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HomeMy WebLinkAbout2008 CON CDC Sterling Bank / Mike & Mona Dallo - Facade Loan Second Trust DeedNOTE SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT ("AGREEMENT") is made as of APRIL 1, 2008 by and between Sterling Bank ("Lender"), Community Development Commission of the City of National City ("Creditor ") and Mike N. Hallo and Mona M. Dallo("Borrower", whether one or more) (wherein Lender, Creditor and Borrower may also collectively be referred to as the "Parties"). WITNESSETH: WHEREAS, Borrower intends to obtain financing from Lender securcd by the real property located at 303 Highland Avenue, National City, CA 91950 and more particularly described in Exhibit "A" attached hereto; ("Property"); and WHEREAS, Lender has agreed, subject to certain covenants and conditions, to make a loan in the principal amount of $3,500,000.00 (the "Loan") to Borrower; and WHEREAS, Borrower and Creditor have previously entered into a Facade Improvement Agreement dated September 18, 2006, which resulted in Creditor providing Borrower a loan to make facade improvements to the Property, which agreement remains in full force and effect, and which is not modified by this Subordination Agreement; and WHEREAS, on April 1, 2008, Borrower and Creditor executed an Amendment to the Facade Improvement Agreement, which reflected the increase in Creditor's loan to Borrower from $347,320.00 to $542,349.00. All other terms and conditions of the Facade Improvement Agreement remain in full force and effect; and WHEREAS, as of the date of this Agreement, Borrower is indebted to Creditor for sums of money pursuant to the Amendment to the Facade Improvement Agreement dated April 1, 2008, in the original principal amount of $542,349.00 and securcd by a Deed of Trust dated April 1, 2008; and WHEREAS, Lender and Borrower are in possession of an appraisal prepared by John D. Slinger, dated October 3, 2007, which reflects an appraised value of the Property as $5,400,000.00, which Lender has relied upon in making the Loan and based on such appraisal Lender and Borrower have represented to Creditor that the Property has such an appraised value and Creditor has relied on that appraised value in agreeing to subordinate its Subordinated Interests to Borrow to the Loan; and WHEREAS, Borrower and Creditor all agree that the Loan will directly and/or indirectly benefit Borrower and has agreed to subordinate their Subordinated Interests to the obligations owed by Borrower to Lendcr and to Lender's security interest and Liens; and WHEREAS, Borrowcr and Lender have represented, and Creditor has relied on their representations, that the Loan shall be used for cash out for working capital for improvements and equipment upgrades at the Borrower's existing grocery stores; and WHEREAS, Lender will only complete its Loan if this Agreement is executed and the Creditor's loan to Borrow is subordinated. NOW THEREFORE, for good and valuable consideration, the amount and sufficiency of which is hereby acknowledged by Borrower and Creditor and to induce Lender to make, in consideration of the recitals above which arc incorporated herein as part of thc agreement, and in consideration of the making by Lender of all, or any part of the Loan to Borrower, the parties hereto agree as follows: 1. Subordination: Creditor's loan to Borrower is and shall be subordinated in all respects to the Loan, including, without limitation, the liens pursuant to the Deed of Trust dated April 1, 2008. 2. Lender, in its sole discrction, may take any action without affecting this Agreement, including but not limited to the following: a. Modify the terms of Lender's Loan, as long as the Lender does not increase the amount due on the Loan without the Creditor's prior written approval, except for expenses associated with the preservation and enforcement of Lender's lien position; b. Grant an extension or renewal of Lender's Loan, as long as the Lender does not increase the amount due on the Loan without the Creditor's prior written approval, except for expenses associated with the preservation and enforcement of Lender's lien position; c. Defer payments or enter into a workout agreement on Lender's Loan, as long as the Lender does not increase the amount due on the Loan without the Creditor's prior written approval, except for expenses associated with the preservation and enforcement of Lender's lien position; d. Release or substitute collateral securing Lender's Loan; e. Forbear from collecting on existing collateral or requiring additional collateral; f. Declare a default on Lender's Loan. Lender shall notify Creditor in writing within ten (10) days of declaring default; and g. Agree to release, compromise, or settlement of Lender's Loan. 3. Termination of Agreement: This Agreement shall continue in full force and effect until thc Loan is paid in full; including any extensions, modifications and/or renewals thereof or this Agreement is released in writing by Lender's authorized officer. If Borrower or Creditor becomes insolvent or bankrupt, this Agreement shall remain in full force and effect. 4. Miscellaneous: This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. It may only be modified in writing, signed by each party to be charged with such change. This Agreement shall be construed under the laws of the State of California. Venue shall be appropriate in the County of San Diego, State of California. In the event of any action being instituted on this Agreement to enforce or interpret its terms, the prevailing party shall be entitled to reasonable legal fees and costs. This Agreement applies to any successor to Creditor or assignee of this Agreement or of the Subordinated Interests, including any bankruptcy trustee or receiver or guarantors or sureties of Creditor. 5. The terms and conditions of the Facade Improvement Agreement, dated September 18, 2006 and the Amendment to the Facade Improvement Agreement, dated April 1, 2008, both entered into by the Borrower and Creditor, remain in full force and effect. Should there be a conflict between the Facade Improvement Agreement and this Subordination Agreement, the Facade Improvement Agreement shall control. Lender may record any document necessary to perfect the subordination contained herein. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written herein above. Mona M. Dallo LENDER Sterling Bank By: teve ' ife Senior Vice President CREDITOR Community Development Commission of the City of National City By on Morrison Chairman STATE OF TEXAS COUNTY OF HARRIS § On V\ Q-vCh . 2h l'OO S , 2008 before me, personally appeared Steve Rifc personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. ESS my hand and official seal. tia baiwbathAk-- Signature of Notary Public LAURA B. DANNENBAUM Notary Public, State of Texas My Commission Expires SEPTEMBER 01, 2009 Place Notary Seal Above Y 3JjjgN State off6a&iferai& County of 11gyv1 L. ) On11At14 24 oloo? before me,1M 44,46 ©S1144c , personally appeared Mona M. Dallo 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. _^aran,.h_J true ands trec Wl fficial seal. ignature of otary Public 01 ca f*,wbrt i s' Place Notary Seal Above rC91419 +l State of -Cali a - County of I,a/9Y OnniA(8CH 24;00/ before me, L.44(ulLEV1Ct. L. flSt‘edk- , personally appeared Mike N. Dallo 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. WITNE my hand gnature of Notary Public ial seal. 1 ceb•m/ S/Dh `, i0/IQrd'_ 30-2o�S. Place Notary Seal Above CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CC.M. c,Z , r� a� , rrzir.~C,~ z40c State of California County of SCLn Di o n n �-^ 1 D On y'� -O 8 before me, 11 . ,M. M. CCL' UJ 4 I %OC Y� r CLIa L C , Dale n Here Insert Name a d Title of the Olfe er personally appeared Roo Alo r r I So r'-) Name(s) of Signer(s) V. M. ORCUR Commission if 1631N2 i Notary Public • CaMoOtlo San D ego County My Comm. rxpr aDec TO 20 Place Notary Seal Above } who proved to me on the basis of satisfactory evidence to be the persons) whose name(s)-is/are subscribed to the within instrument and acknowledged to me that he/,s LtMey executed the same in his/berltheir authorized capacity(iee), and that by his/herlt#heir signature($ on the instrument the personnk 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 _ OPTIONAL ( ' / / Siynature of �nary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: AAm/-SL bo f d naT-ion .reeni e n it -- Document Date: t L pr-i/ / 2j) c5 -. ._ Number •of Pages: � I � '^ p � �d /� n.� ! Signer(s) Other Than Named Above: Skue hive !z yl d I "k tkC-- 4- r ' I C /lcc "Da I k. Capacity(ies) Claimedlaby Slgner(s) Signer's Name: I?bn _mOr,nI So r7 1 Individual Corporate Officer — Title(s): Partner — J Limited _ General 17 Attorney in Fact Trustee _J Guardiap r Conservator r Other: iv! ('LI Ot OT- A)ali rmr C Sig er Is �Repr9,enting: C41 Aid F, n a 0 e +1, CIF Signer's Name: Individual Corporate Officer — Title(s): Partner — -' Limited - General Attorney in Fact 11 Trustee I Guardian or Conservator iJ Other: - Signer Is Representing: RIGHT THUMBPRINT OF SIGNER Fop of thumb here UO2W4M74•17.<.`1•4`,•,roe 2WW:2 11ewes c c> stne<c^�ts c 5-. ^52.. t)2007 Nalkxcr' Notary A.,, dation • 9350 De Soto Ave.. PO. Box 2402 • Chatsworth, CA 41313-2402 • www.NatiaralNotaryory Item tt5007 Rmokrr. Call TollFreo 1 800 876-6827 Exhibit "A" Legal Description PARCEI, 1: TILE SOUTIIERI,Y I IAT.F OF THE EASTERLY HALF OP THE WESTERLY HALF, THE SOLJTIIERLY HALF OF'I'11E WESTERLY IIAI,F OF TIFF NORTIIERLY HALF ANT) THE WESTERLY QUARTER OF THE. SOUTHERLY HALF OF 20 ACRE LOT 2 OF QUARTER SECTION 131 OF RANCIIO DE I ,A NACION, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, SPATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166 BY MORRIIL, FILED IN THE OFFICE OF THE COUNTY RI?CORI)IN OF SAID SAN DIEGO COUNTY. EXCEPTING FROM SAID WESTERLY QUARTER OF TIIE SOUTIIERLY IIALU,'1'IIE SOUTHERLY 240 FEET THEREOF AND THE WESTERLY 40 FEET' THEREOF. Al SO EXCEPTING THAT PORTION OF THE PROPERTY DESCRIBED ABOVE WHICH LIES EASTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT IN THE NORTHERLY LINE OF SAID SOUTHERLY HAI.F OF THE WESTERLY ITALF OF TIFF NORTHERLY HALF OF 20 ACRE. LOT 2, WHICH IS DISTANT WFSTERI,Y 172.50 FEET FROM THE NORTHEASTERLY CORNER OF SAID SOUTHERLY HALF OF THE WESTERLY HALF OF THE NORTHERLY HAI.F; THENCF. SOTJTHFRLY IN A STRAIGHT LINE TO A POINT IN THE SOUTI IERI.Y LINE OF SAID 20 ACRE LOT 2, WHICH IS DISTANT THEREON 171.46 FEET WF.STERI.Y FROM TIFF SOT ITIFFASTERLY CORNER OF TIFF WESTFRT.Y IIALF OF SAID Lou. PARCE1, 2: AN EASEMENT AND RICAN' OF WAY FOR INGRESS AND EGRESS FOR DRAINAGE PURPOSES, OVER A STRIP OF LAND 6 FEET WIDE IN 20 ACRE LOT 2 OF QUARTER SECTION l31 OF RANCHO DE LA NACION. IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166 BY MORRIIL, FILED IN THE OFFICE OF THE COUNT Y RECORDER OF SAN DIEGO COUNTY, THE CENTER LINE OF SAID 6 FOOT STRIP BEING DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTLY LINE OF THE SOIJTIIERI,Y IIALF OF THE WESTERLY HAI.F OF THE NORTHERLY HALF OF SAID 20 ACRE LOT 2, WIIICII IS DISTANT THEREON 172.50 FEET FROM TIIE NORTIEASTERLY CORNER OF SAID SOUI'I IERLY I IALF OF THE WESTERLY ILALF OF TIM NOR'I'I IERI.Y IIA1.1', BEING THE NORTIERLY TERMINUS OF THE STRAIGI IT LINE WIIICII CONNECTS SAID POINT OF BEGINNING WITH A POINT IN THE SOUTHERLY LINE OF SAID 20 ACRE LOT 2 WHICH IS DISTANT 171 • 46 FEET WESTERLY FROM THE BOUT( (EASTERLY CORNER OF THE WESTERLY HALF OF SAID LOT; THENCE SOUTHERLY ALONG SAID STRAIGHT CONNECTING LINE, 90.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTHEASTERLY IN A STRAIGHT LINE TO A POINT IN SAID NORTIIERLY LINE OF THE SOUTHERLY HALF OF THE WESTERLY HALF OF THE NORTIIERLY HALF, WIIICII IS DISTANT THEREON WF,STERI.Y 103 • 46 FEET FROM SAID NORTI IEASTERLY CORNER OF THE SOUTHERLY HALF OF THE WESTERLY !TAU OI''I'IIE NORTIIERLY HALF OIL SAID LOT, SAID 6 FOOT STRIP BEGINNING IN'1'IIA'I' STRAIGIT CONNECTING LINE DESCRIBED ABOVE AND ENDING IN SAID NORTI IERLY LINE OF TIIE SOUTHERLY HALF OF TETE WESTERLY HALF OF THE NORTHERIY HALF OF SAII) LOT 2. 11 RESOLUTION NO. 2008 — 57 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRMAN TO EXECUTE A SUBORDINATION AGREEMENT WITH STERLING BANK TO PLACE THE CDC FACADE LOAN AGREEMENT WITH MIKE N. DALLO AND MONA DALLO IN A SECOND TRUST DEED POSITION WHEREAS, on September 18, 2006, the Community Development Commission of the City of National City ("CDC") entered into a Facade Improvement Loan Agreement and Deed of Trust with Mike Dello and Mona Dallo (the "Property Onwers"), the Owners of the Foodland Property ("Property"), which was approved by the adoption of Resolution 2006-216 on October 3, 2006; and WHEREAS, the Facade Improvement Agreement and Deed of Trust placed the Union Bank of California as the first Trust Deed on the Property, and the CDC was in second position; and WHEREAS, the CDC moved into first position when the Property Owners paid off their total debt to Union Bank of California; and WHEREAS, on April 1, 2008, the CDC and the Property Owners executed an amendment to the Facade Improvement Agreement, which increased the amount of the CDC's loan to the Property Owners from $347,320 to $542,349; and WHEREAS, at this time, the Property Owners desire to borrow $3.5 Million from Sterling Bank to improve the Property and expand business operations; and WHEREAS, in order to facilitate a loan to the Property Owners by Sterling Bank, the Bank has requested that the CDC enter into a Subordination Agreement with the Bank, whereby all indebtedness of the Property Owners to the CDC shall be subordinated to the loan by the Bank to the Property Owners, including, without limitation, the CDC's Subordinated Interests. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby authorizes the Chairman to execute a Subordination Agreement with Sterling Bank to place the Facade Improvement Agreement with Mike N. Dallo and Mona Dallo in a Second Trust Deed position. Said Subordination Agreement is on file in the Office of the City Clerk. PASSED and ADOPTED this 1st day of April, 2 l on Morrison, Chairman APPROVED AS TO FORM: George H. Eiser, III Legal Counsel Passed and adopted by the Community Development Commission of the City of National City, Califomia, on April 1, 2008, by the following vote, to -wit: Ayes: Commissioners Morrison, Natividad, Parra, Ungab, Zarate. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Community Development Commission Secretary, Community Development Commission By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2008-57 of the Community Development Commission of the City of National City, Califomia, passed and adopted on April 1, 2008. Secretary, Community Development Commission By: Deputy City of National City, California caooQ,•5� C QO%•\y COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT MEETING DATE April 1 200X AGENDA ITEM NO 22 (TEM TITLE .RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY (CDC) AUTHORIZING THE CHAIRMAN TO EXECUTE A SUBORDINATION AGREEMENT WITH STERLING BANK TO PLACE THE CDC FACADE LOAN AGREEMENT WITH MIKE N. DALLO AND MONA DALLO IN A SECOND TRUST DEED POSITION. PREPARED BY Jacqueline Reynoso (ext. 4293) Community Development Coordinator DEPARTMENT Economic Development Division EXPLANATION On September I8, 2006, The Community Development Commission of the City of National City (CDC) entered into a Facade Improvement Agreement with Mike N. Dallo and Mona Dallo (Property Owner) to provide improvements to the Foodland Property. When the loan Agreement and Deed of Trust were executed between the CDC and the Property Owner, the CDC was in a second position; Union Bank of California had first Trust Deed on the said property. CDC moved into a first position when the Property Owner paid off their total debt with Union Bank of California. 'fhe Property Owner would like to borrow $3.5M from Sterling Bank to improve the said property and expand business operations. Under the proposed Subordination Agreement, all indebtedness of Borrower (Property Owner) to Creditor (CDC) shall be subordinated to the loan by Borrower to Lender (Sterling Bank), including without limitation, Creditor's Subordinated Interests. The alternative to entering into a Subordination Agreement between the \ CDC and Sterling Bank would be to have the Property Owner payoff the CDC loan. Requiring the Property "ner to payoff the CDC loan would negate the purpose of the Facade program at this time. Environmental Review N/A Financial Statement STAFF RECOMMENDATION CDC Board adopt the resolution. ATTACHMENTS 1. Staff Report 2. Resolution 3. Subordination Agreement Resolution No. a1°1 `t A-200 (9/80) City of National City Office of the City Clerk 1243 National City Blvd. National City, CA 91950-4397 619-336-4228 619-336-4229 fax STERLING BANK / MIKE N. DALLO & MONA M. DALLO FACADE LOAN AGREEMENT SECOND DEED TRUST Jacqueline Reynoso (CDC) forwarded the Subordination Agreement to vendor