June 6, 2000 ("DDA".)
The DDA relates to redevelopment, development, and operation of a phased
First Class, First Quality 344,000 square feet mixed-use commercial/office project with restaurant
and retail components and common areas, including a four-tier 1300 space parking structure that
spans all Phases of the Project; specifically the retail component will include up to 81,000 square feet
with a restaurant, deli, caffee shop, financial institution, and other retail uses, Phase I will include
102,237 square feet in a five story office tower at the easterly portion of the Site, Phase II will
include 125,000 square feet in a six story office tower, and Phase III will include 117,000 square feet
in a five story office tower at the westerly portion ("Project".)
Capitalized tenns used in this First Amendment are defined and set forth in the DDA,
unless separately defined in this First Amendment, inclusive of the Attachments hereto.
The financial assistance to be provided by the Agency to Developer pursuant to the
DDA includes the Agency Participation to be paid in up to five (5) separate installment payments
with specific Conditions Precedent thereto, as set forth therein.
In particular for purposes of this First Amendment, the First Installment Payment of
Agency Participation under the DDA includes (i) payment of up to $1,500,000.00, inclusive of
$200,000.00 as repayment for the fair market value of the Phase I Agency Parcels included in the
Phase I development, (ii) plus reimbursement for the costs of the Public Improvements pursuant to
the terms ofthe Reimbursement Agreement in an amount not to exceed $300,000.00, (iii) plus
reimbursement for fifty percent (50%) of the Phase I Permit Fees, the total of which is to be paid
after the Conditions Precedent to the First Installment Payment are satisfied.
Developer has requested the Agency provide an early disbursement of up to
$1,300,000.00 of the First Installment Payment of Agency Participatian ("First Installment
Advance") to fill Developer's short-tenn cash flow needs pending securing and closing on the
Construction Financing.
The Agency desires to accommodate Developer's request by this First Amendment
and provide the First Installment Advance as an advance of part of the First Installment Payment of
Agency Participation subject to the terms and conditions herein set forth and specifically to the
Conditions Precedent to First Installment Advance, as hereinafter defined and set forth, thereby
amending and modifying the timing of and Conditions Precedent to the First Installment Payment of
I
DOCSOC\8444 19v2\242 12.0002 /- 9
Agency Participation under the DDA and facilitating, in effect, a bridge loan from the Agency to the
Developer ("Bridge Loan".)
The Developer has selected, and by this First Amendment the Agency hereby
approves selection of, GMAC Commercial Mortgage Corporation ("GMAC") as the Construction
Lender providing the Phase I Construction Financing. Developer represents it has provided to the
Agency a true and complete copy of that certain "Application to GMAC Mortgage Corporation for a
First Mortgage Construction Loan" dated July 20, 2001 ("Application") entered into between
Developer and GMAC. A true copy of such executed Application is attached hereto as Exhibit A
and fully incorporated by this reference. The Application contains a summary of the terms and
conditions to closing and funding a First Mortgage Construction Loan of $13.75 million for Phase I
of the Project ("Phase I Construction Loan" or "Construction Loan.) The Application also includes
the terms and conditions afthe Commitment, as therein defined, under which GMAC agrees ta loan,
and Developer, as Borrower, agrees to borrow the funds necessary to continue and complete the
Phase I Improvements on the terms and conditions therein set forth. Further, GMAC has provided to
the Agency and Developer a separate representation letter ("GMAC Letter") which identifies the
outstanding conditions to the closing of the Phase I Construction Loan and sets forth a specific time
schedule and outside date for the closing of such loan and the initial disbursement of the proceeds of
such Construction Loan. A true copy of the GMAC Letter is attached hereto as Exhibit B and fully
incorporated by this reference. [insert specific/corrected info from GMAC letter to come]
Subject to the terms and conditions hereinafter set forth, the First Installment
Advance will be available only for payment of Qualified Project Advance Costs (as the term is
hereinafter defined) through direct disbursement by the Agency to the Project general construction
contractor, DPR Construction, Inc., a California corporation [confirm entity type]
("General Contractor" or "DPR") for the existing contract between the Developer and DPR for
construction of the Phase I Improvements ("Construction Contract".)
The Bridge Loan of the First Installment Advance will be evidenced by a promissory
note executed by Developer, as maker, and the Agency, as holder, substantially in the form of the
Promissory Note Secured by Deed of Trust, substantially in the form of Exhibit C attached hereto
and fully incorporated by this reference ("Promissory Note".)
The Promissory Note will be secured by an insured first trust deed encumbering the
Phase I Parcels [staff query? only those parcels held by Developer or will Phase I Agency
Parcels be conveyed and encumbered??] subject only to non-delinquent taxes, the Redevelopment
Plan, and such other exceptions to title approved by Agency legal counsel in his/her sole and
reasonable discretion. The Deed of Trust shall be substantially in the form of the "Construction Deed
of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing",
attached as Exhibit D hereto and fully incorporated by this reference ("Deed of Trust".)
The Deed of Trust will further provide for a general assignment of rents, a specific
assignment of leases and rents, an assignment of contractual agreements affecting the Phase I Parcels
and Project by the Developer to the Agency, including assignment of architectural contracts for the
design and for construction of the Phase I Improvements, including the DPR contract between
Developer and DPR, as more fully described and defined in the Conditions Precedent to the
First Installment Advance.
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DOCSOCI84441 9v2124212.0002 1- (0
The Promissory Note will be further secured by a security agreement and financing
statements in confonnity with the Unifonn Commercial Code ("UCC") to be executed by Developer
and filed with the appropriate County and/or State offices, which DCC filing(s) shall create a first
lien on all personal property, fixtures, and equipment now or hereafter used in the operation of the
Phase I Parcels [same query as above on parcels encumbered].
Developer will further agree to cause perfonnance on one or more capital calls or
contributions to the Project by any and all Members of the Developer entity pursuant to this
First Amendment and that certain "Capital Call Guaranty" executed by each Member, substantially
in the fonn af Exhibit E attached hereto and fully incorporated by this reference.
The DDA, the First Amendment, along with each of the agreements/attachments
hereto and such other ancillary documents entered into between the Agency and Developer may be
collectively referred to as the "Bridge Loan Agreement" or the "Loan Agreement" and together as
the "Bridge Loan Documents" or the "Loan Documents." The Agency is also referred to in such
documents as "Lender" and the Developer is also referred to as "Borrower".
NOW THEREFORE, in consideration of the foregoing recitals, which are a substantive part
of this First Amendment, the covenants and consideration contained and exchanged herein, Agency
and Developer agree as follows:
Section 1. First Installment Advance; Brid2e Loan. The Agency agrees to loan to the
Developer, and the Developer agrees to borrow from the Agency, the sum of $1 ,300,000 as a
Bridge Loan and advance of a portion of the First Installment Payment of Agency Participation,
herein the "First Installment Advance".
(a) The Agency agrees to set aside in a separate Agency account the sum of$I,300,000
as the First Installment Advance. Such funds shall be eannarked for and disbursed far the benefit of
Developer in one or more installment payments in a cumulative amount not to exceed $1,300,000.00
subject to the tenns and conditions hereof, including the Conditions Precedent to First Installment
Advance.
(b) Qualified Project Advance Costs. The First Installment Advance shall be disbursed
only for incurred Qualified Project Advance Costs.
(i) The term "Qualified Project Advance Costs" shall include only hard and soft
costs incurred through and for work campleted pursuant to the tenns of the construction contract
entered into between the Developer and DPR which costs shall directly pertain to construction
through completion of the Phase I Improvements. Qualified Project Advance Costs shall be reduced
by reimbursements, if any, received by the Developer from third parties, including for example
reimbursement by tenants. The term Qualified Project Advance Costs shall not include any other
items or costs defined or listed in the DDA as Project Costs and shall expressly exclude repayment or
payment of any and all amounts advanced by, incurred, ar owed to the Developer entity, including
any Member of the Developer entity, or any affiliate thereof.
(c) Draw Request. The First Installment Advance shall be made available only by the
Agency for direct disbursement to DPR, as payee, as payment on behalf of Developer under the
Construction Contract upon submittal by DPR of a complete draw request evidencing amounts
incurred, due, and payable for Qualified Project Advance Costs ("Draw Request".)
3
DOCSOC\844419v2124212.0002 1- I I
(i) Each Draw Request shall: (I) be on a form reasonably acceptable to Agency
and its legal counsel, (2) be prepared by DPR, (3) signed by DPR authorized representative(s),
(4) evidence amounts incurred, due, and payable for Qualified Project Advance Costs incurred under
the Construction Contract, (5) conform to the requirements of the Construction Contract, and (6) be
approved by Developer, as evidenced by the signature of the Chairman Manager of the Developer
entity on each Draw Request.
(d) Promissory Note. The Bridge Loan of the First Installment Advance shall be
evidenced by the Promissary Note executed by duly authorized Members of the Developer entity.
The terms of the Promissory Note shall include, without limitation, (i) na interest due or accruing
from date of initial disbursement of Bridge Loan proceeds until , 200~, the
outside date for closing of the GMAC Construction Loan as set forth in the GMAC Commitment and
the GMAC Letter; (ii) the full principal balance (and then accruing interest) shall be due as of
, 200~; (iii) if outstanding principal is not timely paid, the full amount shall
commence to accrue interest at the rate often percent (10%) per annum simple interest until principal
and interest paid in full; and (iv) in the event the Construction Loan closes and initial proceeds
thereof are disbursed the Note will be cancelled and Deed of Trust reconveyed.
(e) Capital Call Guaranty. Developer acknowledges and agrees in addition to the
Promissory Note it shall cause each of the Members in their separate capacity to execute and enter
into the Capital Call Guaranty. Said Capital Call Guaranty shall be and include a promise to make a
specific cash capital contribution to the Project ("Capital Call") upon and in the event the Phase I
Construction Financing with GMAC does not close and fund, including disbursements under the
Building Loan Agreement, on or before , 200_, fifteen (IS) days prior to the
date set forth in the GMAC Commitment and the GMAC letter as the outside date to open the
Construction Financing including the occurrence of the initial disbursement of such GMAC
Construction Financing proceeds. The amount of the Capital Call shall be equal to an amount af
cash that causes, and is necessary to establish, a "breakeven" level of net operating income for
Phase I of the Project, but in no event less than $1,300,000 ("Capital Call Amount".) The parties
acknowledge and agree such Capital Call payment shall cause the Construction Financing to close,
the Construction Loan to open and the proceeds thereof be available for disbursement to the Project.
[staff: need example and further explanation of GMAC amount, as to be described in GMAC
letter]
(t) Deed of Trust. The Promissory Note shall be secured by an insured first lien
Deed of Trust recorded against the Phase I Parcels in the Official Records, County of San Diego.
(g) Lender's Policy of Title Insurance. Concurrently with the recordation of the
Deed of Trust securing the Bridge Loan for Phase I, the Title Company, or such other title insurance
company as may be mutually approved by the Agency and Developer, shall provide, issue, and
deliver to the Agency lender's policy of title insurance with such endorsement(s) as reasonably
required by the Agency' legal counsel insuring that the security interest in Phase I is vested in the
Agency in the condition required by this First Amendment. The Title Company shall provide the
Agency with a an original of the lender's policy title insurance, inclusive of all endorsements. The
title insurance policy shall be in the amount of the Bridge Loan. Said lender's policy shall evidence
the Deed of Trust is a first lien on Phase I Parcels free and clear of financial encumbrances,
mechanics liens, and other exceptions to title reasonably required by Agency legal counsel and
demanded to be cleared from title in connection with and as a condition to providing the Bridge
4
DOCSOC\844419v2\24212.0002 (- /'J-
Loan. All costs incurred for or related to such title insurance and clearance of exceptions shall be
borne solely by the Developer.
(h) DCC Financing Statements. As further security and as a part of the Deed of Trust,
Developer shall execute and deliver the necessary VCC security agreement(s) and financing
statement(s) creating a first lien on all persanal property, fixtures, and equipment now or hereafter
used in the operation of the Phase I Parcels. Developer shall furnish continuation statements at
required intervals. Agency shall receive satisfactory evidence that its lien on all Phase I personal
property, fixtures, and equipment is a first and prior lien. In connection with the UCC filing and as
an ongoing obligation hereunder, Developer shall furnish to Agency a detailed schedule of all such
personal property, fixtures, and equipment related to the Phase I Parcels and/or the Phase I
Improvements. Such schedule shall be updated not less than bi-monthly by the Developer.
(i) DPR Completion Guaranty. Developer shall cause DPR to execute the Completion
Guaranty, substantially in the form of Exhibit F attached hereto and fully incorporated by this
reference. The Completion Guaranty shall evidence the commitment and contractual obligation of
DPR to perform under and complete performance under the terms of the Construction Contract,
subject to the provisions thereof which require timely payment to DPR for such continued
performance.
(j) Assignment of Constrnction Agreements. Developer shall enter into and execute
the Assignment of Construction Agreements, substantially in the form of Exhibit G attached hereto
and fully incorporated by this reference. The Assignment of Construction Agreements shall cause
automatic assignment of any and all outstanding agreement relating to the planning, design, or
construction of the Phase I Improvements in the event the GMAC Construction Loan does timely
close and Developer fails to cause the Capital Call to be made by one or more Members of the
Developer entity.
(k) Assignment of Architectural Agreements and Plans and Specifications.
Developer shall enter into and execute the Assignment of Architectural Agreements and Plans and
Specifications, substantially in the form of Exhibit H hereto and fully incorporated by this reference.
The Assignment of Architectural Agreements and Plans and Specifications shall cause automatic
assignment of the working drawings, construction plans and specifications, architectural agreements
and documents relating to the architecture and plans and specifications for the Phase I Improvements
in the event the GMAC Construction Loan does timely close and Developer fails to cause the Capital
Call to be made by one or more Members of the Developer entity.
Section 2. Conditions Precedent to First Installment Advance. The First Installment
Advance shall be paid by the Agency to the Developer (as disbursed directly to DPR) within five (5)
days of the Developer's satisfaction of all the following Conditions Precedent to First Installment
Adyance:
(a) Developer shall open an escrow with the Title Company for the Bridge Loan and an
escrow officer shall be assigned to carry out the terms of this Bridge Loan subject to mutually
agreeable escrow instructions ("Escrow Officer".)
(b) Developer shall have executed and delivered to Escrow the Promissory Note,
substantially in the form of Exhibit C duly executed by the Chairman Manager and the other
Manager, as those terms are defined in that certain Amended and Restated Operating Agreement
5
DOCSOC\844419v2\24212.0002 1- 1.3
dated April 24, 2000, as amended by the First Amendment to Amended and Restated Operating
Agreement dated November 1,2000, and the Second Amendment to Amended and Restated
Operating Agreement March 26, 2001 (collectively "LLC Operating Agreement").
(c) Developer shall have duly executed and delivered the "Construction Deed of Trust
with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing",
substantially in the form of Exhibit D, ready for recording in the Official Records, County of
San Diego, as a first lien against the Phase I Parcels. As a part thereof, Developer shall have duly
executed and delivered the UCC security agreement(s) and financing statement(s), creating a first
lien on all personal property, fixtures, and equipment now or hereafter used in the operation of the
Phase I Parcels.
(d) The Title Company shall be ready to issue to the Agency the lender's policy of title
insurance required hereunder, including all requested endorsements.
(e) Developer shall have caused each Member of the Developer entity to have executed
and delivered to Escrow the Capital Call Guaranty, substantially in the form of Exhibit E.
(f) Developer shall have caused DPR to have duly executed and delivered to Escrow the
Completion Guaranty, substantially in the form af Exhibit F attached hereto and fully incorporated
by this reference.
(g) Developer shall have duly executed and delivered to Escrow the Assignment of
Construction Agreements, substantially in the form of Exhibit G attached hereto and fully
incorporated by this reference.
(h) Developer shall have duly executed and delivered to Escrow the Assignment of
Architectural Agreements and Plans and Specifications, substantially in the form of Exhibit H hereto
and fully incorporated by this reference.
(i) The Phase I Conveyance shall have occurred as evidenced by the close of Escrow for
the Phase I Conveyance and Developer holding fee title to all Phase I Parcels.
[staff do we want to move forward with conveyance of Phase I Agency Parcels and encumber
those as a part ofthis First Amendment?]
U) Developer has acquired, obtained fee title for, and closed escrow on the Phase II
Develaper Parcels. [staff does this apply here, or has it already occurred?]
(k) The Developer shall have submitted to the Agency Executive Director and for review
by the Agency's economic consultant an updated, complete, and true copy of the Developer's current
pro forma line item Project Costs budget for the Phase I Improvements, as submitted to GMAC in
connection with the Application, the Commitment, and the GMAC Letter. The Developer represents
to the Agency that such submittal will be, and shall be, substantially comparable in amounts and
categories of Project Costs for the Phase I Improvements as the prior submittal(s) relating to Phase I
which were attached to the DDA and/or submitted to and on file with the Executive Director.
(I) The Developer shall provide proof reasonably satisfactory to the Agency that the
Developer has closed the GMAC Construction Financing in an amount not less than $13.75 million
for the construction of Phase I Improvements and such Construction Loan is ready to fund subject
6 !-/LJ-
DOCSOC\844419v2\24212.0002
only the closing condition that Developer provide evidence of executed leases with tenants for space
in the Phase I Improvements, which leases (along with all previausly reviewed and approved tenant
leases) cumulatively provide GMAC with a "breakeven" level of net operating income for the
Project. As an altematiye to closing the Construction Loan with GMAC including the initial
disbursement of Construction Loan proceeds having been made, Developer may deliver to Escrow
the GMAC Letter duly executed by GMAC, along with true copies of the executed Application and
the Commitment which evidence Developer is ready to close such loan on the earlier ta occur of:
(i) ,2002, or (ii) - days from the Date of First Amendment.
(m) Developer shall have provided to the Agency Executive Director a complete copy of
the Construction Contract between the Developer and DPR for the construction of the Phase I
Improvements, certified by the Developer to be a true and correct copy thereof, and copies of all
other contracts relating to the construction of the Phase I Improvements, including without limitation
the architect's contract.
(n) The Parcel Map for the Phase I Parcels has been recorded in the Office of the
Recorder of the County of San Diego as Instrument No. date of recording
(0) The Agreement Affecting Real Property has been duly executed and delivered and is
ready for recording in the Official Records, County of San Diego, against the Phase I Parcels in a
position superior and non-subordinate to all monetary liens and other encumbrances as required
under the DDA.
(p) Developer shall not be in Default of this Agreement, including but without limitation,
compliance with applicable times for performance as set forth in the Schedule of Performance, and
all representations and warranties of the Developer contained herein shall be true and correct in all
material respects.
(q) All development and building approvals and permits for the Phase I Improvements
shall have been issued (or are ready to issue upon payment of the applicable permit fees) by the City,
the Agency, and any other governmental agencies with jurisdiction over the Phase I Improvements
and Phase I Parcels required for the Developer to continue construction through completion of the
Phase I Improvements on the Phase I Parcels.
(r) The insurance certificates conforming to Section 1304 of the DDA shall be up to date
and in place.
Section 3. No Other Changes. Except as expressly provided to the contrary in this
Amendment, the terms of the Agreement shall remain in full force and effect as written. All terms
used herein and not defined herein but defined in the Agreement shall have the meaning given to
such terms in the Agreement.
7 ---
DOCSOC\844419v2\24212.0002 /-/~
IN WITNESS WHEREOF, the Redevelopment Agency of the City ofChula Vista, as
Agency, and Gateway Chula Vista, LLC, as Developer, have signed this First Amendment to
Disposition and Development Agreement as of the Date of First Amendment.
REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA, a public body corporate
and politic
By:
Chainnan or Authorized Designee
"AGENCY"
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth
Agency Special Counsel
APPROVED AS TO FORM:
City Attorney and Agency General Counsel
[Signature block continued on next page.]
8 /- / b
DOCSOC\844419v2124212.0002
[Signature block continued from previous page.]
GATEWAY CHULA VISTA, LLC, a California
limited liability company
By: Coast Pacific Properties, LLC
Its: Co-Managing Member
James V. Pieri, Chairman Manager
By: Chula Vista Asset Management, LLC
Its: Co-Managing Member
Geoffrey Payne, Other Manager
"DEVELOPER"
APPROVED AS TO FORM:
Counsel to the Developer
9 1-/7
DOCSOC\844419v2\24212.0002
EXHIBIT A
APPLICATION FOR GMAC CONSTRUCTION LOAN
(including GMAC COMMITMENT)
(to be attached)
EXHIBIT A
Page I of -
DOCSOC\844419v2\24212.0002 1- (q
EXHIBIT B
GMAC LETTER
(to be attached)
EXHIBIT B
Page 1 of -
DOCSOC\8444 I 9v2\242 12.0002 /-/9
3.1 Term of Promissory Note. The entire balance due under this Note shall be
paid to the Agency, or otherwise satisfied as provided below, upon the earlier of (i) [insert date
negotiated]; or (ii) the uncured default of Developer under the Agreement, or this Promissory Note,
or the Deed of Trust; or (iii) the sale, lease (except leasing to tenants for space in the completed
Phase I Improvements required under the Agreement) or other transfer or conveyance of all or any
part of the Property, or any interest therein (individually or collectively a "Transfer"), without the
prior written consent of the Executive Director, which consent may be withheld in the Executive
Director's sole and absolute discretion if such Transfer occurs prior to due date of this Promissory
Note. or,
3.2 Alternative to Payment. Alternatively to section 3.1 above, provided that
payments, if any due, have been made and all documents have been recorded and delivered pursuant
to the Agreement, the Agency shall accept in full satisfaction of this Promissory Note the timely
closing of and initial disbursement of funds from the GMAC Construction Loan. In this regard,
concurrent with the such timely closing of and initial disbursement of funds from the GMAC
Construction Loan in conformity with this subsection 3.2 and the Agreement and any GMAC
agreements, the Agency shall cancel this Promissory Note and execute and deliver to the Developer
ar to escrow a request for release and reconveyance of the Deed of Trust securing this Promissory
Note.
4. Form of Payments. All amounts due under this Promissory Note are payable in
immediately available funds and lawful monies of the United States of America.
5. Application of Payments. All payments made under this Promissory Note shall be
applied first to costs and fees owing hereunder, second to the payment of accrued interest (if due
under Section 9) and third to the payment of principal.
6. Prepayment. At any time, Developer may prepay in whole or in part the outstanding
principal balance under this Promissory Note, together with all accrued interest, if any, and unpaid
fees, costs and expenses, if any, payable hereunder, without penalty.
7. Security. This Promissory Note and all amounts payable hereunder are secured by a
Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and
Fixture Filing, a first trust deed of even date herewith executed by Developer in favor of Agency
("Deed of Trust") and recorded against the Phase I Parcels in the Official Records, County of
San Diego The terms of the Deed of Trust are incorporated herein and made a part hereof to the
same extent and with the same force and effect as if fully set forth herein. A default under any of the
provisians of the Deed of Trust shall be a default hereunder, and a default hereunder shall be a
default under the Deed of Trust.
8. Acceleratiou and Other Remedies. Upon; (a) the occurrence of an event of default
or (b) Developer selling, contracting ta sell, giving an option to purchase, conveying, leasing
(except leasing to tenants for space in the completed Phase I Improvements required under the
Agreement), encumbering, or alienating the Phase I Parcels, or any interest in therein, or suffering its
title, or any interest in the Phase I Parcels to be divested, whether voluntarily or involuntarily,
without the consent ofthe Agency as set forth in the Agreement, or (iii) or the cancellation of the
GMAC Commitment for the Construction Loan, the Agency may, at Agency's option, declare the
outstanding principal amount of this Promissory Note, together with the then accrued and unpaid
interest thereon and other charges hereunder, and all other sums secured by the Deed of Trust, to be
EXHIBIT C
Page 2 of5 !-:J-{
DOCSOC\844419v2\24212.0002
due and payable immediately, and upon such declaration, such principal and interest and other sums
shall immediately become and be due and payable without demand or notice, all as further set forth
in the Deed of Trust. All costs of collection, including, but not limited to, reasonable attarneys' fees
and all expenses incurred in connection with protection of, or realization on, the security for this
Promissory Note, may be added to the principal hereunder, and shall accrue interest as provided
herein in Section 9. Agency shall at all times have the right to proceed against any portion of the
security for this Promissory Note in such order and in such manner as such Agency may consider
appropriate, without waiving any rights with respect to any of the security. Any delay or omission on
the part of the Agency in exercising any right hereunder, under the Agreement or under the Deed of
Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of
any right or remedy hereunder or under the Agreement or any other document or agreement shall
preclude other or further exercises thereof, or the exercise of any other right or remedy.
The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such
payment shall not be a waiver of Agency's right to either require prompt payment when due of all
other sums payable hereunder or to declare an eyent of default for failure to make prompt or
complete payment.
9. Interest; Alternate Rate. Upon the occurrence of any event of default, or upon the
maturity hereof (by acceleration or otherwise), the entire unpaid principal sum, at the option of
Agency, shall bear interest, from the date of occurrence of such event of default or maturity and after
judgment and until collection, at the rate of ten percent (10%) per annum simple interest
("Alternate Rate"). Interest calculated at the Alternate Rate, when and if applicable, shall be due and
payable immediately without notice or demand. Developer agrees that in the event of any event of
default, Agency will incur additional expense in servicing the Bridge Loan evidenced by this
Promissory Note and will suffer damage and loss resulting from such eyent of default. Developer
agrees that in such event Agency shall be entitled ta damages and payment of the Alternate Rate, and
Developer agrees to pay such sum on demand.
10. Waivers. Developer and all endorsers, guarantors and sureties hereof jointly and
severally waive presentment, protest, notice of protest, notice of dishonor, diligence in collection,
and the benefit of any exemption under any homestead exemption laws, if applicable.
II. Consents. Developer and all endorsers, guarantors and sureties consent to: (a) any
renewal, extension or modification (whether one or more, and subject to the terms and provisions of
the Agreement relating to modification, extension, and/or amendment) of the terms of the Agreement
or the terms or time of payment under this Promissory Note, (b) the release or surrender or exchange
or substitution of all or any part of the security, whether real or personal, or direct or indirect, for the
payment hereof, (c) the granting of any other indulgences to Developer, and (d) the taking or
releasing of other or additional parties primarily or contingently liable hereunder. Any such renewal,
extension, modification, release, surrender, exchange or substitutian may be made without notice to
Developer or to any endarser, guarantor or surety hereof, and without affecting the liability of said
parties hereunder.
12. Successors and Assigns. Whenever "Agency" is referred to in this Promissory Note,
such reference shall be deemed to include the Redevelopment Agency of the City ofChula Vista and
its successors and assigns, including, without limitation, any subsequent assignee or holder of this
Promissary Note. All covenants, provisions and agreements by or on behalf of Developer, and on
behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall
inure to the benefit of the Agency and Agency's successors and assigns. Whenever "Developer" is
EXHIBIT C
Page 3 of 5 I-:¿J....
DOCSOC\8444 I 9v2\242 I 2.0002
referred to in this Note, such reference shall be deemed to include Gateway Chula Vista, LLC, a
California limited liability company, and their approved successors and assigns, including, without
limitation, any approved subsequent assignee or holder of this Promissory Note, if such approval is
given in the Agency's sole and absolute discretion.
13. Usury. It is the intention of Developer and Agency to confonn strictly to the
Interest Law, as defined below, applicable to this loan transaction. Accordingly, it is agreed that
notwithstanding any provision to the contrary in this Promissory Note, or in any of the documents
securing payment hereof or otherwise relating hereto, the aggregate of all interest and any other
charges or consideration constituting interest under the applicable Interest Law that is taken,
reserved, contracted for, charged or received under this Promissory Note, or under any of the other
aforesaid agreements or otherwise in connection with this loan transaction, shall under no
circumstances exceed the maximum amount of interest allowed by the Interest Law applicable to this
loan transaction. If any excess of interest in such respect is provided for in this Promissory Note, or
in any of the documents securing payment hereof or otherwise relating hereto, then, in such event:
(a) the provisions of this paragraph shall govern and control;
(b) neither Developer nor Developer's heirs, legal representatives, successors or
assigns shall be obligated to pay the amaunt of such interest to the extent that it is in excess of the
maximum amount of interest allowed by the Interest Law applicable to this loan transaction;
(c) any excess shall be deemed canceled automatically and, if theretofore paid,
shall be credited on this Promissory Note by Agency or, if this Promissory Note shall have been paid
in full, refunded to Developer; and
(d) the effective rate of interest shall be automatically subject to reduction to the
Maximum Legal Rate of Interest (as defined below), allowed under such Interest Law, as now or
hereafter construed by courts of appropriate jurisdiction. To the extent permitted by the Interest Law
applicable to this loan transaction, all sums paid or agreed to be paid to Agency for the use,
forbearance or detention of the indebtedness evidenced hereby shall be amortized, prorated, allocated
and spread throughout the full tenn of this Note. For purposes of this Note, "Interest Law" shall
mean any present or future law of the State of California, the United States af America, or any other
jurisdiction which has application to the interest and other charges under this Note. The "Maximum
Legal Rate of Interest" shall mean the maximum rate of interest that Agency may from time to time
charge Developer, and under which Developer would have no claim or defense of usury under the
Interest Law.
14. Costs of Enforcement. Developer agrees to pay upon demand all reasonable costs
and expenses, including attorneys' fees and disbursements (including appeals), incurred by the
Agency of this Promissory Note to enforce the terms hereof. In addition to the foregoing award of
attorneys' fees, Agency shall be entitled to its attorneys' fees incurred in any post-judgment
proceedings to enforce any judgment in connection with this Promissory Note. This provision is
separate and several and shall survive the merger ofthis provision into any judgment.
15. Miscellaneous. Time is of the essence hereof. If this Promissory Note is now, or
hereafter shall be, signed by more than one party or person, it shall be the joint and several obligation
of such parties or persons (including, without limitation, all makers, endorsers, guarantors and
sureties), and shall be binding upon such parties and upon their respective successors and assigns.
EXHIBIT C
Page40f5 1- 2.3
DOCSOC\844419v2\24212.0002
the "Improvements"); (iii) all development rights or credits, air rights, water, water rights and water
stock related to the Real Property or the Improvements (the Real Property, and Trustor's interest in
the Improvements are collectively referred to herein as the "Property"); (iv) all minerals, oil and gas,
and other hydrocarbon substances in, on or under the Property, (v) all appurtenances, easements,
rights and rights of way appurtenant or related to the Property; (vi) all interest or estate which Trustor
may hereafter acquire in any of the property described above; and (vii) all additions and accretions
to, and the proceeds of, any of the foregoing (all of the foregoing being collectively referred to as the
"Subject Property"). The listing of specific rights or property shall not be interpreted as a limit of
general terms.
Section 2 OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the
purpose of securing the following obligations ("Secured Obligations"):
(i) Payment to Beneficiary of all sums at any time owing under that certain
Promissory Note ("Note") of eyen date herewith, in the principal amount of One Million Three
Hundred Thousand and Noll OOths Dollars ($$1,3000,000.) executed by Trustor, and payable to the
arder of Beneficiary; and
(ii) Payment and performance of all covenants and obligations of Trustor under
this Deed of Trust; and
(iii) Payment and performance of all covenants and obligations on the part of
Borrower under that certain First Amendment to Disposition and Development Agreement dated
September _,2001 and that certain Disposition and Development Agreement dated June 6, 2000
(collectively, the "Loan Agreement") by and between Trustor and Beneficiary; and
(iv) Payment and performance of all future advances and other obligations that the
then record owner of all or part of the Subject Property may agree to pay and/or perform (whether as
principal, surety or guarantor) far 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; and
(v) All modifications, extensians and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications of the required principal
payment dates or interest payment dates or both, as the case may be, deferring or accelerating
payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of
interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a
new or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all principal, interest,
prepayment charges (if any), late charges, other charges, and loan fees at any time accruing or
assessed on any of the Secured Obligations.
2.3 INCORPORATION. All terms of the Secured Obligations and the documents
evidencing such obligations are incorporated herein by this reference. Any and all persons or entities
who may have or acquire an interest in the Subject Property shall be deemed to have notice of the
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terms afthe Secured Obligations and to have notice, if provided therein, that: (a) the Note or the
Loan Agreement may permit borrowing, repayment and re-borrowing so that repayments shall not
reduce the amounts of the Secured Obligations; and (b) the rate of interest on one or more Secured
Obligations may vary from time to time.
Section 3 ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Trustor hereby irrevocably assigns to Beneficiary all of Trustor's
right, title and interest in, to and under: (a) all leases and subleases of the Subject Property or any
portion thereof, all licenses and agreements relating to the management, leasing or operation of the
Subject Property or any portion thereof, and all other agreements of any kind relating to the use or
occupancy of the Subject Property or any portion thereof, whether now existing or entered into after
the date hereof ("Leases"); and (b) the rents, issues, deposits and profits of the Subject Property,
including, without limitation, all amounts payable and all rights and benefits accruing ta Trustor
under the Leases {"Payments"). The term "Leases" shall also include all guarantees of and security
far the lessees' performance thereunder, and all amendments, extensions, renewals or modifications
thereto which are permitted hereunder. This is a present and absolute assignment, not an assignment
for security purposes only, and Beneficiary's right to the Leases and Payments is not contingent
upon, and may be exercised without possession of, the Subject Property.
3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License") to
collect and retain the Payments as they become due and payable, until the occurrence of a Default
(as hereinafter defined). Upon a Default, the License shall be automatically revoked and Beneficiary
may collect and apply the Payments pursuant ta Section 6.4 without notice and without taking
possession of the Subject Property. Trustor hereby irrevocably authorizes and directs the lessees
under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment
to Beneficiary of any rental or other sums which may at any time become due under the Leases, or
for the performance of any of the lessees' undertakings under the Leases, and the lessees shall have
no right or duty to inquire as to whether any Default has actually occurred or is then existing
hereunder. Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon
and complying with any such notice or demand by Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care,
management or repair of the Subject Property or for performing any of the terms, agreements,
undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or
(c) responsible or liable for any waste committed on the Subject Property by the lessees under any of
the Leases or any other parties; for any dangerous or defective condition of the Subject Property; or
for any negligence in the management, upkeep, repair or control of the Subject Property resulting in
loss or injury or death to any lessee, licensee, employee, invitee or other person or entity.
Beneficiary shall not directly or indirectly be liable to Trustor or any other person ar entity as a
consequence of: (i) the exercise or failure to exercise any of the rights, remedies or powers granted
to Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge any
obligation, duty or liability of Trustor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES REGARDING LEASES. Trustor
represents and warrants that as of the date hereaf it has provided to Beneficiary a complete listing of
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the names and dates of agreement for each Lease that has been entered into by Trustor for the Subject
Property.
3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to:
(a) perform the obligations of lessor contained in the Leases and enforce by all available remedies
performance by the lessees of the obligations of the lessees contained in the Leases; (b) give
Beneficiary prompt written notice of any default which occurs with respect to any of the Leases,
whetherthe default be that of the lessee or of the lessor; (c) exercise Trustor's best efforts to keep all
portions of the Subject Property that are capable of being leased at all times at rentals not less than
the fair market rental value, subject however, to any rental restrictions in the Ground Lease (it being
understood, however, that upon a foreclosure ofthis Deed of Trust or upon Beneficiary's receipt of
an assignment in lieu of foreclosure, that such rental restrictions shall not apply to Beneficiary or its
successors); (d) deliver to Beneficiary fully executed, counterpart original(s) of each and every Lease
if requested to do so; and (e) execute and record such additional assignments of any Lease or specific
subordinations (or subordination, attornment and nondisturbance agreements executed by the lessor
and lessee) of any Lease to the Deed of Trust, in form and substance acceptable to Beneficiary, as
Beneficiary may request. Trustor shall not, without Beneficiary's prior written consent (except as
expressly permitted or required by provisions of the Loan Agreement): (i) enter into any Leases after
the date of this Assignment; (ii) execute any other assignment relating to any of the Leases;
(iii) discount any rent or other sums due under the Leases or collect the same in advance, other than
to collect rent one (I) month in advance of the time when it becomes due; (iv) terminate, modify or
amend any of the terms of the Leases or in any manner release or discharge the lessees from any
obligations thereunder; (v) consent to any assignment or subletting by any lessee; or (vi) subordinate
or agree to subordinate any of the Leases to any other deed of trust or encumbrance. Any such
attempted action in violation of the provisions of this Sectian 3.5 shall be null and yoid. Without in
any way limiting the requirement af Beneficiary's consent hereunder, any sums received by Trustor
in consideration of any termination (or the release or discharge of any lessee) modification or
amendment of any Lease shall be applied to reduce the outstanding Secured Obligations and any
such sums received by Trustor shall be held in trust by Trustor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by
Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by Beneficiary estoppel
certificates executed by Trustor and by each of the lessees, in recordable farm, certifying (if such be
the case): (a) the foregoing assignment and the Leases are in full force and effect; (b) the date of
each lessee's most recent payment of rent; (c) there are no defenses or offsets outstanding, or stating
those claimed by Trustor or lessees under the foregoing assignment or the Leases, as the case may
be; and (d) any other information reasonably requested by Beneficiary.
Section 4 SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary a
security interest, to secure payment and performance of all of the Secured Obligations, in all of the
following described personal property in which Trustor now or at any time hereafter has any interest
(collectively, the "Collateral"):
All goods (as defined in Division 9 of the California Uniform Commercial
Code as in effect from time to time ["UCC"]), building and other materials, supplies, work in
process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal
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property, wherever situated, which are or are to be incorporated into, or used exclusively in
cannection with or appropriated for use on (i) the Real Property described on Exhibit A
referenced and incorporated herein (to the extent the same are not effectively made a part of
the Real Property pursuant to Section 1.1 above) or (ii) the Improvements constructed or to
be constructed on the Subject Property (which real property and improvements are, pursuant
to Section 1.1 above, collectively referred to herein, along with the other property described
in Section 1.1 above, as the Subject Property); together with all rents, issues, deposits and
profits of the Subject Property (to the extent, if any, they are not subject to Article Ill); all
inventory, accounts (as defined in Division 9 of the UCC), cash receipts, deposit accounts,
accounts receivable, cantract rights, general intangibles, including all payment intangibles
(as the foregoing terms are defined in Division 9 of the UCC), chattel paper, instruments,
documents, notes, drafts, letters of credit, insurance policies, insurance and condemnation
awards and proceeds, any other rights to the payment of money, trade names, trademarks and
service marks arising from or related to the Subject Property or any business now or hereafter
conducted thereon by Trustor; all permits consents, approvals, licenses, authorizations and
other rights granted by, given by or obtained from, any governmental entity with respect to
the Subject Property; all deposits or other security now or hereafter made with or given to
utility companies by Trustor with respect to the Subject Property; all advance payments of
insurance premiums made by Trustor with respect to the Subject Property; all plans, drawings
and specifications relating to the Subject Property; all loan funds held by Beneficiary,
whether or not disbursed; all funds deposited with Beneficiary pursuant to any loan
agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and
payments of any kind related to the Subject Property or any portion thereof; together with all
replacements and proceeds of, and additions and accessions to, any of the foregoing; together
with all books, records and files relating to any of the foregoing.
As to all of the above described personal property which is or which hereafter
becomes a "fixture" under applicable law, this Deed of Trust constitutes a fixture filing under
Division 9 ofthe UCC and is acknowledged and agreed to be a "construction mortgage"
under such Division 9 of the UCC. Trustor is the "debtor" and Beneficiary is the "secured
party".
4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants
that: (a) Trustor has, or will have, good title to the Collateral; (b) Trustor has not previously assigned
or encumbered the Collateral, and no financing statement covering any of the Collateral has been
delivered to any other person or entity; and (c) Trustor's principal place of business is located at the
address shown hereinafter.
4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a
"secured party" under the UCC, Beneficiary may, but shall not be obligated to, at any time without
notice and at the expense of Trustor: (a) give notice to any person or entity of Beneficiary's rights
hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the
Collateral or any rights or interests of Beneficiary therein; (c) inspect the Collateral; and (d) endorse,
collect and receive any right to payment afmoney owing to Trustor under or from the Collateral.
Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property
other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall
make an express written election of said remedy under Division 9 of the UCC, or other applicable
law.
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4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence ofa Default
(hereinafter defined) under this Deed of Trust, then in addition to all of Beneficiary's rights as a
"secured party" under the UCC or otherwise at law:
(i) Beneficiary may (i) upon written notice, require Trustor to assemble any or
all of the Collateral and make it available to Beneficiary at a place designated by Beneficiary;
(ii) without prior notice, enter upon the Subject Property or other place where any of the Collateral
may be located and take possession of, collect, sell, and dispase of any or all of the Collateral, and
store the same at locations acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and
deliver at any place or in any lawful manner all or any part of the Collateral and bid and become
purchaser at any such sales; and
(ii) Beneficiary may, for the account of Trustor and at Trustor's expense:
(i) operate, use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate for the
purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement,
compromise, or settlement, including insurance claims, which Beneficiary may deem desirable or
proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and
receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or
hereafter owing to Trustor in connection with or on accaunt of any or all of the Collateral.
Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have
accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary
unless Trustor shall make an express written election of said remedy under Division 9 of the UCC, or
other applicable law.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do so, in Beneficiary's name, or in the name of Trustor,
prepare, execute and file or record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve any of Beneficiary's security
interests and rights in or to any of the Collateral, and, upon a Default hereunder, take any other action
required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be accountable
only for such funds as are actually received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in
this section or the Loan Documents; so long as no Default exists under this Deed of Trust or any of
the Loan Documents, Trustor may possess, use, move, transfer or dispose of any of the Collateral in
the ordinary course of Trustor's business and in accordance with the Loan Agreement.
Section 5 RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Trustor represents and warrants that Trustor lawfully holds and possesses
valid title to the Subject Property without limitation on the right to encumber and that this Deed of
Trust is a first lien on the Subject Property.
5.2 TAXES AND ASSESSMENTS. Subject to Trustor's right to in good faith contest
payment of taxes, Trustor shall pay prior to delinquency all taxes, assessments, levies and charges
impased by any public or quasi-public authority or utility company which (i) are or which may
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become a lien upon or cause a loss in value of the Subject Property or any interest therein, or (ii) are
required to be paid by Trustor pursuant to the Loan Agreement. Trustor shall also pay prior to
delinquency all taxes, assessments, levies and charges imposed by any public authority upon
Beneficiary by reason of its interest in any Secured Obligation or in the Subject Property, or by
reason of any payment made to Beneficiary pursuant to any Secured Obligation.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's option and upon its
written demand, Trustor, shall, until all Secured Obligations have been paid in full, pay to
Beneficiary monthly, annually or as otherwise directed by Beneficiary an amount estimated by
Beneficiary to be equal to: (a) all taxes, assessments, charges, and levies imposed by any public or
quasi-public authority or utility company which are or may become a lien upon the Subject Property
(or which are required to be paid by Trustor pursuant to the Ground Lease) and will become due for
the tax year during which such payment is so directed; and (b) premiums for fire, other hazard and
mortgage insurance required or requested pursuant to the Loan Documents when same are next due.
¡fBeneficiary determines that any amounts paid by Trustor are insufficient for the payment in full of
such taxes, assessments, charges, levies and/or insurance premiums, Beneficiary shall notify Trustor
of the increased amounts required ta pay all amounts when due, whereupon Trustor shall pay to
Beneficiary within thirty (30) days thereafter the additional amount as stated in Beneficiary's notice.
All sums so paid shall not bear interest, except to the extent and in any minimum amount required by
law; and Beneficiary shall, unless Trustor is otherwise in Default hereunder or under any Secured
Obligation, apply said funds to the payment of, or at the sole option of Beneficiary release said funds
to Trustor for the application to and payment of, such sums, taxes, assessments, levies, charges, and
insurance premiums. Upon Default by Trustor hereunder or under any Loan Document, Beneficiary
may apply all or any part of said sums to any Secured Obligation and/or to cure such Default, in
which event Trustor shall be required to restore all amounts so applied, as well as to cure any other
events or conditions of Default not cured by such application. Upon assignment of this Deed of
Trust, Beneficiary shall have the right to assign all amounts collected and in its possession to its
assignee whereupon Beneficiary and its Trustee shall be released from all liability with respect
thereto. Within ninety-five (95) days following full repayment of the Secured Obligations (other
than full repayment of the Secured Obligations as a consequence of a foreclosure or conveyance in
lieu of foreclosure of the liens and security interests securing the Secured Obligations) ar at such
earlier time as Beneficiary may elect, the balance of all amounts collected and in Beneficiary's
possession shall be paid to Trustor and no other party shall have any right or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay
and perform each Secured Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Trustor shall immediately
discharge any lien not approved by Beneficiary in writing that has or may attain priority over this
Deed of Trust. Trustor shall pay when due all obligations secured by or which may become liens and
encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the
Subject Property or Collateral or any interest therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
(i) The following (whether now existing or hereafter arising) are all absolutely
and irrevocably assigned by Trustor to Beneficiary and, at the request of Beneficiary, shall be paid
directly to Beneficiary: (i) all awards of damages and all other compensation payable directly or
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indirectly by reason of a condemnation or proposed condemnation for public or private use affecting
all or any part of, or any interest in, the Subject Property or Collateral; (ii) all other claims and
awards for damages to, or decrease in value of, all or any part of, or any interest in, the Subject
Property or Collateral; (iii) all proceeds of any insurance policies payable by reason of loss sustained
to all or any part of the Subject Property or Collateral; and (iv) all interest which may accrue on any
of the foregoing. Subject to applicable law, and without regard to any requirement contained in
Section 5.7{d), Beneficiary may at its discretion apply all or any of the proceeds it receives to its
expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured
Obligations in any order acceptable to Beneficiary, and/or Beneficiary may release all or any part of
the proceeds to Trustor upon any conditions Beneficiary may impose. Beneficiary may commence,
appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and
collect all claims and awards assigned to Beneficiary; provided, however, in no event shall
Beneficiary be responsible for any failure to collect any claim or award, regardless of the cause of the
failure, including, without limitation, any malfeasance or nonfeasance by Beneficiary or its
employees or assigns.
(ii) At its sole option, Beneficiary may pennit insurance or condemnation
proceeds held by Beneficiary to be used for repair or restoration but may condition such application
upon reasonable conditions, including, without limitation: (i) the deposit with Beneficiary of such
additional funds which Beneficiary determines are needed to pay all costs afthe repair or restoration,
(including, without limitation, taxes, financing charges, insurance and rent during the repair period);
(ii) the establishment of an arrangement for lien releases and disbursement of funds acceptable to
Beneficiary; (iii) the deliyery to Beneficiary of plans and specifications for the work, a contract for
the work signed by a contractor acceptable to Beneficiary, a cost breakdown for the wark and a
payment and performance bond for the work, all of which shall be acceptable to Beneficiary; and
(iv) the delivery to Beneficiary of evidence acceptable to Beneficiary (a) that after completion of the
work the income from the Subject Property will be sufficient to pay all expenses and debt service for
the Subject Property; (b) of the continuatian of Leases acceptable to and required by Beneficiary; (c)
that upon completion of the work, the size, capacity and total value of the Subject Property will be at
least as great as it was before the damage or condemnation occurred; (d) that there has been no
material adverse change in the financial condition or credit of Trustor since the date of this Deed of
Trust; and (e) of the satisfaction of any additional conditions that Beneficiary may reasonably
establish to protect its security. Trustor hereby acknowledges that the conditions described above are
reasonable, and, if such conditions have not been satisfied within thirty (30) days of receipt by
Beneficiary of such insurance or condemnation proceeds, then Beneficiary may apply such insurance
or condemnation proceeds to pay the Secured Obligations in such order and amounts as Beneficiary
in its sole discretion may choose.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY.
Subject to the provisions of the Loan Agreement, Trustor covenants: (a) to insure the Subject
Property and Collateral against such risks as Beneficiary may reasonably require and, at
Beneficiary's request, to provide evidence of such insurance to Beneficiary, and to comply with the
requirements of any insurance companies insuring the Subject Property and Collateral; (b) to keep
the Subject Property and the Collateral in good condition and repair; (c) not to remove or demolish
the Subject Property or Collateral or any part thereof, not to alter, restore or add to the Subject
Property or Collateral and not to initiate ar acquiesce in any change in any zoning or other land
classification which affects the Subject Property without Beneficiary's prior written consent (except
as provided for in the Loan Agreement); (d) to complete or restore promptly and in good and
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workmanlike manner the Subject Property and Collateral, or any part thereof which may be damaged
or destroyed, without regard to whether Beneficiary elects to require that insurance proceeds be used
to reduce the Secured Obligations as provided herein; (e) to comply with all laws, ordinances,
regulations and standards, and all covenants, conditions, restrictions and equitable servitudes,
whether public or private, of every kind and character which affect the Subject Property or Collateral
and pertain to acts committed or conditions existing thereon, including, without limitation, any work,
alteration, improvement or demolition mandated by such laws, covenants or requirements; (f) not to
commit or penn it waste of the Subject Property or Collateral; and (g) to do all other acts which from
the character or use of the Subject Property may be reasonably necessary to maintain and preserve its
value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's
sole expense, Trustor shall protect, preserve and defend the Subject Property and the Collateral and
title to and right of possession of the Subject Property and Collateral, the security hereof and the
rights and powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall give
Beneficiary and Trustee prompt notice in writing afthe assertion of any claim, of the filing of any
action or proceeding, of the occurrence of any damage to the Subject Property or Collateral and of
any condemnation offer or action.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee
accepts this trust when this Deed of Trust is recorded. From time ta time upon written request of
Beneficiary and presentation of this Deed of Trust or a certified copy thereof for endorsement, and
without affecting the personal liability of any person or entity for payment of any indebtedness or
performance of any obligations secured hereby, Trustee may, without liability therefor and without
notice: (a) reconvey all or any part of the Subject Property; (b) consent to the making of any map or
plat thereof; and (c) join in any grant of easement thereon, any declaration of covenants and
restrictions, or any extension agreement or any agreement subordinating the lien or charge of this
Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time
to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust
hereunder and the enforcement of the rights and remedies available hereunder, and may obtain orders
or decrees directing or confirming or approving acts in the execution of said trust and the
enforcement of said remedies. Trustee has no obligation to notify any party of any pending sale or
any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary or
Trustee shall be a party unless held or commenced and maintained by Trustee under this Deed of
Trust. Trustee shall not be obligated to perfonn any act required of it hereunder unless the
performance of the act is requested in writing and Trustee is reasonably indemnified and held
hannless against loss, cost, liability or expense.
5.tO COMPENSATION; EXCULPATION; INDEMNIFICATION
(i) Trustor shall pay Trustee's fees and reimburse Trustee for expenses in the
administration of this trust, including attorneys' fees. Trustor shall pay to Beneficiary reasonable
compensation for services rendered conceming this Deed of Trust, including without limit any
statement of amounts owing under any Secured Obligation. Beneficiary shall not directly or
indirectly be liable to Trustor or any other person or entity as a consequence of (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) the failure or refusal of
Beneficiary to perform or discharge any obligation or liability of Trustor under any agreement related
to the Subject Property or under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
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party resulting from Beneficiary's failure (whether by malfeasance, nonfeasance or refusal to act) to
sell, lease or sublease the Subject Property after a Default (hereinafter defined) or from any other act
or omission (regardless of whether the same constitutes negligence) of Beneficiary in managing the
Subject Property after a Default unless the loss is caused by the gross negligence or willful
misconduct of Beneficiary and no such liability shall be asserted against or imposed upon
Beneficiary, and all such liability is hereby expressly waived and released by Trustor.
(ii) Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court
costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value,
and other expenses which either may suffer or incur: (i) by reason of this Deed of Trust; (ii) by
reason of the execution of this trust or in performance of any act required or permitted hereunder or
by law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or (iv) by reason of
any alleged obligation or undertaking on Beneficiary's part to perform or discharge any of the
representations, warranties, conditions, covenants or other obligations contained in any other
document related to the Subject Property. The above obligation of Trustor to indemnify and hold
harmless Trustee and Beneficiary shall survive the release and cancellation of the Secured
Obligations and the release and reconveyance or partial release and reconveyance of this Deed of
Trust for any and all claims which arise or arose during the period of this Deed of Trust, regardless of
when such claim or claims are made.
(iii) Trustor shall pay all amounts and indebtedness arising under this Section 5.10
immediately upon demand by Trustee or Beneficiary together with interest thereon from the date the
indebtedness arises at the maximum amount of interest allowed by law.
5.11 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and
acknowledged by Beneficiary and recorded in the Office of the Recorder of the County of San Diego,
Beneficiary may appoint another trustee to act in the place and stead of Trustee or any successor.
Such writing shall set forth any information required by law. The recordation of such instrument of
substitution shall discharge Trustee herein named and shall appoint the new trustee as the trustee
hereunder with the same effect as if originally named Trustee herein. A writing recorded pursuant to
the provisions of this Section 5.11 shall be conclusive proof of the proper substitution of such new
Trustee.
5.12 DUE ON SALE OR ENCUMBRANCE. If the Subject Property or any interest
therein shall, be sold, assigned, leased, subleased, transferred (including, without limitation, through
sale or transfer of a majority or controlling interest of the corporate stock or general partnership
interests or limited liability company interests of Trustor, except as permitted under the Loan
Agreement), mortgaged, collaterally assigned, or further encumbered, whether directly or indirectly,
whether voluntarily, involuntarily or by operation oflaw, without the prior written consent of
Beneficiary, then Beneficiary, in its sole discretion, may declare all Secured Obligations immediately
due and payable.
5.13 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL
SECURITY. Without notice to or the consent, approval or agreement of any persons or entities
having any interest at any time in the Subject Property or in any manner obligated under the Secured
Obligations ("Interested Parties"), Beneficiary may, from time to time, release any person or entity
from liability for the payment or performance of any Secured Obligation, take any action or make
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any agreement extending the maturity or otherwise altering the terms or increasing the amount of any
Secured Obligation, or accept additional security or release all or a portion of the Subject Property
and Collateral and other security for the Secured Obligations. None of the foregoing actions shall
release or reduce the personal liability of any of said Interested Parties, or release or impair the
priority of the lien of and security interests created by this Deed of Trust upon the Subject Property
and Collateral.
5.14 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to
Trustee for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument, or
instruments setting forth all obligations secured hereby, Trustee shall reconvey, without warranty, the
Subject Property or that portion thereof then held hereunder. To the extent pennitted by law, the
reconveyance may describe the grantee as "the person or persons legally entitled thereto" and the
recitals of any matters or facts in any reconveyance executed hereunder shall be conclusive proof of
the truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to determine the rights
of persons or entities claiming to be rightful grantees of any reconveyance. When the Subject
Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all
future rents, issues and profits of the Subject Property to the person or persons legally entitled
thereto.
5.15 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Beneficiary pursuant to this the Loan
Documents or by the proceeds of any loan secured by this Deed of Trust.
5.16 RIGHT OF INSPECTION. Beneficiary, its agents and employees, may enter the
Subject Property at any reasonable time for the purpose of inspecting the Subject Property and
Collateral and ascertaining Trustor's compliance with the tems hereof.
Section 6 DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the tenn "Default" shall mean (a) at
Beneficiary's option, the failure of Trustor to make any payment of principal or interest on the Note
or to pay any other amount due hereunder or under the Note when the same is due and payable,
whether at maturity, by acceleration or otherwise; or (b) the failure of Trustor to perform any
non-monetary obligation hereunder, or the failure to be true of any representation or warranty of
Trustor contained herein and the continuance of such failure for ten (10) days after notice or within
any longer grace period, if any, allowed in the Loan Agreement for such failure, or (c) the existence
of any event of default as defined in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee
shall each have all the following rights and remedies:
(i) With or without notice, to declare all Secured Obligations immediately due
and payable;
(ii) With or without notice, and without releasing Trustor from any Secured
Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of
Trustor and, in connection therewith, to enter upon the Subject Property and do such acts and things
as Beneficiary or Trustee deem necessary or desirable to protect the security hereof, including,
EXHIBIT D
Pagellof16
DOCSOC\844419v2\24212.0002
1-3Ç
without limitation: (i) to appear in and defend any action or proceeding purporting to affect the
security of this Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of
Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim oflien
which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority to this
Deed of Trust, the judgment of Beneficiary or Trustee being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance
required to be carried under this Deed of Trust; or (v) to employ counsel, accountants, contractors
and other appropriate persons.
(iii) To commence and maintain an action or actions in any court of competent
jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the
covenants of Trustor hereunder, and Trustor agrees that such covenants shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any
suit brought under this subparagraph, Trustor waives the defense of laches and any applicable statute
of limitations;
(iv) To apply to a court of competent jurisdiction for and obtain appointment of a
receiver of the Subject Property as a matter of strict right and without regard to the adequacy of the
security for the repayment of the Secured Obligations, the existence of a declaration that the Secured
Obligations are immediately due and payable, or the filing of a notice of default, and Trustor hereby
consents to such appointment;
(v) To enter upon, passess, manage and operate the Subject Property or any part
thereof, to take and possess all documents, books, records, papers and accounts of Trustor or the then
owner of the Subject Property, to make, terminate, enforce or modify Leases of the Subject Property
upon such terms and conditions as Beneficiary deems proper, to make repairs, alterations and
improvements to the Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to
protect or enhance the security hereof;
(vi) To execute a written notice of such Default and of its election to cause the
Subject Property to be sold to satisfy the Secured Obligations. As a condition precedent to any such
sale, Trustee shall give and record such notice as the law then requires. When the minimum period
of time required by law after such notice has elapsed, Trustee, without notice to or demand upon
Trustor except as required by law, shall sell the Subject Property at the time and place of sale fixed
by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such
manner and order, all as Beneficiary in its sole discretion may determine, at public auction to the
highest bidder for cash, in lawful money of the United States, payable at time af sale. Neither
Trustor nor any other person or entity other than Beneficiary shall have the right to direct the order in
which the Subject Property is sold. Subject to requirements and limits imposed by law, Trustee may
from time to time postpone sale of all or any portion of the Subject Property by public announcement
at such time and place of sale. Trustee shall deliver to the purchaser at such sale a deed conveying
the Subject Property or portion thereof 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 or entity, including Trustee, Trustor or Beneficiary may purchase at the sale;
(vii) To resort to and realize upon the security hereunder and any other security
now ar later held by Beneficiary concurrently or successively and in one or several consolidated or
independent judicial actions or lawfully taken non-judicial proceedings, or both, and ta apply the
EXHIBIT D
Page 12 of 16
DOCSOC\844419v21242 12.0002
I-~
proceeds received upon the Secured Obligations all in such order and manner as Trustee and
Beneficiary, or either of them, determine in their sole discretion.
(viii) Upon sale of the Subject Property at any judicial or non-judicial foreclosure,
Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or
any portion of the Secured Obligations. In determining such credit bid, Beneficiary may, but is not
obligated to, take into account all or any of the follawing: (i) appraisals of the Subject Property as
such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Subject Property prior
to foreclosure; (iii) expenses and costs which Beneficiary anticipates will be incurred with respect to
the Subject Property after foreclosure, but prior to resale, including, without limitation, costs of
structural reports and other due diligence, costs to carry the Subject Property prior to resale, costs of
resale (e.g. commissions, attorneys' fees, and taxes), costs of any hazardous materials clean-up and
monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or
settling litigation affecting the Subject Property, and lost opportunity costs (if any), including the
time value of money during any anticipated holding period by Beneficiary; (iv) declining trends in
real property values generally and with respect to properties similar to the Subject Property;
(v) anticipated discounts upon resale of the Subject Property as a distressed or foreclosed property;
(vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors
or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the
above, Trustor acknowledges and agrees that: (a) Beneficiary is not required to use any or all of the
foregoing factors to determine the amount of its credit bid; (b) this section does not impose upon
Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made;
(c) the amount of Beneficiary's credit bid need not have any relation to any loan-to-value ratios
previously discussed between Trustor and Beneficiary; and (d) Beneficiary's credit bid may be
(at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the
Subject Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all
costs, fees and expenses of Trustee, and of this trust, including, without limitation, cost of evidence
of title and attorneys' fees in connection with sale and costs and expenses of sale and of any judicial
proceeding wherein such sale may be made, Trustee shall apply all proceeds of any foreclosure sale:
(a) to payment of all sums expended by Beneficiary under the terms hereof and not then repaid, with
accrued interest at the maximum rate allowed by law; (b) to payment of all other Secured
Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto.
6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary hereunder,
less all costs and expenses incurred by Beneficiary or any receiver hereunder, including, without
limitation, attorneys' fees, shall be applied in payment of the Secured Obligations in such order as
Beneficiary shall determine in its sole discretion; provided, however, Beneficiary shall have no
liability for funds not actually received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiyer's
entry upon and taking possession of all or any part of the Subject Property, nor any collectian of
rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or
proceeds of other security, or other sums, nor the application of any collected sum to any Secured
Obligation, nor the exercise or failure to exercise of any other right or remedy by Beneficiary or
Trustee or any receiver shall cure or waive any breach, Default or notice of default under this Deed
EXHIBIT D
Page 13 of16
DOCSOC\844419v2\24212.0002 1-37
of Trust, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due
have been paid and performed and Trustor has cured all other defaults), or impair the status of the
security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed
as an affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien of this
Deed of Trust.
6.6 PAYMENT OF COSTS. EXPENSES AND ATTORNEYS' FEES. Trustor agrees
to pay to Beneficiary immediately and without demand all costs and expenses incurred by Trustee
and Beneficiary pursuant to Section 6.2 (including, without limitation, court costs and attorneys'
fees, whether incurred in litigation or not) with interest from the date of expenditure until said sums
have been paid at the maximum amount of interest allowed by law. In addition, Trustor shall pay to
Trustee all Trustee's fees hereunder and shall reimburse Trustee for all expenses incurred in the
administration of this trust, including, without limitation, any attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby
irrevocably appoints Beneficiary and its SUCCeSsors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, (a) to execute and/or record any notices of completion, cessation of labor,
or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of
foreclosure, to execute all instruments of assignment or further assurance with respect to the Subject
Property and Collateral, Leases and Payments in favor of the grantee of any such deed, as may be
necessary or desirable for such purpose, (c) ta prepare, execute and file or record financing
statements, continuation statements, applications for registration and like papers necessary to create,
perfect or preserve Beneficiary's security interests and rights in or to any of the Collateral, and
(d) upon the occurrence of an event, act or omission which, with notice or passage of time or both,
would constitute a Default, Beneficiary may perform any obligation of Trustor hereunder; provided
however: (i) Beneficiary as such attorney-in-fact shall only be accountable for such funds as are
actually received by Beneficiary; and (ii) Beneficiary shall not be liable to Trustor or any other
person or entity for any failure to act (whether such failure constitutes negligence) by Beneficiary
under this Section.
Section 7 MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Bridge Laan Documents contain or
incorporate by reference the entire agreement of the parties with respect to matters contemplated
herein and supersede all prior negotiations. The Bridge Loan Documents grant further rights to
Beneficiary and contain further agreements and affirmative and negative covenants by Trustor which
apply to this Deed of Trust and to the Subject Property and such further rights and agreements are
incorporated herein by this reference.
7.2 OBLIGATIONS OF TRUSTOR. JOINT AND SEVERAL. ¡fmore than one
person or entity has executed this Deed of Trust as "Trustor", the obligations of all such persons or
entities hereunder shall be joint and several.
7.3 NO MERGER. No merger shall occur as a result of Beneficiary's acquiring any
other estate in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in
writing. ¡fboth the lessor's and lessee's estate under any lease or any portion thereof which now or
hereafter constitutes a part of Subject Property shall at any time become vested in one owner, this
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Page 140fl6
DOCSOC\844419v2\242 12.0002 /- 3 f
Deed of Trust and the lien created hereby shall not be destroyed or tenminated by application of the
doctrine of merger unless Beneficiary so elects as evidenced by recording a written declaration so
stating, and, unless and until Beneficiary so elects, Beneficiary shall continue to have and enjoy all of
the rights and privileges of Beneficiary as to the separate estates. In addition, upon the foreclosure of
the lien created by this Deed of Trust on the Subject Property pursuant to the provisions hereof, any
leases or subleases then existing and affecting all or any portion of the Subject Property shall not be
destroyed or tenninated by application of the law of merger or as a matter oflaw or as a result of
such foreclosure unless Beneficiary or any purchaser at such foreclasure sale shall so elect. No act
by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or
sublease unless Beneficiary or such purchaser shall give written notice thereof to such tenant or
subtenant.
7.4 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties
claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the
Subject Property, hereby waives all rights to have the Subject Property and/or any other property,
including, without limitation, the Collateral, which is now or later may be security for any Secured
Obligation ("Other Property") marshaled upon any foreclosure of this Deed of Trust or on a
foreclosure of any other security for any of the Secured Obligations. Beneficiary shall have the right
to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a
sale of, the Subject Property and any or all of the Collateral or Other Property as a whole or in
separate parcels, in any order that Beneficiary may designate.
7.5 RULES OF CONSTRUCTION. When the identity of the parties or other
circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural. The tenn "Subject Property" means all and any part of the
Subject Property and any interest in the Subject Property.
7.6 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein
contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the
parties hereto.
7.7 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any
number of counterparts, each of which, when executed and delivered to Beneficiary, will be deemed
to be an original and all afwhich, taken together, will be deemed to be one and the same instrument.
7.8 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the
laws of the State of California, except to the extent that Federal laws preempt the laws of the State of
California.
7.9 INCORPORATION. Exhibit A as attached is incorporated into this Deed of Trust
by this reference.
7.10 NOTICES. All notices or other communications required or permitted to be given
pursuant to the provisions of this Deed of Trust shall be in writing and shall be considered as
properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that
notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express
Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective
EXHIBIT D
Page 15 of 16
DOCSOC\844419v2\24212.0002 1-31
ATTACHMENT A
to EXHIBIT D
DESCRIPTION OF SUBJECT PROPERTY
That certain real property situated in the State of California, County of San Diego, described
as follows:
(to be inserted)
EXHIBIT A TO DEED OF TRUST
Page] of]
DOCSOC\844419v2\242 12.0002 /-c./J
EXHIBIT E
CAPITAL CALL GUARANTY
This CAPITAL CALL GUARANTY ("Guaranty") is made and given as of September_,
2001 ("Date of Guaranty") by the three following entities: Coast Pacific Properties, LLC, a
California limited liability company, and Chula Vista Asset Management, LLC, a California
limited liability company, and Vera Guerin Separate Property Trust by Vera Guerin, Trustee
thereof (collectively, jointly and serverally the "Guarantor" or "Guarantors") to and in favor of the
Redevelopment Agency of the City ofChula Vista, a public body corporate and politic ("Lender".)
B~Ç!I~!'~
Each of the Guarantors is a Member of that certain California limited liability
company named Gateway Chula Vista, LLC, ("Borrower") and a party to the Amended and Restated
Operating Agreement of Gateway Chula Vista LLC dated April 24, 2000, as amended by the
First Amendment to Amended and Restated Operating Agreement dated November I, 2000 and by
the Second Amendment to Amended and Restated Operating Agreement (collectively,
"LLC Operating Agreement".)
Borrower and Lender are parties to that certain Disposition and Development
Agreement dated June 6, 2000 ("DDA").
The DDA relates to redevelopment, development, and operation of a phased
First Class, First Quality 304,000 square feet mixed-use commercial/office project with restaurant
and retail components and common areas, including a four-tier 1014 space parking structure that
spans all Phases of the Project, specifically the retail component will include up to 81,000 square feet
with a restaurant, deli, coffee shop, financial institution, and other retail uses, Phase I will include
94,000 square feet in five stories at the easterly portion of the site, Phase II will include 117,000
square feet in six stories, and Phase III will include 93,000 square feet in five stories at the westerly
portion ("Project").
Capitalized terms used in this Guaranty are defined and set forth in the DDA, or the
First Amendment (as the term is hereinafter defined), or as separately defined herein.
Pursuant to the terms of that certain First Amendment to Disposition and
Development Agreement dated September -' 200 I between Borrower, Gateway Chula Vista, LLC,
and Lender ("Lc;an Agreement" or "First Amendment"), Lender has agreed to loan to Borrower the
principal sum of One Million Three Hundred Thousand and No/IOOTHS Dollars ($1,300,000)
("Bridge Loan") for the purposes specified in the Loan Agreement, said purposes relating to the real
property and improvements described in the Loan Agreement commonly referred to and defined in
the DDA and First Amendment as the Phase I Parcels and Phase 1 Improvements (which real
property and improvements are collectively referred to herein as the "Property".)
The Loan Agreement provides that the Bridge Loan shall be evidenced by the
Promissory Note executed by Borrower payable to the arder of Lender in the principal amount of the
Bridge Loan and shall be secured by the Deed of Trust on the Property and by other security
instruments, if any, specified in the Loan Agreement. The term "Bridge Loan Documents" for
EXHIBIT E
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DOCSOC\844419v2\242 12.0002 I-elL
purposes hereof shall mean the Bridge Loan Agreement, the Deed of Trust, the Promissory Note, and
those other documents described in the Bridge Loan Agreement ("Bridge Loan Documents".)
The Bridge Loan Agreement further requires Borrower to cause each of the
Guarantors to enter into and execute this Guaranty, as a supplemental promise to pay the Capital Call
in the event upon and in the event the Phase I Construction Financing with GMAC does not close
and fund, including disbursements under the Building Loan Agreement for the Construction Loan, on
or before , 200_, (the date which is fifteen (15) days prior to the date set
forth in the GMAC Commitment and the GMAC letter as the outside date to open the Construction
Financing including the occurrence of the initial disbursement of such GMAC Construction
Financing proceeds.)
The amount of the Capital Call and this Guaranty shall be for the Capital Call
Amount, as defined in the Bridge Loan Agreement.
The amount of the Capital Call shall be equal to an amount of cash that causes, and is
necessary to establish, a "breakeven" level of net operating income for Phase I of the Project, but in
no event less than $1,300,000 ("Capital Call Amaunt".)
NOW THEREFORE, to induce Lender to enter into the First Amendment with Borrower
and make the Bridge Loan providing the First Installment Advance to the Phase I Improvements to
the Project, and in consideration thereof, Guarantors, and each of them jointly and severally,
unconditionally guarantee and agree as follows:
Section 1 GUARANTY. Guarantor hereby unconditionally and irrevacably guarantees
and promises to pay to Lender or order, on demand, in lawful money of the United States, in
immediately available funds, the principal sum of the Capital Call Amount, or so much thereof as
may be owing and/or necessary to establish, a "breakeven" leye! of net operating income for Phase I
of the Project, as determined pursuant to the terms of the GMAC Cammitment, the GMAC Letter,
and other Construction Loan documents, together with interest and any other sums payable under the
Bridge Loan Agreement or any of the other Bridge Loan Documents.
Section 2 REMEDIES. If Guarantor fails to promptly perform its obligations under
this Guaranty, Lender may from time to time, and without first requiring performance by Borrower
or any Guarantor or exhausting any or all security for the Bridge Loan, bring any action at law or in
equity, or both, to compel Guarantor or the Guarantors, jointly or severally, to perform its/their
obligations hereunder, and to collect in any such action compensation for all loss, cost, damage,
injury and expense sustained or incurred by Lender as a direct or indirect consequence of the failure
of Guarantor to perform its obligations together with interest thereon at the rate often percent (10%)
per annum simple interest applicable to the principal balance of the Promissory Note.
Section 3 RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice
to Guarantor or obtaining Guarantor's consent and without affecting the liability of Guarantor, from
time to time to: (a) renew or extend all or any portion of Borrower's obligations under the
Promissory Note or any of the other Bridge Loan Documents; (b) declare all sums owing to Lender
under the Promissory Note and the other Bridge Loan Documents due and payable upon the
occurrence of a Default (as defined in the DDA) under the Bridge Loan Documents;
(c) make non-material changes in the dates specified for payments of any sums payable under the
EXHIBIT E
Page 2 of 10
DOCSOC\844419v2\24212.0002 /-43
Promissory Note or any of the other Bridge Loan Documents; (d) otherwise modify the terms of any
of the Bridge Loan Documents, except for (i) increases in the principal amount of the Promissory
Note or changes in the interest rate, fees, or charges are calculated under the Promissory Note and the
other Bridge Loan Documents, or (ii) advancement of the due date of the Promissory Note where no
Default has occurred under the Bridge Loan Documents; (e) take and hold security for the
performance of Borrower's obligations under the Promissory Note or the other Bridge Loan
Documents and exchange, enforce, waive and release any such security; (t) apply such security and
direct the order or manner of sale thereof as Lender in its discretion may determine; (g) release,
substitute or add anyone or more endorsers of the Promissory Note or guarantors of Borrower's
obligations under the Promissory Note or the other Bridge Loan Documents; (h) apply payments
received by Lender from Borrower and/or the Guarantor to any obligations of Borrower to Lender, in
such order as Lender shall determine in its sole discretion, whether or not any such obligations are
covered by this Guaranty; (i) assign this Guaranty in whole or in part; and U) assign, transfer or
negotiate all or any part of the indebtedness guaranteed by this Guaranty.
Section 4 GUARANTOR'S WAIVERS. Guarantor expressly waives: (a) any defense
based upon any legal disability or other defense of Guarantor, or Borrower, any other guarantor, or
other person, or by reason of the cessation or limitation of the liability of Guarantor or Borrower
from any cause other than full payment of all sums payable under the Promissory Note, this
Guaranty, or any of the other Bridge Loan Documents; (b) any defense based upon any lack of
authority of the officers, directors, partners or agents acting or purporting to act on behalf of
Borrower, or any principal or Member of Borrower, any Guarantor, or any defect in the formation of
Borrower or any principal or Member of Borrower; (c) any defense based upon the application by
Borrower of the proceeds of the Bridge Loan for purposes other than the purposes represented by
Borrower to Lender or intended or understood by Lender or Guarantor; (d) any and all rights and
defenses arising out of an election of remedies by Lender, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against the principal by the operation of
Section 580d of the California Code of Civil Procedure or otherwise; (e) any defense based upon
Lender's failure to disclose to Guarantor any information concerning Borrower's financial condition
or any other circumstances bearing on Borrower's ability to pay all sums payable under the
Promissory Note, ar this Guaranty, or any of the other Bridge Loan Documents; (t) any defense
based upon any statute or rule oflaw which provides that the obligation of a surety must be neither
larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense
based upon Lender's election, in any proceeding instituted under the Federal Bankruptcy Code, of
the application of Section 1111 (b )(2) of the Federal Bankruptcy Code or any successor statute;
(h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the
Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which
Lender may have against Borrower or Guarantor and any right to participate in, or benefit from, any
security for the Promissory Note or the other Bridge Loan Documents now or hereafter held by
Lender; U) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of
limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor
further waives any and all rights and defenses that Guarantor may have because Borrower's debt is
secured by real property; this means, among other things: (1) Lender may collect from Guarantor
without first foreclosing on any real or personal property collateral pledged by Borrower under the
Bridge Loan Documents; (2) if Lender forecloses on any real property collateral pledged by
Borrower, then (A) the amount ofthe debt may be reduced only by the price for which that collateral
EXHIBIT E
Page 3 of 10
DOCSOC\8444 I 9v2\242 12.0002 1- £/1
is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender
may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has
destroyed any right Guarantor may have to collect from Borrower. The foregoing sentence is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may have because
Borrower's debt is secured by real property. These rights and defenses being waived by Guarantor
include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of
the California Code of Civil Procedure. Without limiting the generality of the foregoing or any other
provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights
and defenses, including without limitation any rights of subrogation, reimbursement, indemnification
and contribution, which might otherwise be available to Guarantor under California Civil Code
Sectians 2787 to 2855, inclusive, 2899 and 3433, or under California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, or any of such sections. Finally, Guarantor agrees the
performance of any act or any payment which tolls any statute of limitations applicable to the
Promissory Note or any of the other Bridge Loan Documents shall similarly operate to toll the statute
oflimitations applicable to Guarantor's liability hereunder.
Section 5 GUARANTOR'S WARRANTIES. Guarantor warrants and acknowledges:
(a) Lender would not make the Bridge Loan but for this Guaranty by each of the Members, jointly
and severally; (b) there are no conditians precedent to the effectiveness of this Guaranty;
(c) Guarantor has established adequate means of obtaining from sources other than Lender, on a
continuing basis, financial and other information pertaining to Borrower's financial condition, the
Property and Borrower's activities relating thereto and the status of Borrower's performance of
obligations under the Bridge Loan Documents, the DDA, and the First Amendment, and Guarantor
agrees ta keep adequately informed from such means of any facts, events or circumstances which
might in any way affect Guarantor's risks hereunder and Lender has made no representation to
Guarantor as to any such matters; (d) the most recent financial statements of Borrower and of each
Guarantor, if any, previously delivered to Lender are true and correct in all respects, have been
prepared in accardance with generally accepted accounting principles consistently applied (or other
principles acceptable to Lender) and fairly present the financial condition of each Guarantor as of the
respective dates thereof, and no material adverse change has occurred in the financial condition of
any Member or Guarantor since the respective dates thereof; and (e) Guarantor has not and will not,
without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or
otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in
the ordinary course of Guarantor's business.
Section 6 SUBORDINATION. Guarantor subordinates all present and future
indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to
Lender under the Promissory Note and the other Bridge Loan Documents. Guarantor assigns all such
indebtedness to Lender as security for this Guaranty, the Promissory Note ,and the other Bridge Loan
Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of
Borrower under the Promissory Note and the other Bridge Loan Documents have been fully
discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender
is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If
Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and
delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to
Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for
Lender and shall be paid over to Lender on account of the Bridge Loan and Capital Call Amount due
EXHIBIT E
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under the GMAC Commitment, but without reducing or affecting in any manner the liability of any
Guarantor under the other provisions of this Guaranty, and (d) Guarantor shall execute, file and
record such documents and instruments and take such other action as Lender deems necessary or
appropriate to perfect, preserve and enforce Lender's rights in and to such indebtedness and any
security therefor. If Guarantor fails to take any such action, Lender, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor. The foregoing power of attorney
is coupled with an interest and cannot be revoked.
Section 7 BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding
in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may
have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to
Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim, Lender, as
attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor (or any
Member) or, in Lender's discretion, to assign the claim to a nominee and to cause proof of claim to
be filed in the name of Lender's nominee. The faregoing power of attorney is coupled with an
interest and cannot be revoked. Lender or its nominee shall have the right, in its reasonable
discretion, to accept or reject any plan proposed in such proceeding and to take any other action
which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy
or otherwise, the person or persons authorized to pay such claim shall pay to Lender the amount
payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to
Lender all of Guarantor's rights to any such payments or distributions; provided, however,
Guarantor's obligations hereunder shall not be satisfied except to the extent that Lender receives cash
by reason of any such payment or distribution. If Lender receives anything hereunder other than
cash, the same shall be held as collateral for amounts due under this Guaranty. If all or any portion
of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor
hereunder shall continue and shall remain in full force and effect in the event that all or any part of
such payment or performance is avoided or recovered directly or indirectly from Lender as a
preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws,
irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery,
or (b) full payment and performance of all of the indebtedness and obligations evidenced and secured
by the Bridge Loan Documents.
Section 8 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF
INFORMATION. Guarantor agrees that Lender may elect, at any time, to sell, assign, or grant
participations in all or any portion of its rights and obligations under the Bridge Loan Documents and
this Guaranty, and that any such sale, assignment or participation may be to one or more financial
institutions, private investors, and/or other entities, at Lender's sole discretion. Guarantor further
agrees Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or
participant(s) all documents and information (including, without limitation, all financial information)
which has been or is hereafter provided to or known to Lender with respect to: (a) the Property and
its operation; (b) any party connected with the Bridge Loan (including, without limitation, the
Guarantor, the Borrower, any partner or affiliate of Borrower, any constituent partner of Borrower,
any other guarantor and any non-borrower trustor); and/or (c) any lending relationship other than the
Bridge Loan which Lender may have with any party connected with the Bridge Loan. In the event of
any such sale, assignment or participation, Lender and the parties to such transaction shall share in
the rights and obligations of Lender as set forth in the Bridge Loan Documents only as and to the
extent they agree among themselves. In connection with any such sale, assignment or participation,
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Guarantor further agrees the Guaranty shall be sufficient evidence of the obligations of Guarantor to
each purchaser, assignee, or participant, and upon written request by Lender, Guarantor shall consent
to such amendments or modifications to the Bridge Loan Documents as may be reasonably required
in order to evidence any such sale, assignment, or participation.
Section 9 ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS.
This Guaranty is a continuing guaranty of payment and a promise to pay, and is not a guaranty of
collection and cannot be revoked by any Guarantor and shall continue to be effective with respect to
any indebtedness referenced in Section I hereof arising or created after any attempted revocation
hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty
shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs).
The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect
the obligations of Guarantor under any other existing or future guaranties unless said other guaranties
are expressly modified or revaked in writing. This Guaranty is independent of the obligations of
Borrower under the Promissory Note, the Deed of Trust, and the other Bridge Loan Documents.
Lender may bring a separate actian to enforce the provisions hereof against any Guarantor or
Guarantors without taking action against Borrower or any other party or joining Borrower or any
other party as a party to such actian. Except as otherwise provided in this Guaranty, this Guaranty is
not secured and shall not be deemed to be secured by any security instrument unless such security
instrument expressly recites that it secures this Guaranty.
Section 10 ATTORNEYS' FEES; ENFORCEMENT. ¡fany attorney is engaged by
Lender, whether in house counselor outside special council, to enforce or defend any provisian of
this Guaranty, or any of the other Bridge Loan Documents, or as a can sequence of any Default under
the Bridge Loan Documents, the DDA, or the First Amendment, with or without the filing of any
legal action or proceeding, Guarantor shall pay to Lender, immediately upon demand all attorneys'
fees and costs incurred by Lender in connection therewith, together with interest thereon from the
date of such demand until paid at the rate of interest applicable to the principal balance of the Note as
specified therein.
Section 11 RULES OF CONSTRUCTION. The word "Borrower" as used herein shall
include both the named Borrower and any other person at any time assuming or otherwise becoming
primarily liable for all or any part of the obligations of the named Borrower under the Promissory
Note and the other Bridge Loan Documents. The term "person" as used herein shall include any
indiyidual, company, trust or other legal entity of any kind whatsoever. As is the case hereunder, if
this Guaranty is executed by more than one person, the term "Guarantor" shall include all such
persons. When the context and construction so require, all words used in the singular herein shall be
deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are
for convenience only and shall be disregarded in construing this Guaranty.
Section 12 CREDIT REPORTS. Each legal entity and individual obligated on this
Guaranty hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender's
choice, a third party credit report on such legal entity and individual and/or a financial status report,
such as a Dunn & Bradstreet report.
Section 13 GOVERNING LAW. This Guaranty shall be gaverned by, and construed in
accordance with, the laws of the State of California, except to the extent preempted by federal laws.
Guarantor and all persons and entities in any manner obligated to Lender under this Guaranty consent
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to the jurisdiction of any federal or state court within the State of California having proper venue and
also consent to service of process by any means authorized by California or federal law.
Section 14 MISCELLANEOUS. The provisions of this Guaranty shall bind and benefit
the heirs, executors, administrators, legal representatives, nominees, successors and assigns of
Guarantor, and each of them, and Lender. The liability af all persons and entities who are in any
manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be
detennined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion
shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as
though the invalid, illegal or unenforceable portion had never been part of this Guaranty. If any
provision of this Guaranty shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or any remaining provisions of this Guaranty. This Guaranty may be
amended or modified only in writing signed by Lender and all of the Guarantors.
Section 15 ADDITIONAL PROVISIONS. Such additional terms, covenants and
conditions as may be set forth on any exhibit executed by Guarantor and attached hereto which
recites that it is an exhibit to this Guaranty are incorporated herein by this reference.
Section 16 ENFORCEABILITY. Guarantor hereby acknowledges: (a) the obligations
undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses
to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as
part of Lender's consideration for entering into the Bridge Loan and the First Amendment, Lender
has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and
(d) Guarantor has had the opportunity to seek and receive legal advice from skilled legal counsel in
the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor
does hereby represent and confinn to Lender that Guarantor, and each Guarantor, is fully infonned
regarding, and that Guarantor, and each Guarantor, does thoroughly understand: (i) the nature of all
such possible defenses, and (ii) the circumstances under which such defenses may arise, and
(iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences
to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty
with the intent that this Guaranty and all of the infonned waivers herein shall each and all be fully
enforceable by Lender, and that Lender is induced to enter into the Bridge Loan, the First
Amendment, and the other Bridge Loan Documents in material reliance upon the presumed full
enforceability thereof.
Section 17 ARBITRATION.
(a) Arbitration. Upon the demand of any party, any dispute shall be resolved by
binding arbitration (except as set forth in Paragraphs 17.5 and 17.6 below) in accordance with the
tenns of this Guaranty. A "Dispute" shall mean any action, dispute, claim or controversy of any
kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or
hereafter arising under or in connection with, or in any way pertaining to, this Guaranty and each
other document, contract and instrument required hereby or now or hereafter delivered to Lender in
connection herewith, or any past, present or future extensians of credit and other activities,
transactions or obligations of any kind related directly or indirectly to any of the foregoing
dacuments, including without limitation, any of the foregoing arising in connection with the exercise
of any self-help, ancillary or other remedies pursuant to any of the foregoing documents. Any party
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may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any party
who fails or refuses to submit to arbitration following a lawful demand by any other party shall bear
all costs and expenses incurred by such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the parties shall mutually
agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to
arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice oflaw provision in any of the foregoing
documents. The arbitration shall be conducted at a location in California selected by the AAA or
other administrator. If there is any inconsistency between the terms hereof and any such rules, the
terms and procedures set forth herein shall control. All statutes oflimitation applicable to any
Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited
to matters directly relevant to the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided hawever, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it
under Section 91 of Title 12 of the United States Code or any similar applicable state law.
(c) No Waiver: Provisional Remedies, Self-Help and Foreclosure. No provision
hereof shall limit the right of any party to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation, injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court of competent jurisdiction before, after or
during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall
not waive the right of any party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers: Awards. Arbitrators must be active
members of the California State Bar or retired judges of the state or federal judiciary of California,
with expertise in the substantive law applicable to the subject matter of the Dispute. Arbitrators are
empowered to resolve Disputes by summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the substantive law
of the State of California, (ii) may grant any remedy or relief that a court ofthe State of California
could order or grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose
sanctions and to take such other actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other
applicable law. Any Dispute in which the amount in controversy is $1,000,000 or less shall be
decided by a single arbitrator who shall not render an award of greater than $1,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each party expressly waives
any right or claim to recover more than $1,000,000. Any Dispute in which the amount in
controversy exceeds $1,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in any
arbitration in which the amount in controversy exceeds $3,000,000, the arbitrators shall be required
to make specific, written findings of fact and conclusions of law. In such arbitrations (i) the
arbitrators shall not have the power to make any award which is not supported by substantial
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evidence or which is based on legal error, (ii) an award shall not be binding upon the parties unless
the findings of fact are supported by substantial evidence and the conclusions of law are not
erroneous under the substantive law of the State of California, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (2) whether the conclusions of law are
erroneous under the substantiye law of the State of California. Judgment confirming an award in
such a proceeding may be entered only if a court determines the award is supported by substantial
evidence and not based on legal error under the substantive law of the State of California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no Dispute shall be submitted to arbitration if the Dispute concerns
indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the
holder of the mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them
by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests securing such indebtedness
and obligations, shall remain fully valid and enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the qualifications required herein for
arbitrators shall be selected pursuant to the AAA's selection procedures. Judgment upon the decision
rendered by a referee shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration proceeding within 180 days
of the filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding
may disclose the existence, content or results thereof, except for disclosures of information by a party
required in the ordinary course of its business, by applicable law or regulation, or to the extent
necessary to exercise any judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the arbitration provision most
directly related to the foregoing documents or the subject matter of the Dispute shall control. This
arbitration provision shall survive termination, amendment or expiration of any of the foregoing
documents or any relationship between the parties.
(h) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS
GUARANTY, AND BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (a) ARISING UNDER THE BRIDGE LOAN DOCUMENTS, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE BRIDGE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
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EXHIBIT F
COMPLETION GUARANTY
(DPR Construction Contract)
This COMPLETION GUARANTY ("Guaranty") is made as of September _,.2001 by
DPR CONSTRUCTION, INc., a California corporation ("Guarantor") in favor of
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public bady corporate
and politic ("Lender" or "Agency").
RECITALS
A. Pursuant to the terms of that certain First Amendment to Disposition and
Develapment Agreement dated September -' 200 I between Gateway Chula Vista, LLC, a
California limited liability company ("Borrower") and Lender ("Loan Agreement" or "First
Amendment"), Lender has agreed to loan to Borrower the principal sum of One Million Three
Hundred Thousand and Noll OOTHS Dollars ($1,300,000) ("Bridge Loan") for the purposes specified
in the Loan Agreement, said purposes relating to the real property and improvements described in the
Loan Agreement commonly referred to and defined in that certain Disposition and Development
Agreement dated June 6, 2000 between Borrower and Lender ("DDA") and the First Amendment as
the Phase [ Parcels and Phase I Improvements (which real property and improvements are
collectively referred to herein as the "Property".) The DDA and First Amendment may be
collectively referred to herein as the Loan Agreement.
B. Pursuant to the Loan Agreement the development thereunder includes the
construction of certain improvements ("Improvements" or "Phase I Improvements") described in
plans and specifications required by the Loan Agreement ("Plans and Specifications") upon the
Property.
C. Guarantor and Borrower have entered into that certain [insert full name of
Construction Contract] dated ,2001 ("Construction Contract") for the
construction and development of the Phase I Improvements on the Property. Construction and
perfonnance has already commenced by Guarantor under the Construction Contract.
D. The Loan Agreement provides that the Bridge Loan shall be evidenced by a
promissory note ("Note") executed by Borrower payable to the order of Lender in the principal
amount of the Loan and shall be secured by a deed of trust on the Property ("Deed of Trust") and by
other security instruments, if any, specified in the Loan Agreement. The term "Bridge Loan
Documents" or "Loan Documents" for purposes hereof shall mean the Loan Agreement, the Deed of
Trust, the Note and those other documents described in the Loan Agreement as Loan Documents or
otherwise described therein.
NOW THEREFORE, to induce Lender to enter into the Loan Agreement and to make the
Loan, and in consideration thereof, Guarantor unconditionally guarantees and agrees as follows:
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Section 1 GUARANTY. Guarantor hereby guarantees its performance under that
certain [insert full name of Construction Contract] dated ,2001 entered into between
Borrower and Guarantor pertaining to obligations with respect to the construction of the
Improvements. Without limiting the generality of the foregoing, Guarantor guarantees that:
(a) construction of the Improvements shall commence and be completed within the time limits set
forth in the Construction Contract and Loan Agreement; (b) the Improvements shall be constructed
and completed in accordance with the Plans and Specifications and the other provisions of the
Construction Contract and the Loan Agreement, without substantial deviation therefrom unless
approved by Lender in writing; (c) the Improvements shall be constructed and completed free and
clear of any mechanic's liens, materialman's liens and equitable liens; and (d) the Loan proceeds
shall remain available for disbursement free and clear of any stop notices; provided however,
Borrower (or any Member of Borrower, or Lender, or another third party) is causing payment to
Guarantor for work completed pursuant to the tenns of the Construction Contract.
Section 2 LIEN FREE COMPLETION. Completion of the Improvements free and
clear ofliens shall be deemed to have occurred upon: (a) Lender's receipt of a written statement or
certificate executed by the architect designated or shown on the Plans and Specifications certifying,
without qualification or exception, the Improvements are campleted, and (ii) Lender's receipt of all
required occupancy permit(s) for all ofthe Improvements issued by the City of Chula Vista, and
(iii) the expiration of the statutory period(s) within which valid mechanic's liens, materialman's liens
and/or stop notices may be recorded and/or served by reason of the construction of the
Improvements, or, alternatively, Lender's receipt of valid, unconditional releases thereof from all
persons entitled to record said liens or serve said stop notices; or (b) Lender's receipt of such other
evidence of lien free completion as Lender deems satisfactory in its reasonable discretion.
Section 3 OBLIGATIONS OF GUARANTOR UPON DEF AUL T BY
BORROWER. If the Improvements are not continued to be constructed and completed in the
manner and within the time required by the Loan Agreement and the Construction Contract, or if,
prior to the expiration of the time limits for said completion set forth in the Loan Agreement or the
Construction Contract construction of the Improvements should cease or be halted prior to
completion and such cessation or halt constitutes a Default (as defined in the Loan Agreement) by
Borrower (or any Member of the Borrower or by any guarantor thereto), Guarantor shall, promptly
upon demand of Lender: (a) diligently proceed to complete construction of the Improvements in
confonnity with the requirements of the Construction Contract provided however, Borrower (or any
Member of Borrower, or Lender, or another third party) is causing payment to Guarantor for work
completed pursuant to the terms of the Construction Contract; (b) fully pay and discharge all claims
for labor perfonned and material and services furnished in connection with the construction of the
Improvements as required by the Construction Contract; (c) release and discharge all claims of stop
notices, mechanic's liens, materialman's liens and equitable liens that may arise in connection with
the construction of the Improvements; and (d) pay to Lender the amount of any loss or damage
incurred by Lender as a result of any delay in the completion of construction of the Improvements
beyond the time specified in the Construction Contract for such completion, which amount shall
include, but not be limited to the reasonable rental value of the completed Improvements during any
period of the delay in completion. Without in any way limiting the above obligations of Guarantor,
Lender shall make the undisbursed Loan funds available to Guarantor (pursuant to the tenns and
conditions of the Loan Documents) for the purposes of completing the Improvements and fulfilling
Guarantor's other obligations under this Guaranty; provided, however, that the obligation of Lender
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to make such undisbursed Loan funds available to Guarantor is expressly conditioned upon there
being no continuing default by Guarantor under this Guaranty.
Section 4 REMEDIES. If Guarantor fails to promptly perform its obligations under
this Guaranty, Lender shall have the following remedies:
(a) At Lender's option, and without any obligation to do so, to proceed to cause
performance on behalf of Guarantor any or all of Guarantor's obligations hereunder and Guarantor
shall, upon demand and whether or not constructian is actually completed by Lender or its agent, pay
to Lender all sums expended by Lender in performing Guarantor's obligations hereunder together
with interest thereon at the Maximum Interest Rate specified in the Note; and
(b) From time to time and without first requiring performance by Borrower or
exhausting any or all security for the Loan, to bring any action at law or in equity or both to compel
Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all
loss, cost, damage, injury and expense sustained or incurred by Lender as a direct or indirect
consequence of the failure of Guarantor to perform its obligations together with interest thereon at
the Maximum Interest Rate applicable to the principal balance of the Note.
Section 5 RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice
to Guarantor or obtaining Guarantor's consent and without affecting the liability of Guarantor, from
time to time to: (a) direct modificatians to the Plans and Specifications so long as such modifications
do not materially increase the cost of constructing the Improvements nor materially increase the time
necessary to complete the Improvements; (b) change the terms or conditions of disbursement of the
Loan so long as such changes do not materially interfere with Borrower's ability to construct the
Improvements as and when required under the Loan Agreement; (c) otherwise modify the Loan
Documents, including, without limitation, making changes in the terms of repayment of the Loan or
modifying, extending or renewing payment dates; releasing or subordinating security in whole or in
part; changing the interest rate; or advancing additional funds in its discretion for purposes related to
the purposes specified in the Loan Agreement; or (d) assign this Guaranty in whole or in part.
Section 6 GUARANTOR'S WAIVERS. Guarantor waives: (a) any defense based
upon any legal disability or other defense of Borrower or Guarantor, any other guarantor or other
person, or by reason of the cessation or limitation of the liability of Borrower or Guarantor from any
cause other than full payment and performance of those obligations of Borrower or Guarantor which
are guaranteed hereunder; (b) any defense based upon any lack of authority of the officers, directors,
partners or agents acting or purporting to act on behalf of Borrower or Guarantor or any principal of
Borrower or Guarantor or any defect in the formation of Borrower or Guarantor or any principal of
Borrower or Guarantor; (c) any defense based upon the applicatian by Borrower of the proceeds of
the Loan for purposes ather than the purposes represented by Borrower to Lender or intended or
understood by Lender or Guarantor; (d) any and all rights and defenses arising out of an election of
remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise; (e) any defense based upon Lender's failure to disclose to Guarantor any
information concerning Borrower's financial condition or any other circumstances bearing on
Borrower's ability to pay and perform its obligations under the Note or any of the other Bridge Loan
Documents; (f) any defense based upon any statute or rule of law which proyides that the obligation
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DOCSOC\8444 19v21242 12.0002
of a surety must be neither larger in amount nor in any other respects more burdensome than that of a
principal; (g) any defense based upon Lender's election, in any proceeding instituted under the
Federal Bankruptcy Code, of the application of Section II I I (b)(2) of the Federal Bankruptcy Code
or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest
under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce
any remedy which Lender may have against Borrower and any right to participate in, or benefit from,
any security for the Note or the other Loan Documents now or hereafter held by Lender;
U) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of
limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor
further waives any and all rights and defenses that Guarantor may have because Borrower's debt is
secured by real property; this means, among other things, that: (1) Lender may collect from
Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower;
(2) if Lender forecloses on any real property collateral pledged by Borrower, then (A) the amount of
the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price, and (B) Lender may collect from Guarantor
even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may
have to collect from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of
any rights and defenses Guarantor may have because Borrower's debt is secured by real property.
These rights and defenses being waived by Guarantor include, but are not limited to, any rights or
defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.
Without limiting the generality of the foregoing or any other provision hereof, Guarantor further
expressly waives to the extent permitted by law any and all rights and defenses, including without
limitation any rights of subrogation, reimbursement, indemnification and contribution, which might
otherwise be available to Guarantor under Califarnia Civil Code Sections 2787 to 2855, inclusiye,
2899 and 3433, or under California Code of Civil Procedure Sections 580a, 580b, 580d and 726, or
any of such sections. Finally, Guarantor agrees that the performance of any act or any payment
which tolls any statute of limitations applicable to the Loan Documents shall similarly operate to toll
the statute oflimitations applicable to Guarantor's liability hereunder.
Section 7 GUARANTOR'S WARRANTIES. Guarantor warrants and acknowledges
that: (a) Lender would not make the Bridge Loan but for this Guaranty; (b) Guarantor has received a
copy af and reviewed Loan Agreement, the Plans and Specifications, and related Bridge Loan
Documents requested by Guarantor; (c) there are no conditions precedent to the effectiveness of this
Guaranty; (d) Guarantor has established adequate means of obtaining from sources other than
Lender, on a continuing basis, financial and other information pertaining to Borrower's financial
condition, the Property, the progress of construction ofthe Improvements, and the status of
Borrower's performance of its obligations under the Bridge Loan Documents, and Lender has made
no representation to Guarantor as to any such matters; (e) the most recent financial statements of
Guarantar for fiscal years ended December 31,2000 and 1999 issued by PriceWaterhouseCoopers
dated June 12, 2001, previously delivered to Lender are true and correct in all respects, have been
prepared in accordance with generally accepted accounting principles cansistently applied (or other
principles acceptable to Lender) and fairly present the financial condition of Guarantor as of the
respective dates thereof, and no material adverse change has occurred in the financial condition of
Guarantor since the respective dates thereof; and (f) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of
all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course
of Guarantor's business.
EXHIBIT F
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DOCSOC\844419v2\24212.0002 1- SS'
Section 8 SUBORDINATION. Guarantor subordinates all present and future
indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to
Lender under the Note and the other Bridge Loan Documents. Guarantor assigns all such
indebtedness to Lender as security for this Guaranty, the Note and the other Bridge Loan Documents.
Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the
Note and the other Loan Documents have been fully discharged. Guarantor further agrees not to
assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is
expressly made subject to the terms of this Guaranty. If Lender so requests, (a) all instruments
eyidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for
such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be
enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on
account of the Loan but without reducing or affecting in any manner the liability of Guarantor under
the other provisions of this Guaranty, and (d) Guarantor shall execute, file and record such
documents and instruments and take such other action as Lender deems necessary or appropriate to
perfect, preserve and enforce Lender's rights in and to such indebtedness and any security therefor.
If Guarantor fails to take such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized
to do so in the name of Guarantor. The foregoing power of attorney is coupled with an interest and
cannot be revoked.
Section 9 BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding
in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may
have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to
Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim, Lender, as
attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender's
discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of
Lender's nominee. The foregoing power of attorney is coupled with an interest and cannot be
revoked. Lender or its nominee shall have the right, in its reasonable discretion, to accept or reject
any plan proposed in such proceeding and to take any other action which a party filing a claim is
entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or
persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to
the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor's
rights to any such payments or distributions; provided, however, Guarantor's obligations hereunder
shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or
distribution. If Lender receives anything hereunder other than cash, the same shall be held as
collateral for amounts due under this Guaranty. If all or any portion ofthe obligations guaranteed
hereunder are paid or performed, the obligations of Guarantor hereunder shall continue and shall
remain in full force and effect in the event that all or any part of such payment or performance is
avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or
otherwise underthe Bankruptcy Code or other similar laws, irrespective of (a) any notice of
revocation given by Guarantor prior to such avoidance or recovery, or (b) full payment and
performance of all of the indebtedness and obligations evidenced and secured by the Loan
Documents.
Section 10 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF
INFORMATION. Guarantor agrees that Lender may elect, at any time, to sell, assign, or grant
participations in all or any portion of its rights and obligations under the Loan Documents and this
Guaranty, and that any such sale, assignment or participation may be to one or more financial
institutions, priyate investors,.and/or other entities, at Lender's sole discretion. Guarantor further
EXHIBIT F
Page50flO
DOCSOC\84441 9v2\24212.0002 I-~--ç,
agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or
participant(s) all documents and information (including, without limitation, all financial information)
which has been or is hereafter provided to or known to Lender with respect to: (a) the Property and
Improvements and their operation; (b) any party connected with the Loan (including, without
limitation, the Guarantor, the Borrower, any partner of Borrower, any constituent partner of
Borrower, any other guarantor and any non-borrower trustor); and/or (c) any lending relationship
other than the Loan which Lender may have with any party connected with the Loan. In the event of
any such sale, assignment or participation, Lender and the parties to such transaction shall share in
the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they
agree among themselves. In connection with any such sale, assignment or participation, Guarantor
further agrees that the Guaranty shall be sufficient eyidence of the obligations of Guarantor to each
purchaser, assignee, or participant, and upon written request by Lender, Guarantor shall consent to
such amendments or modifications to the Loan Documents as may be reasonably required in order to
evidence any such sale, assignment, or participation.
Section 11 ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS.
The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect
the obligations of Guarantor under any other existing or future guaranties unless said other guaranties
are expressly modified or revoked in writing. This Guaranty is independent of the obligations of
Borrower under the Note, the Deed of Trust and the other Loan Documents. Lender may bring a
separate action to enforce the provisions hereof against Guarantor without taking action against
Borrower or any other party or joining Borrower or any other party as a party to such action. Except
as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be
secured by any security instrument unless such security instrument expressly recites that it secures
this Guaranty.
Section 12 ATTORNEYS' FEES; ENFORCEMENT. If any attorney is engaged by
Lender to enforce or defend any provision of this Guaranty, or any of the other Bridge Loan
Documents relating to the construction of the Improvements, or as a consequence of any Default,
breach or failure of condition under the Bridge Loan Documents relating to the construction of the
Improvements, with or without the filing of any legal action or proceeding, Guarantor shall pay to
Lender, immediately upon demand all attorneys' fees and costs incurred by Lender in connection
therewith, together with interest there an from the date of such demand until paid at the rate of
interest applicable to the principal balance of the Note as specified therein.
Section 13 RULES OF CONSTRUCTION. The word "Borrower" as used herein shall
include both the named Borrower and any other person at any time assuming or otherwise becoming
primarily liable for all or any part of the obligations ofthe named Borrower under the Note and the
other Loan Documents. The term "person" as used herein shall include any individual, company,
trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one
person, the term "Guarantor" shall include all such persons. When the context and construction so
require, all words used in the singular herein shall be deemed to have been used in the plural and vice
versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in
construing this Guaranty.
Section 14 CREDIT REPORTS. Each legal entity obligated on this Guaranty hereby
authorizes Lender to order and obtain, from a credit reporting agency of Lender's choice, a third
party credit report on such legal entity.
EXHIBIT F
Page 6 of 10
DOCSOC\844419v2\24212.0002 1- ~7
Section 15 GOVERNING LAW. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of California, except to the extent preempted by federal laws.
Guarantor and all persons and entities in any manner obligated to Lender under this Guaranty consent
to the jurisdiction of any federal or state court within the State of California having proper venue and
also consent to service of process by any means authorized by California or federal law.
Section 16 MISCELLANEOUS. The provisions of this Guaranty will bind and benefit
the heirs, executors, administrators, legal representatives, nominees, successors and assigns of
Guarantor and Lender. The liability of all persons and entities who are in any manner obligated
hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed
from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or
unenforceable portion had never been part of this Guaranty.
Section 17 ADDITIONAL PROVISIONS. Such additional terms, covenants and
conditions as may be set forth on any exhibit executed by Guarantor and attached hereto which
recites that it is an exhibit to this Guaranty are incorporated herein by this reference.
Section 18 ENFORCEABILITY.. Guarantor hereby acknowledges that: (a) the
obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous
possible defenses to the enforceability of these obligations may presently exist and/or may arise
hereafter, and (c) as part of Lender's consideration for entering into this transaction, Lender has
specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and
(d) Guarantor has had the opportunity to seek and receive legal advice from skilled legal counsel in
the area of financial transactions of the type contemplated berein. Given all of the above, Guarantor
does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that
Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the
circumstances under which such defenses may arise, and (iii) the benefits which such defenses might
confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses.
Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and
all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender
is induced to enter into this transaction in material reliance upon the presumed full enforceability
thereof.
Section 19. ARBITRATION.
19.1 Arbitration. Upon the demand of any party, any dispute shall be resolved by
binding arbitration (except as set forth in Paragraphs] 7.5 and 17.6 below) in accordance with the
terms of this Guaranty. A "Dispute" shall mean any action, dispute, claim or controversy of any
kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or
hereafter arising under or in connection with, or in any way pertaining to, this Guaranty and each
other document, contract and instrument required hereby or now or hereafter delivered to Lender in
connection herewith, or any past, present or future extensions of credit and other activities,
transactions or obligations of any kind related directly or indirectly to any of the foregoing
documents, including without limitation, any of the foregoing arising in connection with the exercise
of any self-help, ancillary or other remedies pursuant to any of the foregoing documents. Any party
may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any party
EXHIBIT F
Page 7 of 10 /-~-t
DOCSOC\844419v2\24212 0002
who fails or refuses to submit to arbitration following a lawful demand by any other party shall bear
all costs and expenses incurred by such other party in compelling arbitration of any Dispute.
19.2 Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the parties shall mutually
agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to
arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of the foregoing
documents. The arbitration shall be conducted at a location in California selected by the AAA or
other administrator. If there is any inconsistency between the tenns hereof and any such rules, the
tenns and procedures set forth herein shall control. All statutes oflimitation applicable to any
Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited
to matters directly relevant to the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it
under Section 91 of Title 12 of the United States Code or any similar applicable state law.
19.3 No Waiver; Provisional Remedies, Self-Help and Foreclosure. No provision
hereof shall limit the right of any party to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation, injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court of competent jurisdiction before, after or
during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall
not waive the right of any party to compel arbitration or reference hereunder.
19.4 Arbitrator Qualifications and Powers; Awards. Arbitrators must be active
members of the California State Bar or retired judges of the state or federal judiciary of California,
with expertise in the substantive law applicable to the subject matter of the Dispute. Arbitrators are
empowered to resolve Disputes by summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the substantive law
of the State of California, (ii) may grant any remedy or relief that a court of the State of California
could order or grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose
sanctions and to take such other actions as they deem necessary to the same extent ajudge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other
applicable law. Any Dispute in which the amount in controversy is $1,000,000 or less shall be
decided by a single arbitrator who shall not render an award of greater than $1,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each party expressly waives
any right or claim to recoyer more than $1,000,000. Any Dispute in which the amount in
controversy exceeds $1,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all hearings and deliberations.
19.5 Judicial Review. Notwithstanding anything herein to the contrary, in any
arbitration in which the amount in controversy exceeds $3,000,000, the arbitrators shall be required
to make specific, written findings affact and conclusions oflaw. In such arbitrations (i) the
arbitrators shall not have the power to make any award which is not supported by substantial
evidence or which is based on legal error, (ii) an award shall not be binding upon the parties unless
the findings of fact are supported by substantial evidence and the conclusions of law are not
EXHIBIT F
Page 8 of 10
DOCSOC\8444 I 9v2\242 12.0002 / - y-C¡
erroneous under the substantive law of the State of California, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (I) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (2) whether the conclusions of law are
erroneous under the substantive law of the State of California. Judgment confinning an award in
such a proceeding may be entered only if a court determines the award is supported by substantial
evidence and not based on legal error under the substantive law of the State of California.
19.6 Real Propertv Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no Dispute shall be submitted to arbitration if the Dispute concerns
indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the
holder afthe mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them
by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests securing such indebtedness
and obligations, shall remain fully valid and enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the qualifications required herein for
arbitratars shall be selected pursuant to the AAA's selection procedures. Judgment upon the decision
rendered by a referee shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
19.7 Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration proceeding within 180 days
of the filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding
may disclose the existence, content or results thereof, except for disclosures of information by a party
required in the ordinary course of its business, by applicable law or regulation, or to the extent
necessary to exercise any judicial review rights set forth herein. If more than one agreement for
arbitratian by or between the parties potentially applies to a Dispute, the arbitration provision most
directly related to the foregoing documents or the subject matter of the Dispute shall control. This
arbitration provision shall survive termination, amendment or expiration of any of the foregoing
documents ar any relationship between the parties.
19.8 WAIVER OF RlGHT TO TRIAL BY JURY. EACH PARTY TO THIS
GUARANTY, AND BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY EXPRESSLY
WAIVES ANY RlGHT TO TRlAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (a) ARlSING UNDER THE BRIDGE LOAN DOCUMENTS, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE BRIDGE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARlSING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY AND LENDER HEREBY AGREES AND
CONSENTS THAT ANY PARTY TO THIS GUARANTY AND LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COpy OF THIS SECTION WITH ANY COURT AS
EXHIBIT F
Page 9 of 10
DOCSOC\844419v2\24212.0002 /- ~ 0
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND LENDER TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing
on the first page of this Guaranty.
"GUARANTOR"
DPR CONSTRUCTION, INc., a California
corporation
By:
Its:
By:
Its:
EXHIBIT F
Page 100f10
DOCSOC\844419v2\242 12.0002 I~rol
EXHIBIT G
ASSIGNMENT OF CONSTRUCTION AGREEMENTS
This ASSIGNMENT OF CONSTRUCTION AGREEMENTS ("Assignment") is provided
for value received by the undersigned GA TEW A Y CHULA VISTA, LLC, a California limited
liability company ("Borrower"), as of September -' 200 I ("Effective Date") who hereby assigns to
the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body
corporate and politic ("Lender"), its rights under all existing and future agreements and contracts, as
amended, between Borrower and any other person or entity (collectively, "Construction
Agreements") relating to the construction of the Phase I Improvements on the Property required by
the DDA and the First Amendment (as such terms are defined herein) which Improvements,
agreements and Property is further described in Exhibit A attached hereto and fully incorporated by
this reference. The Construction Agreements include, but are not limited to, the general contractor
construction contract between Borrower and DPR Construction, Inc., a California corporation
("Contractor") dated , 200_, as existing or as hereafter amended.
NOW THEREFORE, the following is agreed:
Section 1 This Assignment constitutes a present and absolute assignment to Lender as
of the Effective Date; provided, however, Lender confers on Borrower the right to enforce the terms
of the Construction Agreements so long as no Default or event which would constitute a Default after
notice or the passage of time, or both, has occurred and is continuing under any of the Loan
Documents. Upon the occurrence of a Default or event which would constitute a Default after notice
or the passage of time, or both, under any of the Loan Documents, Lender may, in its sole discretion,
give notice to Contractor of its intent to enforce the rights of Borrower under the Construction
Agreements and may initiate or participate in any legal proceedings respecting the enforcement of
said rights. Borrower acknowledges that by accepting this Assignment, Lender does not assume any
of Borrower's obligations under the Construction Agreements.
Section 2 Pursuant to the terms of that certain First Amendment to Disposition and
Development Agreement dated September -' 200 I between Gateway Chula Vista, LLC, a
California limited liability company ("Borrower") and Lender ("First Amendment") and that certain
Disposition and Development Agreement dated June 6, 2000 ("DDA", collectively the First
Amendment and the DDA may herein be referred to as the "Bridge Loan Agreement" or
"Loan Agreement"), Lender has agreed to loan ta Borrower the principal sum of One Million Three
Hundred Thousand and No/I OOTHS Dollars ($1,300,000) ("Bridge Loan") for the purposes specified
in the Loan Agreement. The purpose of the Loan Agreement includes without limitation, the
disposition, construction, and development of certain real property and improvements described in
the Loan Agreement commonly referred to as the Phase I Parcels and Phase I Improvements (which
real property and improvements are collectively referred to herein as the "Property".)
Section 3 Pursuant to the Loan Agreement the development thereunder includes the
construction of certain improvements ("Improvements" or "Phase I Improvements") described in
plans and specifications required by the Loan Agreement ("Plans and Specifications") upon the
Property.
EXHIBIT G
Page 1 00
DOCSOC\844419v2\24212.0002 1- bL
Section 4 Contractor and Borrower have entered into that certain [insert full name of
Construction Contract) dated ,2001 ("Construction Contract") for the
construction and development of the Phase I Improvements on the Property. Construction and
performance has already commenced by Guarantor under the Construction Contract.
Section 5 Borrower represents and warrants to Lender, as of the Effective Date, that
(a) all Construction Agreements entered into by Borrower are in full force and effect and 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 Construction Agreements,
(b) all copies of the Construction Agreements delivered to Lender are complete and correct and
(c) Borrower has not assigned any of its rights under the Construction Agreements. Borrower shall
deliver to Lender a true, complete and correct copy of all Construction Agreements entered into after
the date hereof, promptly upon execution thereof.
Section 6 Borrower agrees (a) to pay and perform all obligations of Borrower under the
Construction Agreements, (b) to enforce the payment and performance of all obligations af any other
person or entity under the Construction Agreements, (c) not to modify the existing Construction
Agreements nor to enter into any future Construction Agreements without Lender's prior written
approval except as otherwise may be permitted in the Loan Documents and (d) not to further assign,
for security or any other purposes, its rights under the Construction Agreements without Lender's
prior written consent.
Section 7 This Assignment is one of the Bridge Loan Documents and secures payment
and performance by Borrower of all obligations of Borrower under the Loan Documents. This
Assignment is supplemented by those provisions of the Loan Agreement which apply to the Loan
Documents and said provisions are incorporated herein by reference. This Assignment is part of and
further defines the assignment of contract rights set forth in the "Security Agreement" provision of
the Deed of Trust.
Section 8 The term "Loan Agreement" as used herein shall mean the DDA and the First
Amendment and all ancillary agreements thereto, as applicable, of even date herewith or entered into
priar to such date between Borrower and Lender relating to the Phase I of the Project, as defined in
the Loan Agreement, as well as any future agreements between Borrower and Lender which refer to
this Assignment. Capitalized terms not otherwise defined herein shall each have the meaning set
forth in the Loan Agreement.
Section 9 The attached Contractor's Consent and Exhibit A are incorporated by
reference.
EXHIBIT G
Page 2 of3 (-(,3
DOCSOC\844419v2\242 12.0002
IN WITNESS WHEREOF, Borrower has executed this Assignment as of the Effective Date
appearing on the first page hereof.
BORROWER
GATEWAY CHULA VISTA, LLC, a California
limited liability company
By: Coast Pacific Properties, LLC
Its: Co-Managing Member
James V. Pieri, Chainnan Manager
By: Chula Vista Asset Management, LLC
Its: Co-Managing Member
Geoffrey Payne, Other Manager
EXHIBIT G
Page 3 of3 1-{ç'Í
DOCSOC\844419v2\24212.0002
CONTRACTOR'S CONSENT
TO ASSIGNMENT
The undersigned DPR CONSTRUCTION, INc. ("Contractor") hereby consents to the
fare going Assignment of Construction Agreements ("Assignment"), of which this Contractor's
Consent ("Consent") is a part.
1. Contractor agrees that if, at any time, Lender shall become the awner of said
Property, or, pursuant to its rights under the Loan Documents, elects to undertake or cause the
completion of construction of the Improvements on any portion of the Property, and gives Contractor
written notice of such election; THEN, so long as the Contractor has received, receives or continues
to receive the compensation called for under the Construction Agreements, Contractor shall continue
to perfonn its obligations under the Canstruction Agreements in accordance with the tenns thereof.
2. Contractor further agrees that, in the event of a breach by Borrower of the
Construction Agreements, so long as Borrower's interest in the Construction Agreements is assigned
to Lender, Contractor will give written notice to Lender at the address shown below of such breach.
Lender shall have thirty (30) days from the receipt of such written notice of default to remedy or cure
said default provided, if such default is of a nature that it cannot be cured within thirty (30) days,
Lender shall have thirty (30) days within which ta commence the cure and shall thereafter have such
reasonable period of time to complete such cure as is necessary. Nothing herein shall require Lender
to cure said default or to undertake completion of construction of the Improvements.
3. Contractor further agrees that, except with the prior written approval of Lender,
Contractor shall not perfonn any construction work on the Property pursuant to any change in the
Plans and Specifications as defined in the Canstruction Agreements where such change: (a) would
constitute a material change in the building material or equipment specifications, the architectural or
structural design, value, architecture or quality of any of the Improvements as defined in the
Construction Agreements; or (b) wauld result in an increase in any item of construction cost in
excess of $DOLLAR AMOUNT OF SINGLE CHANGE IN PLANS AND SPECS HERE for any
single change or in excess of $DOLLAR AMOUNT OF AGGREGATE CHANGE IN PLANS AND
SPECS HERE for all such changes in such items of construction cost; or (c) would affect the
structural integrity, quality of building material or equipment or overall efficiency of operating
systems or utility systems of the improvements. The liens of the Deed of Trust and the Security
Agreement therein shall have priority over any claim oflien of Contractor arising out of or in any
way connected with any construction work perfonned by Contractor on the Property pursuant to any
change in the Plans and Specifications not approved by Lender where Lender's approval is required
under this Consent. Lender may periodically inspect and copy, at reasonable times, the books,
records and accounting data of Contractor relating to the construction of the Improvements.
4. Finally, Contractor shall hold in trust all money disbursed to or otherwise received by
Contractor from or on account of Borrower in connection with the construction of the Improvements
and shall use such money solely for the payment of costs incurred in the construction of the
Improvements, including Contractor's fees, and for no other purpose, until all bills, claims and
demands for such costs have been paid in full.
CONTRACTOR CONSENT TO ASSIGNMENT
EXHIBIT G
Page 1 of2
DOCSOC\844419v2\24212.0002 I - ~ ~-
5. Contractor warrants and represents that it/he has no knowledge of any prior
assignment(s) of any interest in the Construction Agreements. Except as otherwise defined herein,
the terms used herein shall have the meanings given them in the Assignment.
Executed by Contractor on
DPR CONSTRUCTION, INc., a California
corporation
By:
Its:
By:
Its:
CONTRACTOR CONSENT TO ASSIGNMENT
EXHIBIT G
Page 2 of2
DOCSOC\844419v2\24212.0002 I-fo~
EXHIBIT A
to Assignment of Construction Contracts
PROPERTY DESCRIPTION
Exhibit A to Assignment of Construction Agreements dated as of September ~, 200 I,
between Gateway Chula Vista LLC, a California limited liability company, as Borrower, and
Redevelopment Agency of the City ofChula Vista, as Lender.
All that certain real property located in the County of PROPERTY COUNTY, State of
California, described as follows:
ATTACHMENT NO. I TO EXHIBIT G
Page 1 of 1
DOCSOC\844419v2\24212.0002 (-b 7
EXHIBIT H
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND
SPECIFICA nONS
FOR VALUE RECEIVED, the undersigned, GATEWAY CHULA VISTA, LLC,
a California limited liability company ("Borrower"), assigns to the REDEVELOPMENT AGENCY
OF THE CITY OF CHULA VISTA, a public body corporate and politic ("Lender"), as of
September _,200] ("Effective Date"), all of its right, title and interest in and to:
1. All architectural, design, engineering and development agreements, and any and all
amendments, modifications, supplements, addenda and general conditions thereto (collectively,
"Architectural Agreements"); and
2. 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 Borrower in connection with the
construction of the Phase I Improvements on the Property described on Exhibit A attached hereto.
The Plans and Specifications, as of the date hereof, are those which Borrower has heretofore, or will
hereafter deliver to Lender. The Architectural Agreements include, but are not limited to, the
architectural agreement or contract between Borrower and [NAME OF ARCHITECT HERE],
dated [DATE OF ARCHITECTURAL AGREEMENT HERE], as such exists or is hereafter
amended.
3. This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS
AND SPECIFICATIONS ("Assignment") constitutes a present and absolute assignment to Lender
as of September -' 2001 ("Effective Date"); provided, however, Lender confers upon Borrower the
right to enforce the terms of the Architectural Agreements and Borrower'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 and is continuing under any of the Bridge Loan Documents.
Upon the occurrence of a default or event which would constitute a default after notice or the passage
of time, or both, under any of the Bridge Loan Documents, Lender may, in its sole discretion, give
notice to Architect of its intent to enforce the rights of Borrower under the Architectural 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. Borrower acknowledges that by accepting this
Assignment, Lender does not assume any of Borrower's obligations under the Architectural
Agreements or with respect to the Plans and Specifications.
4. Borrower represents and warrants to Lender, as of the Effective Date:
(a) all Architectural Agreements entered into by Borrower are in full force and effect and 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 Lender are
complete and correct; and (c) Barrower has not assigned any of its rights under the Architectural
Agreements or with respect to the Plans and Specifications.
EXHIBIT H
Page 1 of6
DOCSOC\844419v2\24212.0002
I-~ f
5. Borrower agrees: (a) to pay and perfonn all obligations of Borrower under the
Architectural Agreements; (b) to enforce the payment and perfonnance 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 Lender's prior written
approval except as otherwise may be pennitted in the Bridge Loan Documents; and (d) not to further
assign, for security or any other purposes, its rights under the Architectural Agreements or with
respect to the Plans and Specifications without Lender's prior written consent.
6. This Assignment is one of the Bridge Loan Documents and secures payment and
perfonnance by Borrower of all obligations of Borrower under the Bridge Loan Documents.
This Assignment is supplemented by those provisions of the Loan Agreement which apply to the
Bridge Loan Dacuments and said provisions are incorporated herein by reference. This Assignment
is part of and further defines the assignment of contract rights and other rights set forth in the
"Security Agreement" provision of the Deed of Trust.
7. Pursuant to the terms of that certain First Amendment to Disposition and
Development Agreement dated September -' 200 I between Borrower and Lender
("First Amendment") and that certain Disposition and Development Agreement dated June 6, 2000
between Borrower and Lender ("DDA", collectively the First Amendment and the DDA may herein
be referred to as the "Bridge Loan Agreement" ar "Loan Agreement"), Lender has agreed ta loan to
Borrower the principal sum of One Million Three Hundred Thousand and Noll OOTHS Dollars
($1,300,000) ("Bridge Loan") forthe purposes specified in the Loan Agreement. The purpose of the
Loan Agreement includes without limitation, the disposition, construction, and development of
certain real property and improvements described in the Loan Agreement commonly referred to as
the Phase I Parcels and Phase I Improvements (which real property and improvements are
collectively referred to herein as the "Property".) The tenn Loan Agreement as used herein shall
include any future agreements or other ancillary agreements entered into between Borrower and
Lender which refer to this Assignment. Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Loan Agreement.
8. This Assignment shall be governed by the laws ofthe State of California, except to
the extent that federal laws preempt the laws of the State of California, and Borrower consents to the
jurisdictian of any federal or state court within the State of California having proper venue for the
filing and maintenance of any action arising hereunder and agrees that the prevailing party in any
such action shall be entitled, in addition to any other recovery, to reasonable attorneys' fees and
costs.
9. This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors in interest of Barrower and Lender; 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 Borrower contained in any of the Bridge Loan
Documents.
10. The Architect'slEngineer's Consent, Attachment I hereto, Schedule of Unpaid
Claims, Attachment 2 hereto, and Property Description, Attachment 3 hereto, are all attached to this
Assignment and fully incorporated by this reference.
EXHIBIT H
Page 2 of6
DOCSOC\8444 I 9v2\242 12.0002 1- b i
BORROWER
GATEWAY CHULA VISTA, LLC, a California
limited liability company
By: Coast Pacific Properties, LLC
Its: Co-Managing Member
James V. Pieri, Chairman Manager
By: Chula Vista Asset Management, LLC
Its: Co-Managing Member
Geoffrey Payne, Other Manager
EXHIBIT H
Page 3 of6 (-10
DOCSOC\844419v2\24212.0002
Attachment 1
to Borrower Assignment of Architectural Agreements and Plans and Specifications
ARCHITECT'S/ENGINEER'S CONSENT
The undersigned architect and/or engineer (collectively referred to as "Architect") hereby
consents to the foregoing Assignment to which this Architect's/Engineer's Consent ("Consent") is a
part, and acknowledges that there presently exists no unpaid claims due to the Architect except as set
forth on Schedule I attached hereto, arising out of the preparation and delivery of the Plans and
Specifications to Borrower and/or the perfonnance of the Architect's obligations under the
Agreements described in the Assignment.
Architect agrees that if, at any time, Lender shall become the owner of said Property, or,
pursuant to its rights under the Loan Documents, elects to undertake or cause the completion of
construction 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 Agreements, Lender
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 perfonn its obligations under the Agreements for the benefit
and account of Lender in the same manner as if performed for the benefit or account of Borrower in
the absence afthe Assignment.
Architect further agrees that, in the event of a breach by Barrower of the Agreements, or any
agreement entered into with Architect in connection with the Plans and Specifications, so long as
Borrower's interest in the Agreements and Plans and Specifications is assigned to Lender, Architect
will give written notice to Lender of such breach at the address shown below. Lender shall have
thirty (30) days from the receipt of such written notice of default to remedy or cure said default
provided, if such default is of a nature that it cannot be cured within thirty (30) days, Lender shall
have thirty (30) days within which to commence the cure and shall thereafter have such reasonable
period of time to complete such cure as is necessary. Nothing herein shall require Lender to cure said
default or to undertake completion of construction ofthe Improvements.
Architect warrants and represents that it/he has no knowledge of any prior assignment(s) of
any interest in either the Plans and Specifications and/or the Agreements. Except as otherwise
defined herein, the tenns used herein shall have the meanings given them in the Assignment.
Executed on September -' 200 I.
ARCHITECT
ARCHITECT'S SIGNATURE BLOCK HERE
Architect's Address:
ARCHITECT'S ADDRESS
ATTACHMENT NO 1 TO EXHIBIT H
Page] of]
DOCSOC\844419v2\24212.0002 ! - 7 (
ATTACHMENT 2 TO
Assignment of Architectural Agreements and Plans and Specifications
SCHEDULE OF UNPAID CLAIMS
Schedule I to Assignment of Architectural Agreements and Plans and Specifications dated as of
September _,2001, between GATEWAY CHULA VISTA, LLC, a California limited liability
company, as Borrower, and REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA, a public body corporate and politic as Lender.
DESCRIBE UNPAID CLAIMS, IF ANY, HERE
ATTACHMENT NO.2 TO EXHIBIT H
Page I of!
DOCSOC\8444 1 9v2\242 12.0002 (- 7;)-
ATTACHMENT 3
TO EXHIBIT H
PROPERTY DESCRIPTION
Attachment 3 to Assignment of Architectural Agreements and Plans and Specifications dated
as of September _,2001, between GATEWAY CHULA VISTA, LLC, as Borrower, and
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, as Lender.
All that certain real property located in the County of San Diego, State af California,
described as follaws:
A TT ACHMENT NO.3 TO EXHIBIT H
Page 1 of 1
DOCSOC\844419v2\24212.0002 1- 73