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HomeMy WebLinkAboutNC - CDC Proposed AgreementCOOPERATION AGREEMENT FOR COMMISSION'S PAYMENT OF CERTAIN COSTS THIS COOPERATION AGREEMENT (this "Agreement") is entered into this day of February, 2011, by and between the CITY OF NATIONAL CITY (the "City") and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY (the "Commission"), with reference to the following facts: A. The City Council of the City of National City (the "City Council") adopted the Redevelopment Plan for National City Redevelopment Project on July 17, 2007 by Ordinance No. 2007-2295 (the "Redevelopment Plan"), which results in the allocation of a portion of the property taxes generated from the National City Redevelopment Project (the "Project Area") to the Commission for purposes of redevelopment. B. The intent of the Redevelopment Plan is, in part, to provide for the construction and installation of necessary public infrastructure and facilities and to facilitate the repair, restoration and/or replacement of existing public facilities and to perform specific actions necessary to promote the redevelopment and the economic revitalization of the Project Area; to increase, improve and preserve the community's supply of low and moderate income housing; and to take all other necessary actions to implement the Redevelopment Plan and to expend the Commission's share of property taxes (referred to as "tax increment") to accomplish the goals and objectives of the Redevelopment Plan. C. The Commission has adopted its Five -Year Implementation Plan for the Project Area, as amended from time to time (collectively, the "Implementation Plan") with established goals to support affordable housing, economic development, community revitalization, commercial revitalization, and institutional revitalization. To implement the programs and activities associated with each goal, the Commission has made redevelopment fund commitments and budget allocations based on estimated available tax increment revenue and debt financing structures. D. Pursuant to Section 33220 of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.) (the "CRL"), certain public bodies, including the City may aid and cooperate in the planning, undertaking, construction, or operation of redevelopment projects. Collectively, the projects associated with this Agreement are listed in the attached Exhibit 1, which are incorporated herein by this reference (the "Projects"). To carry out the Projects in accordance with the objectives and purposes of the Redevelopment Plan and the Implementation Plan, the Commission desires assistance and cooperation in the implementation and completion of the Projects. The City agrees to aid the Commission and cooperate with the Commission to expeditiously implement the Projects in accordance with the Redevelopment Plan and the Implementation Plan and undertake and complete all actions necessary or appropriate to ensure that the objectives of the Redevelopment Plan and the Implementation Plan are fulfilled within the time effectiveness of the Project Area. Cooperation Agreement Page 1 of 6 E. In considering the Commission's desire to ensure timely implementation and completion of the Projects, the Commission wishes to enter into this Agreement with the City for the pledge of net available tax increment ("Net Tax Increment"), as defined, below, to finance the Projects. The purpose of this Agreement is to facilitate the implementation of the Projects and to provide funding necessary to effectuate the completion of the Projects with Net Tax Increment in this current fiscal year and forthcoming fiscal years. F. "Net Tax Increment" is defined as any tax increment generated from the Project Area, net of any amount required by the CRL to be set aside for purposes of increasing, improving or preserving the City's supply of low and moderate housing, any amounts paid to affected taxing agencies whether by statute or agreement and any amounts paid to the State of California or the County of San Diego as required by statute or agreement, existing debt service payments, and existing contractual obligations received by the Commission or any lawful successor of the Commission and/or to any of the powers and rights of the Commission pursuant to any applicable constitutional provision, statute or other provision of law now existing or adopted in the future. The pledge of Net Tax Increment shall constitute obligations to make payments authorized and incurred pursuant to Section 33445 and other applicable statutes. The obligations set forth in this Agreement will be contractual obligations that, if breached, will subject the Commission to damages and other liabilities or remedies. G. The City Council and the Commission by resolution have each found that the use of Commission redevelopment funding for the publicly owned improvements included in the Projects is in accordance with Section 33445 of the CRL and other applicable law. The said City Council and Commission resolutions are each based on the authority of the Commission, with the consent of the City Council, to pay all or part of the cost of the installation and construction of any building, facility, structure, or other improvements which is publicly owned within the Project Area, if the City Council makes certain determinations. H. By approving and entering into this Agreement, the Commission has approved certain obligations, including the pledge of Net Tax Increment to pay for the Projects. I. The obligations of the Commission under this Agreement shall constitute an indebtedness of the Commission for the purpose of carrying out the Redevelopment Plan for the Project Area. NOW, THEREFORE, the parties hereto do mutually agree as follows: I. INTRODUCTORY PROVISIONS The recitals above are an integral part of this Agreement and set forth the intentions of the parties and the premises on which the parties have decided to enter into this Agreement. II. COMMISSION'S OBLIGATIONS 1. The Projects are those projects which are listed on the attached Exhibit 1. The Agency agrees to pay to the City an amount equal to the cost to the City to carry out the Projects ("Payment Obligation"), including without limitation all administrative costs incurred by the Cooperation Agreement Page 2 of 6 City for the planning, acquisition and disposition, financing, development, permitting, design, site testing, bidding, construction and construction management of the Projects. The Agency's Payment Obligation shall be evidenced by a Promissory Note substantially in form attached hereto as Exhibit 3, and secured by a Deed of Trust, substantially in form attached hereto as Exhibit 4, a Pledge Agreement, substantially in form attached hereto as Exhibit 5, and UCC-1 Financing Statement, substantially in form attached hereto as Exhibit 6. Concurrently herewith, Agency and City shall execute an Option Agreement (including Memorandum of Option Agreement) substantially in form attached hereto as Exhibit 7. The Deed of Trust and Memorandum of Option Agreement shall be recorded against those certain real properties owned by the Agency and identified in the list attached hereto as Exhibit 8 (collectively, the "Agency Properties"), within thirty (30) days of execution of this Agreement. The Option Agreement shall give City an option to purchase the Agency Properties ("Option"). In the event that City exercises said Option, Agency shall receive a credit against any amounts owed to City the Payment Obligation in the amount of the Purchase Price, as set forth in the Option Agreement. The Agency's obligations under this Agreement, including without limitation the Agency's obligation to make the payments to the City required by this Agreement, shall constitute an indebtedness of the Agency for the purpose of carrying out the redevelopment of the Project Area and are obligations to make payments authorized and incurred pursuant to Section 33445 of the CRL and other applicable statutes. The obligations of the Agency set forth in this Agreement are contractual obligations that, if breached, will subject the Agency to damages and other liabilities or remedies. 2. The obligations of Commission under this Agreement shall be payable out of Net Tax Increment, as defined in the above recitals and/or as defined or provided for in any applicable constitutional provision, statute or other provision of law now existing or adopted in the future, levied by or for the benefit of taxing agencies in the Project Area, and allocated to the Commission and/or any lawful successor entity of the Commission and/or any entity established by law to carry out any of the redevelopment plans for the Project Area and/or expend tax increment or pay indebtedness of the Commission to be repaid with tax increment, pursuant to Section 33670 of the CRL or any applicable constitutional provision, statute or other provision of law now existing or adopted in the future, in amounts not less than those set forth in the Payment Schedule attached hereto as Exhibit 2 and incorporated herein by this reference. 3. The indebtedness of Commission under this Agreement shall be subordinate to the rights of the holder or holders of any existing bonds, notes or other instruments of indebtedness (all referred to herein as "indebtedness") of the Commission incurred or issued to finance the Project Area, including without limitation any pledge of tax increment revenues from the Project Area to pay any portion of the principal (and otherwise comply with the obligations and covenants) of any bond or bonds issued or sold by Commission with respect to the Project Area. 4. All payments due to be made by the Commission to the City under this Agreement shall be made by the Commission in accordance with the schedule set forth in Exhibit 2 and as otherwise necessary to reimburse the City for the cost to the City of performing its obligations hereunder. City shall provide Commission with a quarterly report accompanied by evidence reasonably satisfactory to the Commission's Executive Director that the City has Cooperation Agreement Page 3 of 6 progressed in the development and construction of the Project for which payment is made by the Commission commensurate with such payments and has incurred costs or obligations to make payments equal to or greater than such amount. III. CITY'S OBLIGATIONS 1. The City shall accept any funds offered by the Commission pursuant to this Agreement and shall devote those funds to completion of the Projects by (i) reimbursing the City or using such funds to make City expenditures to perform the work required to carry out and complete the Projects; (ii) utilizing such funds to pay debt service on bonds or other indebtedness or obligations that the City has or will incur for such purposes; and/or (iii) paying such funds into a special fund of the City to be held and expended only for the purpose of satisfying the obligations of the City hereunder. In the event that City exercises the Option, the Commission Property may be used, leased or sold by the City for any municipal purposes, including affordable housing and public improvements, in conformance with the Redevelopment Plan. 2. It is the responsibility of City to pay all development and construction costs in connection with the Projects from funds paid to the City by the Commission under this Agreement. 3. The City shall perform its obligations hereunder in accordance with the applicable provisions of federal, state and local laws, including the obligation to comply with environmental laws such as CEQA before undertaking each Project, and shall timely complete the work required for each Project in accordance with the Schedule of Performance attached hereto as Exhibit 2 and incorporated herein by this reference. IV. LIABILITY AND INDEMNIFICATION In contemplation of the provisions of California Government Code section 895.2 imposing certain tort liability jointly upon public entities solely by reason of such entities being parties to an agreement as defined by Government Code section 895, the parties hereto, as between themselves, pursuant to the authorization contained in Government Code sections 895.4 and 895.6, shall each assume the full liability imposed upon it, or any of its officers, agents or employees, by law for injury caused by negligent or wrongful acts or omissions occurring in the performance of this Agreement to the same extent that such liability would be imposed in the absence of Government Code section 895.2. To achieve the above -stated purpose, each party indemnifies, defends and holds harmless the other party for any liability, losses, cost or expenses that may be incurred by such other party solely by reason of Government Code section 895.2. V. ENTIRE AGREEMENT; WAIVERS; AND AMENDMENTS 1. This Agreement shall be executed in triplicate originals, each of which is deemed to be an original. This Agreement consists of six (6) pages and two (2) Exhibits, which constitute the entire understanding and agreement of the parties. Cooperation Agreement Page 4 of 6 2. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to the subject matter of this Agreement. 3. This Agreement is intended solely for the benefit of the City and the Commission. Notwithstanding any reference in this Agreement to persons or entities other than the City and the Commission, there shall be no third party beneficiaries under this Agreement; provided, however, that City may, with the consent of Commission, which shall not be unreasonably withheld, assign City's rights and obligations, in whole or part, under this Agreement to any third party. 4. All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representatives of the parties. VI. SEVERABILITY If any term, provisions, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability. VII. DEFAULT If either party fails to perform or adequately perform an obligation required by this Agreement within thirty (30) calendar days of receiving written notice from the non -defaulting party, the party failing to perform shall be in default hereunder. In the event of default, the non - defaulting party will have all the rights and remedies available to it at law or in equity to enforce the provisions of this contract, including without limitation the right to sue for damages for breach of contract. The rights and remedies of the non -defaulting party enumerated in this paragraph are cumulative and shall not limit the non -defaulting party's rights under any other provision of this Agreement, or otherwise waive or deny any right or remedy, at law or in equity, existing as of the date of the Agreement or hereinafter enacted or established, that may be available to the non -defaulting party against the defaulting party. All notices of defaults shall clearly indicate a notice of default under this Agreement. VIII. BINDING ON SUCCESSORS This Agreement shall be binding on and shall inure to the benefit of all successors and assigns of the parties, whether by agreement or operation of law. SIGNTURES ON NEXT PAGE SPACE LEFT INTENTIONALLY BLANK Cooperation Agreement Page 5 of 6 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. Attest: CITY OF NATIONAL CITY By: By: City Clerk City Manager Attest: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: By: Secretary Commission Chair APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: Kane Ballmer & Berkman By: Commission Special Counsel Cooperation Agreement Page 6 of 6 EXHIBIT 1 PROJECTS SUBJECT TO THIS AGREEMENT Project name/description APN # or location Anticipated cost Anticipated Completion Granger Hall and property 554-050-11 $1,200,000 June 30, 2014 Old Library/Cultural Arts Center/Public Works 200 East 12th St $398,323 June 30, 2014 Street Resurfacing Redevelopment Project Areas $6,500,000 June 30, 2016 Concrete improvements Redevelopment Project Areas $1,400,000 June 30, 2016 Roundabout D Avenue and 12th St $625,000 June 30, 2016 Traffic Signal Timing, fiber optic interconnect Redevelopment Project Areas $150,000 June 30, 2016 Plaza Boulevard Widening Plaza Boulevard — I-5 to I-805 $4,709,300 June 30, 2016 Traffic Monitoring/Safety Enhancement Redevelopment Project Areas $150,000 June 30, 2016 Drainage Improvements Redevelopment Project Areas $2,200,000 June 30, 2016 Public Works Relocation 2200 Hoover Ave $100,000 June 30, 2016 Public Works Acquisition 2200 Hoover Avenue $4,700,000 June 30, 2016 Senior Village APNs # 561- 410-04, 05, 06 $13,000,000 June 30, 2016 Las Palma Park Facilities Plan APNs #563- 150-31, 561- 360-35 $50,000 June 30, 2016 Pacific Steel 1500 Cleveland Ave $60,000 June 30, 2016 Kimball Way Creek Improvements Paradise Creek — National City Blvd to D Ave $100,000 June 30, 2016 B-1 Site Development 5 acre parcel — Port holdings immediately northeast of Pier 32 Marina — Harbor District Project $200,000 June 30, 2106 Area Storefront Renovation Program All project areas $250,000 June 30, 2016 Sudberry — RCP site APN # 562- 321-08 $830,000 June 30, 2016 Paradise Creek Enhancement Paradise Creek — 18th St — 24th St $2,300,000 June 30, 2016 Aquatic Center Pepper Park, Harbor District project area $3,300,000 June 30, 2016 WI-TOD 2200 Hoover Ave $13,000,000 June 30, 2016 TOTAL $55,226,623 EXHIBIT 2 PAYMENT SCHEDULE All projects will be completed by June 30, 2016 as noted in Exhibit 1 EXHIBIT 3 PROMISSORY NOTE [behind this page] PROMISSORY NOTE TO THE CITY OF NATIONAL CITY SECURED BY A DEED OF TRUST AND ASSIGNMENT OF RENTS 7.00% Interest National City, California Date: February , 2011 FOR VALUE RECEIVED, the REDEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (the "Agency" or "Borrower") hereby promises to pay to the CITY OF NATIONAL CITY, a California municipal corporation (the "City" or "Lender") the principal amount of [INSERT AMOUNT] DOLLARS and No/100 Cents ($ .00) (the "City Loan") together with interest on the unpaid principal balance from time to time outstanding at an annual rate of seven percent (7%). The Commission, acting to carry out its public purposes of executing and implementing the Redevelopment Plan for the National City Redevelopment Project Areas (the "Project Area") under the Community Redevelopment Law, borrowed from the City the City Loan on a long- term basis. This promissory note (the "Note") evidences the City Loan to the Agency, and is given by the Commission pursuant to the Community Redevelopment Law and that certain Cooperation Agreement, dated 2011, by and between the City and Commission (referred to herein as the "Cooperation Agreement"). The Cooperation Agreement is a public record on file in the offices of the Commission and the City, and the provisions of said document are incorporated herein by this reference. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Cooperation Agreement. 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Cooperation Agreement. In addition, the following terms shall have the following meanings: "Affiliate" shall mean (1) any Person directly or indirectly controlling, controlled by, or under common control with another Person; (2) any Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person; or (3) if that other Person is an officer, director, member or partner, of any company for which such Person acts in any such capacity. The term "control" as used in the immediately preceding sentence, shall mean the power to direct the management or the power to control election of the board of directors. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. "City Loan" shall mean the long-term loan made by the City to the Commission pursuant to the Community Redevelopment Law and the Cooperation Agreement in the principal amount of [insert amount] ($ .00), which is evidenced by this Note. "Community Redevelopment Law" shall mean the Community Redevelopment Law of the State of California set forth at California Health and Safety Code Section 33000 et seq. "Net Available Tax Increment Revenue" shall mean any tax increment (defined as any tax increment generated from the Project Area), net of any amount required by the CRL to be set aside for purposes of increasing, improving or preserving the City' s supply of low and moderate housing, any amounts paid to affected taxing agencies whether by statute or agreement and any amounts paid to the State of California or the County of San Diego as required by statute or agreement, existing debt service payments, and existing contractual obligations received by the Commission or any lawful successor of the Commission and/or to any of the powers and rights of the Commission pursuant to any applicable constitutional provision, statute or other provision of law now existing or adopted in the future. The pledge of net available tax increment will constitute obligations to make payments authorized and incurred pursuant to Section 33445 and other applicable statutes. The obligations set forth in this Agreement will be contractual obligations that, if breached, will subject the Commission to damages and other liabilities or remedies. "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. "Tax Increment Revenue" means the portion of property tax revenues from the increase in assessed value of real property within the Project Area that has occurred after adoption of the Redevelopment Plan for the Project Area received by the Commission to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by the Commission to finance or refinance, in whole or in part, its activities in the Project Area. "Term" of this Note shall mean the period of time five (5) years following the execution of this Note by the Commission which execution date shall constitute the "Effective Date" of this Note. "Transfer" shall have the meaning set forth in Section 9 of this Note. 2. This Note evidences the obligation of the Commission to the City for the repayment of the City Loan. 3. This Note is payable at the principal office of the City, 1243 National City Boulevard, National City, California, 91950-4379, or at such other place as the holder hereof may inform the Commission, in writing, in lawful money of the United States. 4. This Note shall be secured by the Agency's pledge of Net Available Tax Increment Revenue as provided in the Cooperation Agreement, the Agency Deed of Trust -2- (Exhibit 4 to the Cooperation Agreement), Pledge Agreement (Exhibit 5 to the Cooperation Agreement), and UCC-1 Financing Statement (Exhibit 6 to the Cooperation Agreement). 5. This Note shall bear interest at the rate of seven percent (7.00 %) per annum, simple interest, which shall begin to accrue upon disbursement of the City Loan. 6. The indebtedness of the Commission under this Note shall be subordinate to the rights of the holder or holders of any existing bonds, notes and other instruments of indebtedness, and existing contractual indebtedness (all referred to herein as "indebtedness") of the Commission incurred or issued to finance its activities in the Project Area, including without limitation any pledge of tax increment revenues from the Project Area to pay any portion of the principal (and otherwise comply with the obligations and covenants) of any existing bond or bonds issued or sold by the Commission with respect to the Project Area. 7. Prior to the expiration of the fifth (5th) anniversary following the Effective Date of this Note, the Commission shall be obligated to repay the City Loan from the Agency's Net Available Tax Increment Revenue, by making annual installment payments based on the Payment Schedule. In the event that additional funds are required in order to make the Commission payments to the City required by this Note, the Commission shall make such payments from income received by the Commission from its projects and programs or any other additional funds available to it. All payments to the City shall be applied first to interest, then to reduce the principal amount owed. 8. The entire unpaid principal balance of this Note and any accrued but unpaid interest shall be due and payable immediately in the event that, prior to the fifth anniversary of the Effective Date, there is a default by the Commission under the terms of this Note or the Cooperation Agreement which is not cured within the respective time period provided herein and therein. 9. (a) Prior to the repayment in full of the City Loan, the Commission shall not assign or attempt to assign any right or interest in the Cooperation Agreement (referred to hereinafter as a "Transfer"), without prior written approval of the City. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. The City shall not unreasonably withhold or delay its consent. If consent should be given, any such Transfer shall be subject to this Section 9, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. (b) Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill the obligations undertaken by the Commission in the Cooperation Agreement and this Note. Any such proposed transferee, by instrument in writing satisfactory to the City, for itself and its successors and assigns, and for the benefit of the City shall expressly assume all of the obligations of the Commission under the Cooperation Agreement and agree to be subject to all conditions and restrictions applicable to the Commission in this Note. There shall be submitted to the City for review all instruments and other legal documents proposed to effect any such Transfer; and if approved by the City its approval shall be indicated to the Commission in writing. (c) In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, shall be deemed to relieve the Commission or any other party from any obligations under the Cooperation Agreement. (d) In the event of a Transfer prior to the time the City Loan is paid in full, without the prior written consent of the City, the remaining principal balance of the City Loan and all accrued but unpaid interest shall be immediately due and payable. (e) As used herein, "Transfer" includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in the Agency, or any conversion of the Commission to an entity form other than that of the Commission at the time of execution of this Note. (f) The City shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain the City's reasons for disapproval. 10. Subject to the provisions and limitations of this Section 10, the obligation to repay the City Loan is a nonrecourse obligation of the Agency. Commission officials, employees, agents and attorneys shall not have any personal liability for repayment of the City Loan. The sole recourse of City for repayment of the City Loan shall be the exercise of its rights against the security for the City Loan. Provided, however, that the foregoing shall not (a) constitute a waiver of any obligation evidenced by this Note; (b) limit the right of the City to name the Commission as a party defendant in any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment shall be asked for or taken against the Agency; (c) release or impair this Note; (d) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy or any other instrument securing the Note or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of any deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing the Note; (f) relieve the Commission of any of its obligations under any indemnity delivered by the Commission to the City; or (g) affect in any way the validity of any guarantee or indemnity from any Person of all or any of the obligations evidenced and secured by this Note. Notwithstanding the first sentence of this paragraph, City may recover directly from the Commission or from any other party: (a) Any damages, costs and expenses incurred by the City as a result of fraud or any criminal act or acts of the Commission or any member, officer, director or employee of the Agency; (b) Any damages, costs and expenses incurred by the City as a result of any misappropriation of funds; 4 (c) All court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that the City shall pay to the Commission the Agency's reasonable court costs and attorneys' fees if the Commission is the prevailing party in any such enforcement or collection action). 11. The Commission waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice. The Commission hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Note, the Cooperation Agreement or any term or provision thereof. 12. Upon the failure of Commission to perform or observe any other term or provision of this Note, upon any event of acceleration described in Section 8, or upon the occurrence of any other event of default under the terms of the Cooperation Agreement, the holder may exercise its rights or remedies hereunder or thereunder. 13. (a) Subject to the extensions of time set forth in Section 14, and subject to the further provisions of this Section 13, failure or delay by the Commission to perform any material term or provision of this Note or the Cooperation Agreement constitutes a default under this Note. (b) The City shall give written notice of default to the Agency, specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs under the terms of this Note or the Cooperation Agreement, prior to exercising any remedies hereunder or thereunder, the City shall give to the Commission written notice of such default. The Commission shall have a reasonable period of time after such notice is given within which to cure the default prior to exercise of any remedies by the City under this Note and/or the Cooperation Agreement. In no event shall the City be precluded from exercising any remedies if its security becomes or is about to become materially impaired by any failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. (e) If a non -monetary event of default occurs under the terms of this Note or the Cooperation Agreement, prior to exercising any remedies hereunder or thereunder, the City shall give to the Commission written notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, the Commission shall have such period to effect a cure prior to exercise of any remedies by the -5- City under this Note and/or the Cooperation Agreement. If the default is such that it is not reasonably capable of being cured within thirty (30) calendar days, and the Commission(i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then the Commission shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the City. In no event shall the City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety (90) calendar days after the notice of default is received or deemed received. (f) Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Borrower; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 14. Notwithstanding specific provisions of this Note, the Commission shall not be deemed to be in default for failure to perform any non -monetary performance hereunder where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the City or any other public or governmental Commission or entity, or any causes beyond the control or without the fault of the Commission ("Force Majeure Event"). An extension of time for any such Force Majeure Event shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause of the Force Majeure Event, if notice by the Commission is sent to the City within thirty (30) calendar days of knowledge of the commencement of such cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the Commission delivers to the City written notice describing the event, its cause, when and how the Commission obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. The Commission shall deliver such written notice within thirty (30) calendar days after it obtains actual knowledge of the Force Majeure Event. Times of performance under this Note may also be extended in writing by the City and the Agency. 15. If the rights created by this Note shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations shall be completely performed and paid. 16. The Commission shall have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. IN WITNESS WHEREOF, the Commission has executed this Note as of the day and year set forth above. 6 Attest: BORROWER COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: By: Secretary Commission Chair APPROVED AS TO FORM: By: General Counsel APPROVED AS TO FORM: Kane Ballmer & Berkman By: Commission Special Counsel -7 EXHIBIT 4 DEED OF TRUST [behind this page] OFFICIAL BUSINESS. Document entitled to free recording per Government Code Section 6103. Recording Requested by and When Recorded Mail to: OFFICE OF CITY MANAGER CITY OF IMPERIAL BEACH 1243 National City Boulevard National City, California 91950-4379 SPACE ABOVE THIS LINE FOR RECORDER'S USE [LIST OF APNS FOR PROPERTIES] DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) This Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents)(the "Deed of Trust") is given as of the date signed by the REDEVELOPMENT AGENCY OF THE CITY OF IMPERIAL BEACH, a public body corporate and politic (hereinafter referred to as "Trustor") whose address is 1243 National City Boulevard, National City, California 91950-4379, to [Name] Title Company, a California corporation (hereinafter called "Trustee"), for the benefit of the CITY OF NATIONAL CITY, a municipality (hereinafter called "Beneficiary"), whose address is 1243 National City Boulevard, National City, California 91950-4379. Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION the following properties (the "Trust Estate"): (a) That certain real property in the City of National City, County of San Diego, State of California more particularly described and enumerated in Exhibit "A" attached hereto and by this reference made a part hereof (such interest in real property is hereafter referred to as the "Subject Property"); (b) All buildings, structures and other improvements now or in the future located or to be constructed on the Subject Property (the "Improvements"); (c) all tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights -of -way and development rights (the Deed of Trust Page 1 of 9 "Appurtenances"). (The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred to as the "Real Property"); (d) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation leasing or occupancy of the Trust Estate, including those past due and unpaid (the "Rents"); (e) all present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (the "UCC"), and whether existing now or in the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, theater equipment, seating, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor (the "Goods," and together with the Real Property, the "Property"); and (f) all present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types on intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (collectively the "Intangibles"). Deed of Trust Page 2 of 9 Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the "Personal Property"). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a "secured party" under the UCC and other applicable California law. Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9313, 9502 and 14109 of the UCC. FOR THE PURPOSE OF SECURING due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in that certain promissory note (the "Note"), dated on or about the date hereof, executed by Trustor. The obligations and restrictions set forth in the Note (the "Secured Obligations") and all of their terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances evidenced by any instrument reciting that it is secured hereby. AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That Trustor shall perform the obligations of the Agency as set forth in the Secured Obligations at the time and in the manner respectively provided therein; 2. That Trustor shall not permit or suffer the use of any of the property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed; 3. That the Secured Obligations are incorporated in and made a part of the Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may exercise its remedies hereunder. 4. That all rents, profits and income from the property covered by this Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income. 5. That upon default hereunder or under the aforementioned Secured Obligations, or any of them, and after the giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the improvements now existing or hereafter erected on the property insured against loss by fire and such other hazards, casualties, and contingencies as may Deed of Trust Page 3 of 9 reasonably be required in writing from time to time by the Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. In no event shall the amounts of coverage be less than 100 percent of the insurable value of the Property. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies shall be deposited with the Beneficiary; 7. To pay, at least 10 days before delinquency, any taxes and assessments affecting said Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deedof Trust, Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7. 8. To keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon (subject to Trustor' s right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law and/or covenants, conditions and/or restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the consent of the Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest, or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees; 11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by Deed of Trust Page 4 of 9 the Beneficiary shall be added to the indebtedness and obligations secured hereby in the Secured Obligations, or any other instrument drawn and agreed upon between the parties; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate of ten percent (10%) pursuant to Section 3289 of the California Civil Code; 13. _ Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as authorized by Beneficiary and further that they will keep and maintain the property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall, at Beneficiary's written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of San Diego County, a surety bond in an amount one -and -one-half (1') times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; 14. That any and all improvements made or about to be made upon the premises covered by the Deed of Trust, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; and 15. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14, Division 3, of the California Civil Code. IT IS MUTUALLY AGREED THAT: 16. Should the property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of any beneficiary of a deed of trust senior or junior in priority to this Deed of Trust ("Lender"), Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage. Unless Beneficiary approves of the rights of any Lender to the contrary, in addition to their rights herein, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary. Deed of Trust Page 5 of 9 17. If Trustor shall fail to perform any covenant or agreement in this Deed of Trust or the Secured Obligations within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than 30 days is reasonably required to cure such default, should Trustor fail to promptly commence such cure, and diligently prosecute same to completion), after the giving of notice and the expiration of any applicable cure period, Beneficiary may deliver to Trustee a written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed, the Secured Obligations and all documents evidencing expenditures secured hereby; 18. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attorney's fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's Deed; (3) all consideration paid by Beneficiary as referred to in a Secured Obligation, with accrued interest at the highest rate of interest permitted by law; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto; 19. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 20. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; Deed of Trust Page 6 of 9 21. Upon written request of Beneficiary stating that all obligations secured hereby have been satisfied, and upon surrender of this Deed of Trust to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto"; 22. The trust created hereby is irrevocable by Trustor; 23. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary" shall include not only the original Beneficiary hereunder but also any successors or assignees. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; 24. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee; 25. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth in the first paragraph of this Deed of Trust. 26. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary. 27. Trustor agrees that the indebtedness secured by this Deed of Trust is made expressly for the purpose , and in furtherance, of the responsibilities of Trustor as a redevelopment agency under the provisions of California's Community Redevelopment Law. 28. Notwithstanding specific provisions of this Deed of Trust, non -monetary performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City of San Diego or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary); or any other causes Deed of Trust Page 7 of 9 beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Deed of Trust may also be extended in writing by the Beneficiary and Trustor. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor shall deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event. 29. (a) Subject to the extensions of time set forth in Section 28, and subject to the further provisions of this Section 29, failure or delay by Trustor to perform any term or provision respectively required to be performed under a Secured Obligation or this Deed of Trust constitutes a default under this Deed of Trust. (b) Beneficiary shall give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies, Beneficiary shall give Trustor written notice of such default. Trustor shall have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary under the Secured Obligations and/or this Deed of Trust. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially impaired by any failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. (e) If a non -monetary event of default occurs, prior to exercising any remedies, Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any Deed of Trust Page 8 of 9 failure to cure a default or the default is not cured within ninety (90) days after the notice of default is received or deemed received. (0 Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Trustor; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 30. This Deed of Trust shall be subordinate and junior to only those trust deeds Beneficiary expressly agrees to subordinate to in a written instrument approved by the Executive Director of the Trustor and City Manager of the Beneficiary, or their respective assignees. The Executive Director of the Trustor or City Manager of Beneficiary or their designee shall execute such instruments as may be necessary to subordinate the lien of this Deed of Trust and the Secured Obligation to the deed of trust described in this Section 30, above. In the event of a default or breach by Trustor of any security instrument securing a senior obligation described in this Section 30, Beneficiary shall have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary shall be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall be a lien against the Subject Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law. IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above. Attest: CITY OF NATIONAL CITY By: By: City Clerk City Manager Attest: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: By: Secretary Commission Chair APPROVED AS TO FORM: Deed of Trust Page 9 of 9 By: Commission General Counsel APPROVED AS TO FORM: Kane Ballmer & Berkman By: Commission Special Counsel Deed of Trust Page 10 of 9 State of California County of ) ss On before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) LEGAL DESCRIPTION OF SUBJECT PROPERTY EXHIBIT "A" TO DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) EXHIBIT 5 PLEDGE AGREEMENT [behind this page] THIRD PARTY PLEDGE AGREEMENT TO: CITY OF NATIONAL CITY ("City") 1. GRANT OF SECURITY INTEREST. In consideration for City's assistance and cooperation in the implementation and completion of those certain Projects (defined below) set forth in that certain Cooperation Agreement dated February , 2011 entered. into by City and the Community Development Commission of the City of National City ("Pledgor" or "Commission") ("Cooperation Agreement") and as security for the payment of all Indebtedness (defined below) of Pledgor to City, Pledgor hereby assigns, transfers to and pledges with City the following money and property: that certain bank account established at Wells Fargo, LAIF, Deutsche Bank for 2004 TAB account (bond reserve funds), Deutsche Bank — Trustee for 2005 TAB account (bond reserve funds), Bank of New York/Mellon — Trustee for 1999 TAB account (bond reserve funds), Gilford Securities, and all proceeds on deposit or to be deposited therein and rights to payment with respect to the foregoing, of Pledgor, together with all other money or property heretofore delivered or which shall hereafter be delivered to or come into the possession, custody or control of City in any manner or for any purpose whatsoever during the existence of this Agreement (collectively called "Collateral"), and whether held in a general or special account or deposit for safekeeping or otherwise, together with whatever is receivable or received when any Collateral or proceeds are sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation, (a) all rights to payment, including returned premiums, with respect to any insurance relating to any of the foregoing, (b) all rights to payment of any Net Available Tax Increment (defined below), and (c) all rights to payment with respect to any cause of action affecting or relating to any of the foregoing, (hereinafter called "Proceeds"), and in the event that Pledgor receives any such Proceeds, Pledgor will hold the same in trust on behalf of and for the benefit of City and will immediately deliver all such Proceeds to City in the exact form received, to be held by City as part of the Collateral, subject to all terms hereof. The word "Indebtedness" is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Pledgor heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable, including, without limitation, all amounts due under that certain Cooperation Agreement, including, without limitation, amounts equal to the cost to the City to carry out the Projects (defined below), including without limitation all costs incurred by the City for planning, acquisition and disposition, financing, development, permitting, design, site testing, bidding, construction and management of the Projects and Pledgor's obligation to make the payments set forth in the Payment Schedule attached to the Cooperation Agreement as Exhibit 2. The term Net available tax increment is defined as any tax increment generated from the Project Area, net of any amount required by the CRL to be set aside for purposes of increasing, improving or preserving the City's supply of low and moderate housing, any amounts paid to affected taxing agencies whether by statute or agreement and any amounts Pledge Agreement Page 1 of 10 increasing, improving or preserving the City's supply of low and moderate housing, any amounts paid to affected taxing agencies whether by statute or agreement and any amounts paid to the State of California or the County of San Diego as required by statute or agreement, existing debt service payments, and existing contractual obligations received by the Commission or any lawful successor of the Commission and/or to any of the powers and rights of the Commission pursuant to any applicable constitutional provision, statute or other provision of law now existing or adopted in the future. The pledge of net available tax increment will constitute obligations to make payments authorized and incurred pursuant to Section 33445 and other applicable statutes. The obligations set forth in this Agreement will be contractual obligations that, if breached, will subject the Commission to damages and other liabilities or remedies. The term "Projects" as used herein shall collectively mean the projects associated with the Cooperation Agreement listed in the Schedule of Projects set forth in Exhibit 1 of the Cooperation Agreement. 2. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS. This is a continuing agreement and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of Pledgor to the City, including that arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of Pledgor or any other event or proceeding affecting Pledgor. This Agreement shall not apply to any new Indebtedness created after actual receipt by City of written notice of its revocation as to such new Indebtedness; provided however, that contractual agreements made by the City to Pledgor to aid and cooperate with Pledgor in the implementation and completion of the Projects after revocation under commitments existing prior to receipt by City of such revocation, and extensions, renewals or modifications, of any kind, of Indebtedness incurred by the Pledgor prior to receipt by City of such revocation shall not be considered new Indebtedness. Any such notice must be sent to City by registered U.S. mail, postage prepaid, addressed to its office at: 1243 National City Boulevard National City, California 91950-4379 or at such other address as City shall from time to time designate. The obligations of Pledgor hereunder shall be in addition to any obligations of Pledgor under any other grants or pledges of security for any liabilities or obligations of Pledgor or any other person heretofore or hereafter given to City unless said other grants or pledges of security are modified or revoked in writing; and this Agreement shall not, unless herein provided, affect or invalidate any such other grants or pledges of security. 3. WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. Pledgor acknowledges that there is no condition precedent to the effectiveness of this Agreement and that this Agreement is in full force and effect and is binding on Pledgor as of the date written below, regardless of whether City obtains additional collateral or any guaranties from others or takes any other action contemplated by Pledgor. Pledgor waives Pledge Agreement Page 2 of 10 the benefit of any statute of limitations affecting Pledgor's liability hereunder or the enforcement thereof, and Pledgor agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to Pledgor's liability hereunder. The liability of Pledgor hereunder shall be reinstated and revived and the rights of City shall continue if and to the extent for any reason any amount at any time paid on account of any Indebtedness secured hereby is rescinded or must be otherwise restored by City, whether as a result of any proceedings in bankruptcy, insolvency, reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by City in its sole discretion; provided however, that if City chooses to contest any such matter at the request of Pledgor, Pledgor agrees to indemnify and hold City harmless from and against all costs and expenses, including reasonable attorneys' fees, expended or incurred by City in connection therewith, including without limitation, in any litigation with respect thereto. 4. REPRESENTATIONS AND WARRANTIES. 4.1 Pledgor represents and warrants to City that: (i) Pledgor is the owner and has possession or control, or will have possession or control, of the Collateral and Proceeds; (ii) Pledgor has the right to pledge the Collateral and Proceeds; (iii) all Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs, default, prepayment, defenses and conditions precedent of any kind or character, except as heretofore disclosed to City in writing; (iv) specifically with respect to Collateral and Proceeds consisting of investment securities, instruments, chattel paper, documents, contracts, insurance policies or any like property, all persons appearing to be obligated thereon have authority and capacity to contract and are bound as they appear to be, and the same comply with applicable laws concerning form, content and manner of preparation and execution; (v) all statements contained herein and, where applicable, in the Collateral are true and complete; and (vi) no financing statement covering any of the Collateral or Proceeds, and naming any secured party other than City, is on file in any public office. 4.2 Pledgor further represents and warrants to City that the Collateral pledged hereunder is so pledged at Pledgor's request. Pledgor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Pledgor's risks hereunder. 5. COVENANTS OF PLEDGOR. 5.1 Pledgor agrees: (i) to indemnify City against all losses, claims, demands, liabilities and expenses of every kind caused by property subject hereto by reason of Government Code Section 895.2; (ii) to pay all costs and expenses, including reasonable attorneys' fees, incurred by City in the perfection, preservation, realization, enforcement and exercise of its rights, powers, and remedies hereunder; (iii) to permit City to exercise its powers; (iv) to execute and deliver such documents Pledge Agreement Page 3 of 10 as City deems necessary to create, perfect and continue the security interests contemplated hereby; and (v) not to change its chief place of business or the place where Pledgor keeps any of the Collateral or Pledgor's records concerning the Collateral and Proceeds without first giving City written notice of the address to which Pledgor is moving same. 5.2 Pledgor agrees with regard to Collateral and Proceeds: (i) not to permit any lien on the Collateral or Proceeds, except in favor of City; (ii) after an Event of Default, defined below, not to withdraw any funds from any deposit account pledged to City hereunder without City's prior written consent; (iii) not to sell, hypothecate or otherwise dispose of any of the Collateral or Proceeds, or any interest therein, without the prior written consent of City; (iv) to keep, in accordance with generally accepted accounting principles, complete and accurate records regarding all Collateral and Proceeds, and to permit City to inspect the same at any reasonable time; (v) not to commingle Collateral or Proceeds with other property, (vi) in the event City elects to receive payments of Collateral or Proceeds hereunder after an Event of Default that is continuing, to pay all expenses incurred by City in connection therewith, including expenses of accounting, correspondence, collection efforts, filing, recording, record keeping and expenses incidental thereto; (vii) to provide any service and do any other acts or things necessary to keep the Collateral and Proceeds free and clear of all defenses, rights of offset and counterclaims; and (viii) if the Collateral or Proceeds consists of securities and so long as no Event of Default exists, to vote said securities and to give consents, waivers and ratifications with respect thereto, provided that no vote shall be cast or consent, waiver or ratification given or action taken which would impair City's interest in the Collateral and Proceeds or be inconsistent with or violate any provisions of this Agreement. 6. POWERS OF CITY. Pledgor appoints City its true attorney in fact to perform any of the following powers, which are coupled with an interest, are irrevocable until termination of this Agreement and may be exercised from time to time by City `s officers, council members, agents and employees, or any of them, whether or not Pledgor is in default: (a) to perform any obligation of Pledgor hereunder in Pledgor's name or otherwise; (b) to notify any person obligated on any security, instrument or other document subject to this Agreement of City `s rights hereunder; (c) to collect by legal proceedings or otherwise all dividends, interest, principal or other sums now or hereafter payable upon or on account of the Collateral or Proceeds; (d) to enter into any extension, reorganization, deposit, merger or consolidation agreement, or any other agreement relating to or affecting the Collateral or Proceeds, and in connection therewith to deposit or surrender control of the Collateral and Proceeds, to accept other property in exchange for the Collateral and Proceeds, and to do and perform such acts and things as City may deem proper, with any money or property received in exchange for the Collateral or Proceeds, at City `s option, to be applied to the Indebtedness or held by City under this Agreement; (e) to make any compromise or settlement City deems desirable or proper in respect of the Collateral and Proceeds; (f) to insure, process and preserve the Collateral and Proceeds; (g) to exercise all rights, powers and remedies which Pledgor would have, but for this Agreement, under all the Collateral Pledge Agreement Page 4 of 10 and Proceeds subject to this Agreement; and (h) to do all acts and things and execute all documents in the name of Pledgor or otherwise, deemed by City as necessary, proper or convenient in connection with the preservation, perfection or enforcement of its rights hereunder. To effect the purposes of this Agreement or otherwise upon instructions of Pledgor, City may cause any Collateral and/or Proceeds to be transferred to City's name or the name of City's nominee. If an Event of Default has occurred and is continuing, any or all Collateral and/or Proceeds consisting of securities may by registered, with notice to Pledgor, in the name of City or its nominee, and thereafter City or its nominee may exercise, without notice, all voting and corporate rights at any meeting of the shareholders of the issuer thereof, any and all rights of conversion, exchange or subscription, or any other rights, privileges or options pertaining to any Collateral and/or Proceeds, all as if it were the absolute owner thereof. The foregoing shall include, without limitation, the right of City or its nominee to exchange, at its discretion, any and all Collateral and/or Proceeds upon the merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof, or upon the exercise by the issuer thereof or City of any right, privilege or option pertaining to any shares of the Collateral and/or Proceeds, and in connection therewith, the right to deposit and deliver any and all of the Collateral and/or Proceeds with any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as City may determine. All of the foregoing rights, privileges or options may be exercised without liability except to account for property actually received by City. City shall have no duty to exercise any of the foregoing, or any other rights, privileges or options with respect to the Collateral or Proceeds and shall not be responsible for any failure to do so or delay in so doing. 7. CASH COLLATERAL ACCOUNT; NO DISBURSEMENT. Any money received by City in respect of the Collateral may, at City's option, be retained in a non -interest bearing cash collateral account and the same shall, for all purposes, be deemed Collateral hereunder. No disbursement of all of the Collateral may be made without City's prior written consent, which may be given or withheld in City's sole and absolute discretion. 8. CITY'S CARE AND DELIVERY OF COLLATERIAL. City's obligation with respect to Collateral and/or Proceeds in its possession shall be strictly limited to the duty to exercise reasonable care in the custody and preservation of such Collateral and Proceeds, and such duty shall not include any obligation to ascertain or to initiate any action with respect to or to inform Pledgor of maturity dates, conversion, call or exchange rights, or offers to purchase the Collateral or Proceeds, or any similar matters, notwithstanding City's knowledge of the same. City shall have no duty to take any steps necessary to preserve the rights of Pledgor against prior parties, or to initiate any action to protect against the possibility of a decline in the market value of the Collateral or Proceeds. City shall not be obligated to take any actions with respect to the Collateral or. Proceeds requested by Pledgor unless such request is made in writing and City determines, in its sole discretion, that the requested action would not unreasonably jeopardize the value of the Collateral and Proceeds as security for the Indebtedness. City may at any time deliver the Collateral and Proceeds, or any part thereof, to Pledgor, and the receipt thereof by Pledgor Pledge Agreement Page 5 of 10 shall be a complete and full acquittance for the Collateral and Proceeds so delivered, and City shall thereafter be discharged from any liability or responsibility therefor. 9. PLEDGOR'S WAIVERS. 9.1 Pledgor waives any right to require City to make any presentments or demands for performance, or give any notices of nonperformance, protests, notices of protest or notices of dishonor in connection with any obligations or evidences of indebtedness held by City as security or which constitute in whole or in part the Indebtedness secured hereunder, or in connection with the creation of new or additional Indebtedness. 9.2 Pledgor waives any defense arising by reason of: (i) the cessation or limitation from any cause whatsoever, other than payment in full, of the Indebtedness by Pledgor; (ii) any lack of authority of any officer, board member, director, partner, agent or any other person acting or purporting to act on behalf of Pledgor which is a corporation, partnership or other type of entity, or any defect in the formation of Pledgor; (iii) any act or omission by City which directly or indirectly results in or aids the discharge of Pledgor or any Indebtedness by operation of law or otherwise; or (iv) any modification of the Indebtedness, in any form whatsoever, including any modification made after revocation hereof to any Indebtedness incurred prior to such revocation, and including without limitation, the renewal, extension, acceleration or other change in the terms of the Indebtedness, or any part thereof, including increase or decrease of the rate of interest thereon. Until all Indebtedness shall have been paid in full Pledgor waives all rights and defenses arising out of an election of remedies by City. Until all Indebtedness of the Pledgor to City shall have been paid in full, Pledgor further waives any right to enforce any remedy which City now has or may hereafter have against any other person or entity, and waives any benefit of, or any right to participate in, any security whatsoever now or hereafter held by City. 10. AUTHORIZATIONS TO CITY. Pledgor authorizes City either before or after revocation hereof, without notice or demand and without affecting Pledgor's liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Indebtedness or any part thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security, other than the Collateral and Proceeds, for the payment of the Indebtedness or any part thereof and exchange, enforce, waive and release the Collateral and Proceeds, or any part thereof, or any such other security; (c) after an Event of Default that is continuing, apply the Collateral and Proceeds or any other security and direct the order or manner of sale thereof, including without limitation, a non judicial sale permitted by the terms of the controlling security agreement or deed of trust, as City in its discretion may determine; (d) release or substitute any one or more of the endorsers or guarantors of the Indebtedness, or any part thereof, or any other parties thereto; and (e) apply payments received by City from Pledgor to any Indebtedness of Pledgor to City, in such order as City shall determine in its sole discretion, whether or not any such Pledge Agreement Page 6 of 10 Indebtedness is covered by this Agreement, and Pledgor hereby waives any provision of law regarding application of payments which specifies otherwise. City may assign this Agreement in whole or in part after providing written notice to Pledgor. 11. PAYMENT OF TAXES, CHARGES, LIENS AND ASSESSMENTS. Pledgor agrees to pay, prior to delinquency, all taxes, charges, liens and assessments against the Collateral and Proceeds, and upon the failure of Pledgor to do so, City at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Any such payments made by City shall be obligations of Pledgor to City, due and payable immediately upon demand, together with interest at a rate determined in accordance with the provisions of Section 15 herein, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement. 12. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an "Event of Default" under this Agreement: (a) any default in the payment or performance of any obligation, or any defined event of default, under (i) any contract or instrument evidencing any Indebtedness, or (ii) any other agreement between Pledgor and City, including without limitation, the Cooperation Agreement and other related agreements any other obligation of Pledgor relating to or executed in connection with any Indebtedness; (b) any representation or warranty made by Pledgor herein shall prove to be incorrect in any material respect when made; (c) Pledgor shall fail to observe or perform any obligation or agreement contained herein; (d) any attachment or like levy on any property of Pledgor; and (e) City, in good faith, believes any or all of the Collateral and/or Proceeds to be in danger of misuse, dissipation, commingling, loss, theft, damage, or destruction, or otherwise in jeopardy or unsatisfactory in character or value. 13. REMEDIES. Upon the occurrence of any Event of Default, City shall have and may exercise without demand any and all rights, powers, privileges and remedies granted to a secured party upon default at law or in equity. All rights, powers, privileges and remedies of City shall be cumulative. City may exercise its lien or right of setoff with respect to the Indebtedness in the same manner as if the Indebtedness were unsecured. No delay, failure or discontinuance of City in exercising any right, power, privilege or remedy hereunder shall affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single or partial exercise of any such right, power, privilege or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. Any waiver, permit, consent or approval of any kind by City of any default hereunder, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing. While an Event of Default exists: (a) City may, at any time and at City's sole option, liquidate any time deposits pledged to City hereunder, whether or not said time deposits have matured and notwithstanding the fact that such liquidation may give rise to penalties for early withdrawal of funds; (b) City may appropriate the Collateral and apply all Proceeds toward repayment of the Indebtedness in such order as City may from time to time elect or, at City `s sole option, place any Proceeds in the cash collateral account; and (c) at City's request, Pledgor will assemble and deliver all Collateral and Proceeds, and books and records Pledge Agreement Page 7 of 10 pertaining thereto, to City at a reasonably convenient place designated by City. It is agreed that public or private sales, for cash or on credit, to a wholesaler or retailer or investor, or user of property of the types subject to this Agreement, or public auction, are all commercially reasonable since differences in the sales prices generally realized in the different kinds of sales are ordinarily offset by the differences in the costs and credit risks of such sales. For any Collateral or Proceeds consisting of securities, City shall be under no obligation to delay a sale of any portion thereof for the period of time necessary to permit the issuer thereof to register such securities for public sale under any applicable state or federal law, even if the issuer thereof would agree to do so. 14. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or any part of the Indebtedness, City may transfer all or any part of the Collateral or Proceeds and shall be fully discharged thereafter from all liability and responsibility with respect to any of the foregoing so transferred, and the transferee shall be vested with all rights and powers of City hereunder with respect to any of the foregoing so transferred; but with respect to any Collateral or Proceeds not so transferred, City shall retain all rights, powers, privileges and remedies herein given. Any proceeds of any disposition of any of the Collateral or Proceeds, or any part thereof, may be applied by City to the payment of expenses incurred by City in connection with the foregoing, including reasonable attorneys' fees, and the balance of such proceeds may be applied by City toward the payment of the Indebtedness in such order of application as City may from time to time elect. 15. COSTS, EXPENSES AND ATTORNEYS' FEES. Pledgor shall pay to City immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of City 's legal counsel) (all such items collectively referred to as "Pledgor Reimbursement Obligations"), incurred by City in exercising any right, power, privilege or remedy conferred by this Agreement or in the enforcement thereof, including any of the foregoing incurred in connection with any bankruptcy proceeding relating to Pledgor or the valuation of the Collateral and/or Proceeds, including without limitation, the seeking of relief from or modification of the automatic stay or the negotiation and drafting of a cash collateral order. All of the foregoing shall be paid to City by Pledgor with interest at a rate per annum equal to the greater of ten percent (10%) or Prime Rate in effect from time to time from the date the Pledgor Reimbursement Obligations are incurred by the City. The "Prime Rate" is a base rate that J.P. Morgan Chase Bank from time to time establishes and which serves as the basis upon which effective rates of interest are calculated for its most creditworthy customers. 16. DISCLOSURE OF INFORMATION. Pledgor acknowledges that City has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Pledgor to City and any obligations with respect thereto, including this Agreement. In connection therewith, City may disclose all documents and information which City now has or hereafter acquires relating to Pledgor and this Agreement, whether furnished by Pledgor or otherwise. In the event of any such sale, assignment, transfer or participation, City and the parties to such transaction shall share in the rights and Pledge Agreement Page 8 of 10 obligations of City as set forth in this Agreement only as and to the extent they agree among themselves. In connection with any such sale, assignment, transfer or participation, Pledgor further agrees that this Agreement shall be sufficient evidence of the obligations of Pledgor to each purchaser, assignee, transferee or participant, and upon written request by City, Pledgor shall enter into such amendment or modification to this Agreement as may be reasonably required in order to evidence any such sale, assignment, transfer or participation. The indemnity obligations of Pledgor under this Agreement shall also apply with respect to any purchaser, assignee, transferee or participant. 17. GOVERNING LAW; SUCCESSORS, ASSIGNS. This Agreement shall be governed by and construed in accordance with the laws of the State of California, and shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties. 18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement 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 Agreement. 2011. IN WITNESS WHEREOF, this Agreement has been duly executed as of February _, PLEDGOR NATIONAL CITY REDEVELOPMENT COMMISSION Dated: By: Ron Morrison Chairman ATTEST: Brad Raulston, Secretary APPROVED AS TO FORM By: Claudia Gacitua Silva Commission General Counsel Pledge Agreement Page 9 of 10 KANE, BALLMER & BERKMAN By: Susan Y. Cola Commission Special Counsel Pledge Agreement Page 10 of 10 EXHIBIT 6 UCC-1 FINANCING STATEMENT [behind this page] ATTACHMENT UCC-1 Financing Statement Debtor: The Community Development Commission of the City of National City. Secured Party: The City of National City. Item 4: Collateral Description. This Financing Statement covers all of the following items and/or types of property, whether any of the foregoing is owned now or acquired later; all accessions, additions, replacements, and substitutions relating to any of the foregoing; all records of any kind relating to any of the foregoing; and all proceeds relating to any of the foregoing (including insurance, general intangibles and account proceeds): (1) Any and all general intangibles, instruments, documents, chattel paper, accounts, accounts receivable, cash, deposit accounts, contract rights and rights to payment pursuant to, or in any way now or hereinafter arising out of, in connection with or otherwise relating to (a) [that certain Cooperation Agreement] [that certain Option Agreement] [that certain Agreement for Right of First Refusal] dated as of , among the City of and the Debtor, [that certain Promissory Note executed by the Debtor in favor of the City of dated as of ] as now existing or as it may hereinafter be amended, modified, supplemented, or superseded; (b) any and all related documents, instruments, and agreements, as now existing or as may be modified, supplemented, or amended from time to time; and (c) any and all present and future collateral, of whatever kind or nature, now or hereafter granted to secure payment and performance of any and all of the foregoing (collectively and severally referred to as the "Collateral"); and (2) Together with whatever is receivable or received when any of the Collateral or proceeds thereof are sold, assigned, transferred, collected, exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation (a) all accounts, contract rights, chattel paper, instruments, general intangibles, money and rights to payment of any kind now or hereafter arising from any such sale, assignment, transfer, collection, exchange, or other disposition of any of the foregoing; and (b) all rights to payment, including without limitation, rights to payment with respect to any cause of action affecting or relating to any of the foregoing (referred to as the "Proceeds"). UCC-1 ATTACHMENT COLLATERAL DESCRIPTION EXHIBIT 7 OPTION AGREEMENT WITH MEMORANDUM OF OPTION [behind this page] OPTION AGREEMENT THIS OPTION AGREEMENT (this "Agreement") is entered into this day of February , 2011, by and between the CITY OF NATIONAL CITY (the "City") and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY (the "Commission"), with reference to the following facts: A. The Commission owns, or within the term of this Agreement, will own, certain real property more particularly described on Exhibit "A" (the "Property"). B. The Commission desires to grant the City an option to purchase the Property from the Commission and the City wishes to reserve the right to purchase the Property from the Commission under the terms contained herein. C. The parties hereto wish to enter into a memorandum of option agreement and record such an instrument on any or all of the Property subject to this Agreement using the memorandum attached hereto as Exhibit `B". D. This Agreement is subject to the provisions of the Redevelopment Plan for the National City Redevelopment Project on July 17, 2007 by Ordinance No. 2007-2295 (the "Redevelopment Plan"). The Redevelopment Plan is incorporated herein by reference and made a part hereof as though fully set forth herein. NOW, THEREFORE, for good and valuable consideration paid by the City, receipt and sufficiency of which is acknowledged by the Commission, the parties hereto do mutually agree as follows: 1. Grant of Option. Commission hereby grants City, or its nominee, the option to purchase the Property, or any part thereof, on or before the latter of (a) the thirtieth (30th) anniversary of this Agreement or (b) last date for duration of the Redevelopment Plan, as set forth in Section XI therein ("Redevelopment Plan Effectiveness Date"). This option shall be exercisable only by written notice delivered by City to Commission as provided below. Upon the exercise of such option to purchase the Property and receipt by the Commission, City shall purchase the Property pursuant to the terms below. 2. Exercise of Option. The option contained herein shall be exercised by City, if at all, in the following manner: (i) City shall deliver written notice (the "Exercise Notice") to Commission not less than ten (10) days prior to the date of the proposed purchase of the Property by the City; the last date of written notice shall be the latter of (a) the thirtieth (30th) anniversary of this Agreement or (b) the Redevelopment Plan Effectiveness Date; (ii) Commission, after receipt of City's notice, shall deliver notice (the "Responsive Purchase Notice") to City prior to the proposed purchase date of the Property by the City, setting forth the proposed purchase price and such other terms necessary and appropriate to accomplish the purchase of the Property by City under the timeframes proposed by the City; and (iii) if City wishes to exercise such option Option Agreement Page 1 of 4 to purchase the Property, City shall, after City's receipt of the Responsive Purchase Notice, exercise the option by delivering the City's form of purchase and sale agreement and grant deed, modified for any particular parcel of Property, along with the consideration for the Property in the amount of the purchase price and identification of the day the grant deed is to be recorded in the office of the County Recorder (the "Closing Date"). The proposed grant deed for the Property or any part thereof shall include, among other things, express covenants requiring the Property to be devoted to the purposes set forth below. The purchase price for the Property shall be the fair market value of the Property. City and Commission shall meet to determine the fair market value of the Property. In the event the Commission and City are unable to agree on the fair market value, within forty-five (45) days of the Responsive Purchase Notice (the "Negotiation Period"), the fair market value shall be determined in accordance with the appraisal procedures set forth in the paragraph directly, below ("Fair Market Value Appraisal Process"). In the event the Commission and City are unable to agree upon the fair market value of the Property within the Negotiation Period, the Commission and City shall each appoint and pay for a Qualified Appraiser (as defined below) to determine the fair market value of the Property in accordance with the standards and procedures set forth below. Each Qualified Appraiser shall complete and submit an appraisal to the City and Commission on or prior to 5:00 p.m. Pacific time on the date that is sixty (60) days following the expiration of the Negotiation Period ("Notice of the Fair Market Value Appraisal"). If the appraisals differ, then the Fair Market Value shall be the average of the two (2) appraisals. Each of the Qualified Appraisers shall be instructed to appraise the Property (taking into consideration any improvements and infrastructure located thereon) for uses allowed under then applicable laws. As used herein, the term "Qualified Appraiser" shall mean an MAI appraiser with at least ten (10) consecutive years experience with similar properties in Southern California, with whom neither the Commission nor City is affiliated with. 3. Purpose. Any and all property purchased by the City pursuant to this Option may be used, sold or leased by the City for any municipal purpose, including, but not limited to, housing and public improvements, in conformance with the Redevelopment Plan. 4. Condition of Property. The Property is sold in its "as -is" condition on the Closing Date subject to the Redevelopment Plan and all encumbrances of record. 5. Memorandum. Concurrently with the execution hereof, Commission and City shall execute, acknowledge and cause to be recorded in the Official Records of San Diego County, California, the Memorandum of Option Agreement substantially in the form attached hereto as Exhibit "B." Upon the termination of this Agreement as provided herein or at the time of and concurrently with the closing of a sale of the Property, the parties agree to execute a quitclaim deed or other termination instrument in order to cause the memorandum to be terminated and removed of record. Option Agreement Page 2 of 4 6. Transferability of Right. The right of the City under this Agreement is fully transferable and assignable by the City without the consent of the Commission. 7. Expiration Date and Termination of Agreement. The City reserves the right to reduce or extend the time period in paragraph 1 which permits the City to purchase the Property on or before the latter of (a) the thirtieth (30th) anniversary of the Agreement or (b) the Redevelopment Plan Effectiveness Date. 8. Prorations. Title Insurance. Title and Escrow. The parties shall equally share all costs of escrow and prorations affecting the Property. Commission shall not voluntarily create and record any liens or encumbrances or other matters against the Property after receipt of the Exercise Notice. The Commission pay for City's requirements for a CLTA Commission's Policy of Title Insurance in favor of the City. Unless otherwise agreed upon by the parties in writing, the title insurer and escrow shall be [Name] Title Company, [address]. Said escrow agent shall instruct title insurer to deliver a title commitment to the City upon receipt of the Exercise Notice. 9. This Agreement shall be binding on and shall inure to the benefit of all successors and assigns of the parties, whether by agreement or operation of law. This Agreement may be signed in any number of counterparts and delivered by facsimile. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. ATTEST: CITY OF NATIONAL CITY By: By: City Clerk City Manager A 1'1'EST: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: By: Secretary Commission Chair APPROVED AS TO FORM: By: General Counsel Option Agreement Page 3 of 4 APPROVED AS TO FORM: Kane Ballmer & Berkman By: Commission Special Counsel Option Agreement Page 4 of 4 EXHIBIT "A" The "Property" Assessor Parcel Number: EXHIBIT "B" RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of National City 1243 National City Blvd National City, CA 91950 APN: MEMORANDUM OF OPTION AGREEMENT 1. Parties; and Property. This memorandum of option agreement is entered into by the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public entity, corporate and politic ("Commission") and CITY OF NATIONAL CITY, a municipality ("City") concerning real property located in the City of National City and County of San Diego, State of California, as more fully described in the attached Exhibit "1" (the "Property"). 2. Memorandum. For good and valuable consideration received, the Commission, as current fee Commission of the Property, acknowledges that Commission and City have entered into an option agreement (the "Option Agreement") permitting the City to purchase the Property from the Commission under the terms and conditions thereof for a term of Thirty (30) years from the date this instrument is signed, unless otherwise changed or modified by the terms of the Option Agreement. 3. Not Complete Summary. This instrument is not a complete summary of the Option Agreement. Provisions herein shall not be used in interpreting the Option Agreement. 4. Prohibition against Discrimination and Segregation. City covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof or interest therein, there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, sexual orientation, marital status, race, color, creed, religion, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall City, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Property. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: Option Agreement Page 6 a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall also apply to the preceding paragraph. b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 Option Agreement Page 7 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall also apply to the preceding paragraph. c. In contracts: "There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee itself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the land." 5. Purpose. This instrument is prepared for recordation purposes only, and in no way modifies the terms, conditions, provisions and covenants of the Option Agreement. In the event of any inconsistency between the terms, conditions, provisions and covenants of this instrument and the Option Agreement, the terms, conditions and covenants of the Option Agreement shall prevail. The parties hereto have executed this instrument on the dates specified immediately beside their respective signatures. This document may be executed and acknowledged before a notary public with counterpart signature and acknowledgment pages, each of which shall be deemed an original and which, when taken together, shall constitute the fully -executed instrument. ATTEST: CITY OF NATIONAL CITY By: By: City Clerk City Manager ATTEST: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: By: Secretary Commission Chair APPROVED AS TO FORM: By: City Attorney Option Agreement Page 8 APPROVED AS TO FORM: Kane Ballmer & Berkman By: Commission Special Counsel Option Agreement Page 9 Exhibit "1" to Memorandum of Option Agreement Legal Description of Property The land is situated in the State of California, County of and is described as follows; [to be inserted] APN State of California County of ACKNOWLEDGMENT PAGE TO MEMORANDUM OF OPTION AGREEMENT ) ) ) On before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) State of California County of ) ) ) On before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) EXHIBIT 8 COMMISSION PROPERTIES SUBJECT OF OPTION AGREEMENT [PROVIDE LEGAL DESCRIPTION OR APNs]