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HomeMy WebLinkAbout2015 CON HA (Subordination Agreement) Casa Familiar - RefinancingNOTE TO FILE 01-16-18 IN THE MATTER OF: Resolution of the CDC -HA of the City of National City authorizing the Executive Director to execute a Subordination Agreement with Casa Familiar, Inc. subordinating the Deed of Trust that secures a Home Investment Partnership Program loan for $835,000 on restricted rental units located at 305 East Fifth Street. Please note the following: A FULLY EXECUTED ORIGINAL RECORDED AGREEMENT WAS NEVER FILED WITH THE OFFICE OF THE CITY CLERK. A COPY OF THE FULLY EXECUTED AGREEMENT WAS PROVIDED. ORIGINATING DEPARTMENT: NTF CDC X Housing & Grants City Attorney Human Resources City Manager MIS Community Svcs. Planning Engineering Police Finance Public Works Fire RECORDING REQUESTED BY 'Nor -rite -San Diego branch WHEN RECORDED, RETURN TO: TORREY PINES BANK, A DIVISION OF WESTERN ALLIANCE BANK 12220 El Camino Real, Suite 200 San Diego, CA 92130 Attn: Real Estate Department Loan No. 3530163945 SPACE ABOVE FOR RECORDER'S USE ONLY] DOC# 2015-0418757 IIII 1 I I IIIII IIII II I IIII I III I I III II II 1 IIII I III III III Aug 07, 2015 09:06 AM OFFICIAL RECORDS Ernest J. Dronenburg, Jr., SAN DIEGO COUNTY RECORDER FEES: $39.00 PAGES: 9 SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of July 7, 2015, by and between CASA FAMILIAR, INC., a California non-profit public benefit corporation ("Borrower") and Community Development Commission -Housing Authority of the City of National City ("Subordinate Lender"), in favor of Western Alliance Bank, an Arizona corporation ("Lender"). RECITALS A. Subject to the terms and provisions of that certain deed of trust dated October 1, 2009, executed by Borrower in favor of Subordinate Lender, recorded in the official records of San Diego County on October 12, 2009 as document number 2009-0564364 ("Subordinate Lender's Deed of Trust"), Borrower granted to Subordinate Lender a security interest in and to the property described in Exhibit A attached hereto and incorporated herein (which property, together with all improvements now or hereafter located on the property, is hereinafter collectively referred to as the "Property") to secure Borrower's obligations to Subordinate Lender (the "Subordinated Debt"). B. Borrower has or will execute a deed of trust, security agreement and fixture filing and an assignment of rents and leases ("Lender's Deed of Trust") securing, among other things, a loan agreement between Borrower and Lender dated July 7, 2015 (the "Loan Agreement") and promissory note (the "Note") in the original principal amount of $1,245,000.00 dated July 7, 2015, in favor of Lender (the "Loan"). Lender's Deed of Trust is being recorded in the official records of San Diego County concurrently herewith. The Loan Agreement, the Note, Lender's Deed of Trust and all other documents and instruments made or given in connection with or to evidence or secure Lender's Loan shall be referred to herein as the "Loan Documents". C. As a condition to Lender making the Loan (the "Senior Debt"), Lender requires that Lender's Deed of Trust be unconditionally and at all times remain a lien or charge upon the Property, prior and superior to all the rights of Subordinate Lender under the Subordinate Lender's Deed of Trust and that Subordinate Lender specifically and unconditionally subordinates the Subordinate Lender's Deed of Trust to the lien or charge of Lender's Deed of Trust. AGREEMENT 1. Subordination. Lender's Deed of Trust securing the Note in favor of Lender, and any modifications, renewals or extensions thereof up to a maximum Loan amount of $654,000.00, shall unconditionally be and at all times remain a lien or charge on the Property prior and superior to Subordinate Lender's Deed of Trust. The principal amount of the Subordinated Debt secured by the Property shall not exceed $835,000.00. 2. Lien Subordination. Subordinate Lender unconditionally waives, relinquishes and subordinates all of Subordinate Lender's right, title and interest in and to the Property to the lien or charge of Lender's Deed of Trust and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. 3. Payment Subordination. The right of payment of any and all of the Subordinated Debt is hereby made subordinate and junior to the payment of principal, interest, and all other amounts of the Senior Debt, as set forth herein. Provided, however, as long as no Event of Default under the Loan has occurred and is continuing, Subordinate Lender may receive and retain monthly payments payable pursuant to the Subordinate Lender's loan documents with Borrower. 4. Rights Upon Insolvency. In the event of (1) any insolvency, bankruptcy, receivership, liquidation, reorganization, arrangement, assignment for the benefit of creditors, or other similar proceeding relative to the Borrower, its creditors or its property (as defined in the Loan Agreement), or (2) any proceeding for the voluntary or involuntary liquidation, dissolution or other winding up of the Borrower whether or not involving insolvency or bankruptcy proceedings, then: a. the principal amount of, and all interest on, and all other amounts in respect of, the Senior Debt (including interest thereon accruing after the commencement of any such proceeding, whether or not such interest shall be allowed in such proceeding) shall be paid in full before any payment or distribution of any character, whether in cash, securities or other property, shall be made in respect of the Subordinated Debt; and b. any payment or distribution of any character, whether in cash, securities or other property, which would otherwise (but for the terms hereof) be payable or deliverable in respect of Subordinated Debt (including any payment or distribution in respect of the Subordinated Debt by reason of any other indebtedness of the Borrower being subordinated to the Subordinated Debt), shall be paid or delivered directly to the Lender, or its representatives, until the principal, interest, and all other amounts of the Senior Debt have been paid in full and the Subordinate Lender or any other holder of the Subordinated Debt irrevocably authorizes, empowers and directs all receivers, trustees, liquidators, conservators and others having authority in the premises to effect all such payments and deliveries. 5. Rights Upon Senior Event of Default. At any time that Lender notifies Subordinate Lender that an event of default is outstanding under the Senior Debt, the Borrower shall not make, and the Subordinate Leader shall not receive, accept or retain, any payments of principal or interest or other amount on account of the Subordinated Debt. 6. Borrower Obligations. The Borrower agrees that if any note or other obligation of the Borrower not evidencing Senior Debt, or any portion thereof, shall become due and payable before its maturity date for any reason, the Borrower will give prompt written notice of such occurrence to the Lender. 7. Rights of Lender. a. Subordinate Lender acknowledges and agrees that Lender is under no obligation to, nor has Lender represented that it will, ensure the application of any Loan proceeds it disburses are used for the purposes set forth in the Loan Documents, and the absence of such obligation shall not defeat the subordination herein made in whole or in part. b. So long as any of the Senior Debt shall remain unpaid, the Lender may at all times exercise any and all powers and rights which it now has or may hereafter acquire under the Loan Documents or any of the collateral subject to the Loan Documents without having to obtain any consent or approval of the Subordinate Lender and without any accountability to the Subordinate Lender, nor shall it have any liability to the Subordinate Lender for any action taken or failure to act with respect to this Agreement, the Loan Documents or the aforesaid collateral. Notwithstanding the foregoing: In the event of an Event of Default under the Loan solely as a result of the existence of an Event of Default on the Subordinated Debt (a "Cross Default"). Lender hereby agrees, for the benefit of Subordinate Lender only, to delay the commencement of foreclosure proceedings or otherwise enforcing its remedies under the Loan Documents as a result of such default until after the ninetieth (90th) day following such default, so long as Subordinate Lender is diligently and in good faith pursuing its remedies under the Subordinate Lender's Loan Documents or a resolution of the default with Borrowers during said ninety (90) day period; provided, however, that the foregoing forbearance shall automatically terminate and be of no further force or effect in the event another Event of Default under the Senior Debt (other than Cross Default) has occurred and is continuing. The provisions of this Section 9(b)(i) shall be solely for the benefit of Subordinate Lender (and not for the benefit of Borrower). Nothing contained in this Section 9(b)(i) shall be deemed or construed to limit or affect in any manner any of Lender's rights or remedies under the Loan Documents with respect to any default other than the Cross Default (whether or not the Cross Default then exists and whether or not Subordinate Lender is then pursing its remedies under the Subordinate Lender's Loan Documents or a resolution of the default under the Subordinate Lender's Loan Documents with Borrower). ii. In the event of an Event of Default on the Loan, Lender will provide to Subordinate Lender a copy of any related notice of default delivered to Borrower and such notice shall be sent to Subordinate Lender in the manner provided for in Section 13. In the event of an Event of Default under Subordinate Lender's Loan Documents, Subordinate Lender will provide to Lender a copy of any related notice of default delivered to Borrower and such notice shall be sent to Lender in the manner provided for in Section 13. If the notice delivered by Lender relates to a default by Borrower in its obligation to pay money under the Loan Documents (a "Monetary Default"), Lender agrees that Subordinate Lender shall have the right, but not the obligation, to cure such Monetary Default. If the notice delivered by Lender relates to a default by Borrower with respect to its failure to perform any of its other obligations (other than an obligation to pay money) under the Loan Documents (a "Non -Monetary Default"), Lender agrees that Subordinate Lender shall have the right, but not the obligation, to cure such Non -Monetary Default. Lender shall accept performance by Subordinate Lender of any of the obligations Borrower within the time periods set forth in the Loan Documents for Borrower's performance as though performed by Borrower. 8. Constructive Trust. If, notwithstanding the provisions of this Agreement, any payment or distribution of any character (whether in cash, securities or other property) is received by the Subordinate Lender in contravention of the terms of this Agreement, such payment or distribution shall not be commingled with any asset of the Subordinate Lender, but shall be held in trust for the benefit of, and shall be paid over or delivered and transferred to, the Lender, or its representatives or agents, for application to the payment of all Senior Debt remaining unpaid, until all principal, interest (including interest thereon accruing after the commencement of any proceedings described herein), and all other amounts of the Senior Debt have been paid in full. 9. Modification. The terms of this Agreement, the subordination effectuated hereby, and the rights of the Lender and the obligations of the Subordinate Lender arising hereunder, shall not be affected, modified or impaired in any manner or to any extent by: (i) any amendment or modification of or supplement to the Loan Documents or any other instrument or document executed or delivered pursuant thereto; (ii) the lack of validity, legality or enforceability of any of such documents; (iii) any exercise or non -exercise of any right, power or remedy under or in respect of the Senior Debt or any of such instruments or documents referred to in clause (i) above or arising at law; or (iv) any waiver, consent, release, indulgence, extension, renewal, modification, delay or other action, in action or omission in respect of the Senior Debt or any of the instruments or documents referred to in clause (i) above, whether or not the Subordinate Lender shall have had notice or knowledge of any of the foregoing and whether or not it shall have consented thereto. 10. Notices. All notice, consents, approvals, requests, demands, instruments or other communications to be made, given or furnished pursuant to, under or by virtue of their Agreement (each, a "Notice") shall be in writing and shall be deemed given or furnished if addressed to the party intended to receive the same at the address or such party as set forth below (i) upon receipt when personally delivered at such address, (ii) three business days after the same is deposited in the United States mail as first class registered or certified mail, return receipt requested, postage prepaid, or (iii) one business day after the date of delivery of such notice to a nationwide, reputable commercial courier service: If to Lender: TORREY PINES BANK, a Division of Western Alliance Bank, an Arizona corporation 550 West C Street, Suite 100 San Diego, CA 92101 Attention: Ciro Villa If to Subordinate Lender: Community Development Commission -Housing Authority of the City of National City 1243 National City Blvd. National City, CA 91950 If to Borrower CASA FAMILIAR, INC. 1901 Del Sur Blvd. San Ysidro, CA 92173 Any party may change the address to which any notice is to be delivered to any other address within the United States of America by furnishing written notice of such change at least 15 days prior to the effective date of such change to the other parties in the manner set forth above, but no such notice of change shall be effective unless and until received by such other parties. Notices may be given on behalf of any party by its attorneys. 11. Miscellaneous. This Agreement may not be amended or modified orally but may be amended or modified only in writing, signed by all parties hereto. No waiver of any term or provision of this Agreement shall be effective unless it is in writing, making specific reference to this Agreement and signed by the party against whom such waiver is sought to be enforced. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and cancel any prior agreements regarding the subordination of Subordinate Lender's Deed of Trust to Lender's Deed of Trust, including, without limitation, those provisions, if any, contained in Subordinate Lender's deed of trust which provide for the subordination of the deed of trust to a deed or deeds of trust or to a mortgage or mortgages. This Agreement shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns, and, without further reference, shall pass to and may be relied on and enforced by any transferee or subsequent holder of the Senior Debt and the Subordinated Debt. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12. Definitions. Terms used in this Agreement and not defined herein shall have the respective meanings ascribed to them in the Loan Agreement. The recitals hereto shall be a part of this Agreement. 13. Termination. This Agreement shall terminate upon the final and indefeasible payment in full of the principal amount of, and all interest and premium on, and all other amounts in respect of, the Senior Debt. 14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute and be construed as one and the same instrument. NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED AND OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereof BORROWER: CASA FAMILIAR, INC., a California non-profit corporation By: Andrea S. Skorepa Its: President/CEO A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) JSf` On this cQ/ day of ss , 2015, befo me, Notary Public, personally U appeared b7Z...4 '3', <Se o /9-- who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s ( subscribed to the within instrument and acknowledged to me that h AJA e ey executed the same in hi eir authorized capacity(ies), and that by h'f► eir 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. D. E. TEVIK-WOOD Commission # 1959916 Notary Public - California San Diego County My Comm. Expires Nov 11, 2015 z D WITNESS my hand and official seal. SUBORDINATE LENDER: Community Development Commission -Housing Authority_of the City of National City By. Leslie Deese Its: Executive Director A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ss On this day of l , 2015, before me, c�._)i EeV/t`Lj -tiC1 NS Notary Public, personally appeared LDS l 1 G t E&SS- , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)ee- subscribed to the within instrument and acknowledged to me that - 'j',they executed the same in - ..f/'' heir authorized capacity(ies), and that by Iti� h 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. D. E. TEVIK-WOOD Commission # 1959916 a "� •° "`� Notary Public - California g San Diego County a M Comm. Ex'lres Nov 11, 2015 WITNESS my hand and official seal. LENDER: Western Alliance Bank, an Arizona corporation By: Ciro Villa Its: Vice President A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss COUNTY OF SAN DIEGO ) On this c9/ day of , 2015, bef meE:er, / (.)6L Notary Public, personally appeared -- who proved to me on the basis of satisfactory evidence to be the person(s) whose name(sfare subscribed to the within instrument and acknowledged to me that�he/they executed the same in Olerftireir authorized capacity(ies), and that b 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. z D. E. TEVIK-W000 Commission # 1959916 Notary Public - California San Diego County My Comm. Expires Nov 11, 2015 z z WITNESS my hand and official seal. EXHIBIT "A" PROPERTY LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NATIONAL CITY, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOTS 1, 2 AND 3 AND THE NORTH HALF OF LOT 4 IN BLOCK 4 OF 3.D. O'CONNELL'S SUBDIVISION OF THE EAST HALF OF THE 10 ACRE TRACT 6, IN QUARTER SECTION 155 OF RANCHO DE LA NACION, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 468, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JANUARY 24, 1888. RESOLUTION NO. 2015 — 32 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT WITH CASA FAMILIAR, INC. SUBORDINATING THE DEED OF TRUST THAT SECURES A HOME INVESTMENT PARTNERSHIP PROGRAM LOAN FOR $835,000 ON RESTRICTED RENTAL UNITS LOCATED AT 305 EAST FIFTH STREET IN NATIONAL CITY FOR THE PURPOSE OF REFINANCING EXISTING DEBT WHEREAS, Casa Familiar, Inc., a non-profit public benefit corporation, organized under the laws of the State of California ("Borrower") is the owner of a 10-unit multifamily rental housing project ("Project") located at 305 East Fifth Street in National City; and WHEREAS, in 2009, the Community Development Commission of the City of National City made a loan for $835,000 from the HOME Investment Partnerships Program to assist in the substantial rehabilitation of the Project; and WHEREAS, the Borrower desires to refinance existing debt of $654,000 on the Project through a new mortgage for the principal amount of $1,245,000 from Western Alliance Bank ("Lender"); and WHEREAS, since the debt of other projects owned by the Borrower in the amount of $591,000 is included in the principal amount of the new loan, the lien under the Lender's Deed of Trust on the Project for the new mortgage will not exceed the existing debt of the Project ($654,000); and WHEREAS, In order to provide the loan, the Lender requires the subordination of the Deed of Trust that secures the HOME funds. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement and any other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement will be on file in the office of the City Clerk. PASSED and ADOPTED this 4th day of August on Morrison, Chairman ATTEST: G�L Leslie Deese, Secretary Passed and adopted by the Community Development Commission — Housing Authority of the City of National City, California, on August 4, 2015 by the following vote, to -wit: Ayes: Boardmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Housing Authority Secretary, Housing Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2015-32 of the Community Development Commission — Housing Authority of the City of National City, California, passed and adopted on August 4, 2015. Secretary, Housing Authority By: Deputy Crao\S- 33 CITY OF NATIONAL CITY, CALIFORNIA y oy- - 9 COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY COUNCIL AGENDA STATEMENT "EETING DATE: August 4, 2015 AGENDA ITEM NO. 25 ITEM TITLE: Resolution of the Community Development Commission -Housing Authority of the City of National City authorizing the Executive Director to execute a Subordination Agreement with Casa Familiar, Inc. subordinating the Deed of Trust that secures a HOME Investment Partnership Program loan for $835,000 on restricted rental units located at 305 East Fifth Street in National City for the purpose of refinancing existing debt. PREPARED BY: Carlos Aguirre, Community Dev. Prog. Mgr. DEPARTMENT: g, Grants, & Asset event PHONE: 1619 336-4391! APPROV :Y: EXPLANATION: Casa Familiar, Inc., a non-profit public benefit corporation, organized under the laws of the State of California ("Borrower") is the owner of a 10-unit multifamily rental housing project ("Project") located at 305 East Fifth Street in National City. In 2009, the Community Development Commission of the City of National City made a loan for $835,000 from the HOME Investment Partnerships Program to assist in the substantial rehabilitation of the Project. The Borrower desires to refinance existing debt of $654,000 on the Project through a new mortgage for the principal amount of $1,245,000 from Western Alliance Bank ("Lender"). Since the debt of other projects owned by the Borrower in the amount of $591,000 is included in the principal amount of the new loan, the lien under the Lender's Deed of Trust on the Project for the new mortgage will not exceed the existing debt of the project ($654,000). In order to provide the loan, 'he Lender requires the subordination of the Deed of Trust that secures the HOME funds. The new loan vill effectively lower the interest rate from 7.5% to 4.5%. FINANCIAL STATEMENT: APPROVED: Finance ACCOUNT NO. APPROVED: MIS There is no fiscal impact to the CDC -HA. ENVIRONMENTAL REVIEW: N/A ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Staff recommends the adoption of a resolution to execute the Subordination Agreement. BOARD / COMMISSION RECOMMENDATION: N/A :ATTACHMENTS: 1. Subordination Agreement 2. Deed of Trust 3. Promissory Note lic ,so‘,v-X\0 N No. ra+0\5-3'd Attachment No. 1 RECORDING REQUESTED BY AND WHEN RECORDED, RETURN TO: TORREY PINES BANK, A DIVISION OF WESTERN ALLIANCE BANK 12220 El Camino Real, Suite 200 San Diego, CA 92130 Attn: Real Estate Department Loan No. 3530163945 SPACE ABOVE FOR RECORDER'S USE ONLY] SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of July 7, 2015, by and between CASA FAMILIAR, INC., a California non-profit public benefit corporation ("Borrower") and Community Development Commission -Housing Authority of the City of National City ("Subordinate Lender"), in favor of Western Alliance Bank, an Arizona corporation ("Lender"). RECITALS A. Subject to the terms and provisions of that certain deed of trust dated October 1, 2009, executed by Borrower in favor of Subordinate Lender, recorded in the official records of San Diego County on October 12, 2009 as document number 2009-0564364 ("Subordinate Lender's Deed of Trust"), Borrower granted to Subordinate Lender a security interest in and to the property described in Exhibit A attached hereto and incorporated herein (which property, together with all improvements now or hereafter located on the property, is hereinafter collectively referred to as the "Property") to secure Borrower's obligations to Subordinate Lender (the "Subordinated Debt"). B. Borrower has or will execute a deed of trust, security agreement and fixture filing and an assignment of rents and leases ("Lender's Deed of Trust") securing, among other things, a loan agreement between Borrower and Lender dated July 7, 2015 (the "Loan Agreement") and promissory note (the "Note") in the original principal amount of $1,245,000.00 dated July 7, 2015, in favor of Lender (the "Loan"). Lender's Deed of Trust is being recorded in the official records of San Diego County concurrently herewith. The Loan Agreement, the Note, Lender's Deed of Trust and all other documents and instruments made or given in connection with or to evidence or secure Lender's Loan shall be referred to herein as the "Loan Documents". C. As a condition to Lender making the Loan (the "Senior Debt"), Lender requires that Lender's Deed of Trust be unconditionally and at all times remain a lien or charge upon the Property, prior and superior to all the rights of Subordinate Lender under the Subordinate Lender's Deed of Trust and that Subordinate Lender specifically and unconditionally subordinates the Subordinate Lender's Deed of Trust to the lien or charge of Lender's Deed of Trust. Attachment No. 1 AGREEMENT 1. Subordination. Lender's Deed of Trust securing the Note in favor of Lender, and any modifications, renewals or extensions thereof up to a maximum Loan amount of $654,000.00, shall unconditionally be and at all times remain a lien or charge on the Property prior and superior to Subordinate Lender's Deed of Trust. The principal amount of the Subordinated Debt secured by the Property shall not exceed $835,000.00. 2. Lien Subordination. Subordinate Lender unconditionally waives, relinquishes and subordinates all of Subordinate Lender's right, title and interest in and to the Property to the lien or charge of Lender's Deed of Trust and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. 3. Payment Subordination. The right of payment of any and all of the Subordinated Debt is hereby made subordinate and junior to the payment of principal, interest, and all other amounts of the Senior Debt, as set forth herein. Provided, however, as long as no Event of Default under the Loan has occurred and is continuing, Subordinate Lender may receive and retain monthly payments payable pursuant to the Subordinate Lender's loan documents with Borrower. 4. Rights Upon Insolvency. In the event of (1) any insolvency, bankruptcy, receivership, liquidation, reorganization, arrangement, assignment for the benefit of creditors, or other similar proceeding relative to the Borrower, its creditors or its property (as defined in the Loan Agreement), or (2) any proceeding for the voluntary or involuntary liquidation, dissolution or other winding up of the Borrower whether or not involving insolvency or bankruptcy proceedings, then: a. the principal amount of, and all interest on, and all other amounts in respect of, the Senior Debt (including interest thereon accruing after the commencement of any such proceeding, whether or not such interest shall be allowed in such proceeding) shall be paid in full before any payment or distribution of any character, whether in cash, securities or other property, shall be made in respect of the Subordinated Debt; and b. any payment or distribution of any character, whether in cash, securities or other property, which would otherwise (but for the terms hereof) be payable or deliverable in respect of Subordinated Debt (including any payment or distribution in respect of the Subordinated Debt by reason of any other indebtedness of the Borrower being subordinated to the Subordinated Debt), shall be paid or delivered directly to the Lender, or its representatives, until the principal, interest, and all other amounts of the Senior Debt have been paid in full and the Subordinate Lender or any other holder of the Subordinated Debt irrevocably authorizes, empowers and directs all receivers, trustees, liquidators, conservators and others having authority in the premises to effect all such payments and deliveries. 5. Rights Upon Senior Event of Default. At any time that Lender notifies Subordinate Lender that an event of default is outstanding under the Senior Debt, the Borrower shall not make, and the Subordinate Leader shall not receive, accept or retain, any payments of principal or interest or other amount on account of the Subordinated Debt. Attachment No. 1 6. Borrower Obligations. The Borrower agrees that if any note or other obligation of the Borrower not evidencing Senior Debt, or any portion thereof, shall become due and payable before its maturity date for any reason, the Borrower will give prompt written notice of such occurrence to the Lender. 7. Rights of Lender. a. Subordinate Lender acknowledges and agrees that Lender is under no obligation to, nor has Lender represented that it will, ensure the application of any Loan proceeds it disburses are used for the purposes set forth in the Loan Documents, and the absence of such obligation shall not defeat the subordination herein made in whole or in part. b. So long as any of the Senior Debt shall remain unpaid, the Lender may at all times exercise any and all powers and rights which it now has or may hereafter acquire under the Loan Documents or any of the collateral subject to the Loan Documents without having to obtain any consent or approval of the Subordinate Lender and without any accountability to the Subordinate Lender, nor shall it have any liability to the Subordinate Lender for any action taken or failure to act with respect to this Agreement, the Loan Documents or the aforesaid collateral. Notwithstanding the foregoing: In the event of an Event of Default under the Loan solely as a result of the existence of an Event of Default on the Subordinated Debt (a "Cross Default"). Lender hereby agrees, for the benefit of Subordinate Lender only, to delay the commencement of foreclosure proceedings or otherwise enforcing its remedies under the Loan Documents as a result of such default until after the ninetieth (90th) day following such default, so long as Subordinate Lender is diligently and in good faith pursuing its remedies under the Subordinate Lender's Loan Documents or a resolution of the default with Borrowers during said ninety (90) day period; provided, however, that the foregoing forbearance shall automatically terminate and be of no further force or effect in the event another Event of Default under the Senior Debt (other than Cross Default) has occurred and is continuing. The provisions of this Section 9(b)(i) shall be solely for the benefit of Subordinate Lender (and not for the benefit of Borrower). Nothing contained in this Section 9(b)(i) shall be deemed or construed to limit or affect in any manner any of Lender's rights or remedies under the Loan Documents with respect to any default other than the Cross Default (whether or not the Cross Default then exists and whether or not Subordinate Lender is then pursing its remedies under the Subordinate Lender's Loan Documents or a resolution of the default under the Subordinate Lender's Loan Documents with Borrower). ii. In the event of an Event of Default on the Loan, Lender will provide to Subordinate Lender a copy of any related notice of default delivered to Borrower and such notice shall be sent to Subordinate Lender in the manner provided for in Section 13. In the event of an Event of Default under Subordinate Lender's Loan Documents, Subordinate Lender will provide to Lender a copy of any related notice of default delivered to Borrower and such notice shall be sent to Lender in the manner provided for in Section 13. If the notice delivered by Lender relates to a default by Borrower in its obligation to pay money under the Loan Documents (a "Monetary Default"), Lender agrees that Subordinate Lender shall have the right, but not the obligation, to cure such Monetary Default. If the notice delivered by Lender relates to a default by Borrower with respect to its failure to perform any of its other obligations (other than an obligation to pay money) under the Loan Documents (a "Non -Monetary Default"), Lender agrees that Subordinate Lender shall have the right, but not the obligation, to cure such Non -Monetary Default. Lender shall accept performance by Subordinate Attachment No. 1 Lender of any of the obligations Borrower within the time periods set forth in the Loan Documents for Borrower's performance as though performed by Borrower. S. Constructive Trust. If, notwithstanding the provisions of this Agreement, any payment or distribution of any character (whether in cash, securities or other property) is received by the Subordinate Lender in contravention of the terms of this Agreement, such payment or distribution shall not be commingled with any asset of the Subordinate Lender, but shall be held in trust for the benefit of, and shall be paid over or delivered and transferred to, the Lender, or its representatives or agents, for application to the payment of all Senior Debt remaining unpaid, until all principal, interest (including interest thereon accruing after the commencement of any proceedings described herein), and all other amounts of the Senior Debt have been paid in full. 9. Modification. The terms of this Agreement, the subordination effectuated hereby, and the rights of the Lender and the obligations of the Subordinate Lender arising hereunder, shall not be affected, modified or impaired in any manner or to any extent by: (i) any amendment or modification of or supplement to the Loan Documents or any other instrument or document executed or delivered pursuant thereto; (ii) the lack of validity, legality or enforceability of any of such documents; (iii) any exercise or non -exercise of any right, power or remedy under or in respect of the Senior Debt or any of such instruments or documents referred to in clause (i) above or arising at law; or (iv) any waiver, consent, release, indulgence, extension, renewal, modification, delay or other action, in action or omission in respect of the Senior Debt or any of the instruments or documents referred to in clause (i) above, whether or not the Subordinate Lender shall have had notice or knowledge of any of the foregoing and whether or not it shall have consented thereto. 10. Notices. All notice, consents, approvals, requests, demands, instruments or other communications to be made, given or furnished pursuant to, under or by virtue of their Agreement (each, a "Notice") shall be in writing and shall be deemed given or furnished if addressed to the party intended to receive the same at the address or such party as set forth below (i) upon receipt when personally delivered at such address, (ii) three business days after the same is deposited in the United States mail as first class registered or certified mail, return receipt requested, postage prepaid, or (iii) one business day after the date of delivery of such notice to a nationwide, reputable commercial courier service: If to Lender: TORREY PINES BANK, a Division of Western Alliance Bank, an Arizona corporation 550 West C Street, Suite 100 San Diego, CA 92101 Attention: Ciro Villa If to Subordinate Lender: Community Development Commission -Housing Authority of the City of National City 1243 National City Blvd. National City, CA 91950 If to Borrower CASA FAMILIAR, INC. 1901 Del Sur Blvd. San Ysidro, CA 92173 Attachment No. 1 Any party may change the address to which any notice is to be delivered to any other address within the United States of America by furnishing written notice of such change at least 15 days prior to the effective date of such change to the other parties in the manner set forth above, but no such notice of change shall be effective unless and until received by such other parties. Notices may be given on behalf of any party by its attorneys. 11. Miscellaneous. This Agreement may not be amended or modified orally but may be amended or modified only in writing, signed by all parties hereto. No waiver of any term or provision of this Agreement shall be effective unless it is in writing, making specific reference to this Agreement and signed by the party against whom such waiver is sought to be enforced. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and cancel any prior agreements regarding the subordination of Subordinate Lender's Deed of Trust to Lender's Deed of Trust, including, without limitation, those provisions, if any, contained in Subordinate Lender's deed of trust which provide for the subordination of the deed of trust to a deed or deeds of trust or to a mortgage or mortgages. This Agreement shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns, and, without further reference, shall pass to and may be relied on and enforced by any transferee or subsequent holder of the Senior Debt and the Subordinated Debt. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12. Definitions. Terms used in this Agreement and not defined herein shall have the respective meanings ascribed to them in the Loan Agreement. The recitals hereto shall be a part of this Agreement. 13. Termination. This Agreement shall terminate upon the final and indefeasible payment in full of the principal amount of, and all interest and premium on, and all other amounts in respect of, the Senior Debt. 14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute and be construed as one and the same instrument. NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED AND OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereof. Attachment No. 1 BORROWER: CASA FAMILIAR, INC., a California non-profit corporation By: 4..1 Andrea S. Skorepa Its: President/CEO A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ss l On this day of , 2015, befor,m,, e, Crr i , Notary Public, pers all appeared __.LL. \bp-E"4 '--S‘ a Fel , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s is,-e subscribed to the within instrument and acknowledged to me that 1h sfie7hey executed the same in hitheir authorized capacity(ies), and that by 110-e-Dheir 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. z z 0. E. TEVIK-WOOD Commission # 1959916 Notary Public - California San Diego County My Comm. Expires Nov 11, 2015 WITNESS my hand and official seal. Attachment No. 1 SUBORDINATE LENDER: Community Development Commission -Housing Authority_of the City of National City By: Leslie Deese Its: Executive Director A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) COUNTY OF SAN DIEGO ) ss On this day of , 2015, before me, 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. Attachment No. 1 LENDER: Western Alliance Bank, an Arizona corporation By: Ciro Villa Its: Vice President A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ss On this day of , 2015, before me, 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. Attachment No. 1 EXHIBIT "A" PROPERTY LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NATIONAL CITY, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOTS 1, 2 AND 3 AND THE NORTH HALF OF LOT 4 IN BLOCK 4 OF 3.D. O'CONNELL'S SUBDIVISION OF THE EAST HALF OF THE 10 ACRE TRACT 6, IN QUARTER SECTION 155 OF RANCHO DE LA NACION, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 468, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JANUARY 24, 1888. Attachment No. 2 RECORDATION REQUESTED BY: WHEN RECORDED MAIL TO: Western Alliance Bank, an Arizona corporation San Diego Downtown Office 550 W. "C" Street, Suite 100 San Diego, CA 92101 SEND TAX NOTICES TO: CASA FAMILIAR, INC., a California nonprofit public benefit corporation 1901 Del Sur Blvd. San Ysidro, CA 92173 FOR RECORDER'S USE ONLY DEED OF TRUST MAXIMUM LIEN. The lien of this Deed of Trust shall not exceed at any one time $654,000.00. THIS DEED OF TRUST is dated July 7, 2015, among CASA FAMILIAR, INC., a California nonprofit public benefit corporation, whose address is 1901 Del Sur Blvd., San Ysidro, CA 92173 ("Trustor"); Western Alliance Bank, an Arizona corporation, whose address is San Diego Downtown Office, 550 W. "C" Street, Suite 100, San Diego, CA 92101 (referred to below sometimes as "Lender" and sometimes as "Beneficiary"); and Western Alliance Bank, an Arizona corporation, whose address is 550 W. "C" Street Suite 100, San Diego , CA 92101 (referred to below as "Trustee") . CONVEYANCE AND GRANT. For valuable consideration, Trustor irrevocably grants, transfers and assigns to Trustee in trust, with power of sale, for the benefit of Lender as Beneficiary, all of Trustor's right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of way, and appurtenances; all water, water rights and ditch rights (including stock in utilities with ditch or irrigation rights); and all other rights, royalties, and profits relating to the real property, including without limitation all minerals, oil, gas, geothermal and similar matters, (the "Real Property") located in San Diego County, State of California: Lots 1, 2 and 3 and the north half of Lot 4 in Block 4 of 3.D. O'Connell's Subdivision of the east half of the 10 acre tract 6, in quarter section 155 of Rancho De La Nacion, in the City of National City, County of San Diego, State of California, according to Map thereof No. 468, filed in the Office of the County Recorder of San Diego County, January 24, 1888. The Real Property or its address is commonly known as 304 East 5th Street, National City, CA 91950. The Assessor's Parcel Number for the Real Property is 556-214-01-00. Trustor presently assigns to Lender (also known as Beneficiary in this Deed of Trust) all of Trustor's right, title, and interest in and to all present and future leases of the Property and all Rents from the Property. This is an absolute assignment of Rents made in connection with an obligation secured by real property pursuant to California Civil Code Section 2938. In addition, Trustor grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents. THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF THE TRUSTOR UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED OF TRUST IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS: PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust, Trustor shall pay to Lender all amounts secured by this Deed of Trust as they become due, and shall strictly end in a timely manner perform all of Trustor's obligations under the Note, this Deed of Trust, and the Related Documents. POSSESSION AND MAINTENANCE OF THE PROPERTY. Trustor agrees that Trustor's possession and use of the Property shall be governed by the following provisions: Possession and Use. Until the occurrence of an Event of Default, Trustor may (1) remain in possession and control of the Property; (2) use, operate or manage the Property; and (3) collect the Rents from the Property. Duty to Maintain. Trustor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value. Compliance With Environmental Laws. Trustor represents and warrants to Lender that: (1) During the period of Trustor's ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the Property; (2) Trustor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Lender in writing, (a) any breach or violation of any Attachment No. 2 DEED OF TRUST (Continued) Page 2 Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Trustor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the Property; and (b) any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations and ordinances, including without limitation all Environmental Laws. Trustor authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Trustor's expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Deed of Trust. Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Trustor or to any other person. The representations and warranties contained herein are based on Trustor's due diligence in investigating the Property for Hazardous Substances. Trustor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Trustor becomes liable for cleanup or other costs under any such laws; and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Deed of Trust or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Trustor's ownership or interest in the Property, whether or not the same was or should have been known to Trustor. The provisions of this section of the Deed of Trust, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Deed of Trust and shall not be affected by Lender's acquisition of any interest in the Property, whether by foreclosure or otherwise. Nuisance, Waste. Trustor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Trustor will not remove, or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel or rock products without Lender's prior written consent. Removal of Improvements. Trustor shall not demolish or remove any Improvements from the Real Property without Lender's prior written consent. As a condition to the removal of any Improvements, Lender may require Trustor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value. Lender's Right to Enter. Lender and Lender's agents and representatives may enter upon the Real Property at all reasonable times to attend to Lender's interests and to inspect the Real Property for purposes of Trustor's compliance with the terms and conditions of this Deed of Trust. Compliance with Governmental Requirements. Trustor shall promptly comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property, including without limitation, the Americans With Disabilities Act. Trustor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Trustor has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Property are not jeopardized. Lender may require Trustor to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest. Duty to Protect. Trustor agrees neither to abandon or leave unattended the Property. Trustor shall do all other acts, in addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property. DUE ON SALE - CONSENT BY LENDER. Lender may, at Lender's option, declare immediately due and payable all sums secured by this Deed of Trust upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease -option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Trustor is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Trustor. However, this option shall not be exercised by Lender if such exercise is prohibited by applicable law. TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Deed of Trust: Payment. Trustor shall pay when due (and in all events at least ten (10) days prior to delinquency) all taxes, special taxes, assessments, charges (including water and sewer), fines and impositions levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Trustor shall maintain the Property free of all liens having priority over or equal to the interest of Lender under this Deed of Trust, except for the lien of taxes and assessments not due and except as otherwise provided in this Deed of Trust. Right to Contest. Trustor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized. If a lien arises or is filed as a result of nonpayment, Trustor shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen (15) days after Trustor has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and attorneys' fees, or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest, Trustor shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property. Trustor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Evidence of Payment. Trustor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property. Notice of Construction. Trustor shall notify Lender at least fifteen (15) days before any work is commenced, any services are Attachment No. 2 DEED OF TRUST (Continued) Page 3 furnished, or any materials are supplied to the Property, if any mechanic's lien, materialmen's lien, or other lien could be asserted on account of the work, services, or materials and the cost exceeds $1,000.00. Trustor will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Trustor can and will pay the cost of such improvements. PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Deed of Trust. Maintenance of Insurance. Trustor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Trustor shall also procure and maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Trustee and Lender being named as additional insureds in such liability insurance policies. Additionally, Trustor shall maintain such other insurance, including but not limited to hazard, business interruption, and boiler insurance, as Lender may reasonably require. Notwithstanding the foregoing, in no event shall Trustor be required to provide hazard insurance in excess of the replacement value of the improvements on the Real Property. Policies shall be written in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Trustor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Trustor or any other person. Should the Real Property be located in an area designated by the Administrator of the Federal Emergency Management Agency as a special flood hazard area, Trustor agrees to obtain and maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender that the Property is located in a special flood hazard area, for the full unpaid principal balance of the loan and any prior liens on the property securing the loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of the loan. Application of Proceeds. Trustor shall promptly notify Lender of any loss or damage to the Property if the estimated cost of repair or replacement exceeds $1,000.00. Lender may make proof of loss if Trustor fails to do so within fifteen (15) days of the casualty. If in Lender's sole judgment Lender's security interest in the Property has been impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If the proceeds are to be applied to restoration and repair, Trustor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Trustor from the proceeds for the reasonable cost of repair or restoration if Trustor is not in default under this Deed of Trust. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Deed of Trust, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Trustor as Trustor's interests may appear. Trustor's Report on Insurance. Upon request of Lender, however not more than once a year, Trustor shall furnish to Lender a report on each existing policy of insurance showing: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured, the then current replacement value of such property, and the manner of determining that value; and (5) the expiration date of the policy. Trustor shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Property or if Trustor fails to comply with any provision of this Deed of Trust or any Related Documents, including but not limited to Trustor's failure to discharge or pay when due any amounts Trustor is required to discharge or pay under this Deed of Trust or any Related Documents, Lender on Trustor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Trustor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Deed of Trust also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Deed of Trust: Title. Trustor warrants that: (a) Trustor holds good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Deed of Trust, and (b) Trustor has the full right, power, and authority to execute and deliver this Deed of Trust to Lender. Defense of Title. Subject to the exception in the paragraph above, Trustor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Trustor's title or the interest of Trustee or Lender under this Deed of Trust, Trustor shall defend the action at Trustor's expense. Trustor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Trustor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation. Compliance With Laws. Trustor warrants that the Property and Trustor's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities. Survival of Representations and Warranties. All representations, warranties, and agreements made by Trustor in this Deed of Trust shall survive the execution and delivery of this Deed of Trust, shall be continuing in nature, and shall remain in full force and effect until such time as Trustor's Indebtedness shall be paid in full. Attachment No. 2 DEED OF TRUST (Continued) Page 4 CONDEMNATION. The following provisions relating to eminent domain and inverse condemnation proceedings are a part of this Deed of Trust: Proceedings. If any eminent domain or inverse condemnation proceeding is commenced affecting the Property, Trustor shall promptly notify Lender in writing, and Trustor shall promptly take such steps as may be necessary to pursue or defend the action and obtain the award. Trustor may be the nominal party in any such proceeding, but Lender shall be entitled, at its election, to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Trustor will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation. Application of Net Proceeds. If any award is made or settlement entered into in any condemnation proceedings affecting all or any part of the Property or by any proceeding or purchase in lieu of condemnation, Lender may at its election, and to the extent permitted by law, require that all or any portion of the award or settlement be applied to the Indebtedness and to the repayment of all reasonable costs, expenses, and attorneys' fees incurred by Trustee or Lender in connection with the condemnation proceedings. IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and charges are a part of this Deed of Trust: Current Taxes, Fees and Charges. Upon request by Lender, Trustor shall execute such documents in addition to this Deed of Trust and take whatever other action is requested by Lender to perfect and continue Lender's lien on the Real Property. Trustor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Deed of Trust, including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Deed of Trust. Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax upon this type of Deed of Trust or upon all or any part of the Indebtedness secured by this Deed of Trust; (2) a specific tax on Trustor which Trustor is authorized or required to deduct from payments on the Indebtedness secured by this type of Deed of Trust; (3) a tax on this type of Deed of Trust chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or any portion of the Indebtedness or on payments of principal and interest made by Trustor. Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Deed of Trust, this event shall have the same effect as an Event of Default, and Lender may exercise any or all of its available remedies for an Event of Default as provided below unless Trustor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender. SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Deed of Trust as a security agreement are a part of this Deed of Trust: Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time. Security Interest. Upon request by Lender, Trustor shall take whatever action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property. Trustor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest. Upon default, Trustor shall not remove, sever or detach the Personal Property from the Property. Upon default, Trustor shall assemble any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Trustor and Lender and make it available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable law. Addresses. The mailing addresses of Trustor (debtor) and Lender (secured party) from which information concerning the security interest granted by this Deed of Trust may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Deed of Trust. FURTHER ASSURANCES; ATTORNEY -IN -FACT. The following provisions relating to further assurances and attorney -in -fact are a part of this Deed of Trust: Further Assurances. At any time, and from time to time, upon request of Lender, Trustor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve (1) Trustor's obligations under the Note, this Deed of Trust, and the Related Documents, and (2) the liens and security interests created by this Deed of Trust as first and prior liens on the Property, whether now owned or hereafter acquired by Trustor. Unless prohibited by law or Lender agrees to the contrary in writing, Trustor shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph. Attorney -in -Fact. If Trustor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Trustor and at Trustor's expense. For such purposes, Trustor hereby irrevocably appoints Lender as Trustor's attorney -in -fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in the preceding paragraph. FULL PERFORMANCE. If Trustor pays all the Indebtedness when due, and otherwise performs all the obligations imposed upon Trustor under this Deed of Trust, Lender shall execute and deliver to Trustee a request for full reconveyance and shall execute and deliver to Trustor suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Personal Property. Lender may charge Trustor a reasonable reconveyance fee at the time of reconveyance. EVENTS OF DEFAULT. Each of the following, at Lender's option, shall constitute an Event of Default under this Deed of Trust: Payment Default. Trustor fails to make any payment when due under the Indebtedness. Other Defaults. Trustor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Deed of Attachment No. 2 DEED OF TRUST (Continued) Page 5 Trust or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Trustor. Compliance Default. Failure to comply with any other term, obligation, covenant or condition contained in this Deed of Trust, the Note or in any of the Related Documents. Default on Other Payments. Failure of Trustor within the time required by this Deed of Trust to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien. Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with the Property. Default in Favor of Third Parties. Should Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Grantor's property or Grantor's ability to repay the Indebtedness or Grantor's ability to perform Grantor's obligations under this Deed of Trust or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Trustor or on Trustor's behalf under this Deed of Trust or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Defective Collateralization. This Deed of Trust or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Insolvency. The dissolution or termination of Trustor's existence as a going business, the insolvency of Trustor, the appointment of a receiver for any part of Trustor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Trustor. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Trustor or by any governmental agency against any property securing the Indebtedness. This includes a garnishment of any of Trustor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Trustor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Trustor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Breach of Other Agreement. Any breach by Trustor under the terms of any other agreement between Trustor and Lender that is not remedied within any grace period provided therein, including without limitation any agreement concerning any indebtedness or other obligation of Trustor to Lender, whether existing now or later. Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the Indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Adverse Change. A material adverse change occurs in Trustor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired. Right to Cure. If any default, other than a default in payment, is curable and if Trustor has not been given a notice of a breach of the same provision of this Deed of Trust within the preceding twelve (12) months, it may be cured if Trustor, after Lender sends written notice to Trustor demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Deed of Trust, at any time thereafter, Trustee or Lender may exercise any one or more of the following rights and remedies: Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Trustor under this Deed of Trust, after Trustor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. Foreclosure by Sale. Upon an Event of Default under this Deed of Trust, Beneficiary may declare the entire Indebtedness secured by this Deed of Trust immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold the Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, other documents requested by Trustee, and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of the notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement in accordance with applicable law. Trustee shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. Judicial Foreclosure. With respect to all or any part of the Real Property, Lender shall have the right in lieu of foreclosure by power of Attachment No. 2 DEED OF TRUST (Continued) Page 6 sale to foreclose by judicial foreclosure in accordance with and to the full extent provided by California law. UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code, including without limitation the right to recover any deficiency in the manner and to the full extent provided by California law. Collect Rents. Lender shall have the right, without notice to Trustor to take possession of and manage the Property and collect the Rents, including amounts past due and unpaid, and apply the net proceeds, over and above Lender's costs, against the Indebtedness. In furtherance of this right, Lender may require any tenant or other user of the Property to make payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then Trustor irrevocably designates Lender as Trustor's attorney -in -fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response to Lender's demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver. Appoint Receiver. Lender shalt have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver. Tenancy at Sufferance. If Trustor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Trustor, Trustor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, or (2) vacate the Property immediately upon the demand of Lender. Other Remedies. Trustee or Lender shall have any other right or remedy provided in this Deed of Trust or the Note or available at law or in equity. Notice of Sale. Lender shall give Trustor reasonable notice of the time and place of any public sale of the Personal Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made. Reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition. Any sale of the Personal Property may be made in conjunction with any sale of the Real Property. Sale of the Property. To the extent permitted by applicable law, Trustor hereby waives any and all rights to have the Property marshalled. In exercising its rights and remedies, the Trustee or Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale on all or any portion of the Property. Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and upon any appeal. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, end any anticipated post -judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors' reports, and appraisal fees, title insurance, and fees for the Trustee, to the extent permitted by applicable law. Trustor also will pay any court costs, in addition to all other sums provided by law. Rights of Trustee. Trustee shall have all of the rights and duties of Lender as set forth in this section. POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the powers and obligations of Trustee are part of this Deed of Trust: Powers of Trustee. In addition to all powers of Trustee arising as a matter of law, Trustee shall have the power to take the following actions with respect to the Property upon the written request of Lender and Trustor: (a) join in preparing and filing a map or plat of the Real Property, including the dedication of streets or other rights to the public; (b) join in granting any easement or creating any restriction on the Real Property; and (c) join in any subordination or other agreement affecting this Deed of Trust or the interest of Lender under this Deed of Trust. Obligations to Notify. Trustee shall not be obligated to notify any other party of a pending sale under any other trust deed or lien, or of any action or proceeding in which Trustor, Lender, or Trustee shall be a party, unless the action or proceeding is brought by Trustee. Trustee. Trustee shall meet all qualifications required for Trustee under applicable law. In addition to the rights and remedies set forth above, with respect to all or any part of the Property, the Trustee shall have the right to foreclose by notice and sale, and Lender shall have the right to foreclose by judicial foreclosure, in either case in accordance with and to the full extent provided by applicable law Successor Trustee. Lender, at Lender's option, may from time to time appoint a successor Trustee to any Trustee appointed under this Deed of Trust by an instrument executed and acknowledged by Lender and recorded in the office of the recorder of San Diego County, State of California. The instrument shall contain, in addition to all other matters required by state law, the names of the original Lender, Trustee, and Trustor, the book and page where this Deed of Trust is recorded, and the name and address of the successor trustee, and the instrument shall be executed and acknowledged by Lender or its successors in interest. The successor trustee, without conveyance of the Property, shall succeed to all the title, power, and duties conferred upon the Trustee in this Deed of Trust and by applicable law. This procedure for substitution of Trustee shall govern to the exclusion of all other provisions for Attachment No. 2 DEED OF TRUST (Continued) Page 7 substitution. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. NOTICES. Any notice required to be given under this Deed of Trust shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Deed of Trust. Trustor requests that copies of any notices of default and sale be directed to Trustor's address shown near the beginning of this Deed of Trust. All copies of notices of foreclosure from the holder of any lien which has priority over this Deed of Trust shall be sent to Lender's address, as shown near the beginning of this Deed of Trust. Any party may change its address for notices under this Deed of Trust by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Trustor agrees to keep Lender informed at all times of Trustor's current address. Unless otherwise provided or required by law, if there is more than one Trustor, any notice given by Lender to any Trustor is deemed to be notice given to all Trustors. STATEMENT OF OBLIGATION FEE. Lender may collect a fee, not to exceed the maximum amount permitted by law, for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California. DEED OF TRUST ADDITIONAL PROVISION. Default. The following additional default shall constitute an Event of Default under this Deed of Trust: Environmental Default. Failure of Trustor or any other party to comply with or perform when due, any term, obligation, covenant or condition contained in any environmental agreement executed in connection with any loan, including, without limitation, the Loan. MISCELLANEOUS PROVISIONS. The following additional miscellaneous provisions are a part of this Deed of Trust: Waiver of Jury Trial; Judicial Reference. Trustor hereby waives to the fullest extent permitted by Law, the right to Trial by Jury in any action, proceeding or counterclaim, whether in contract, tort or otherwise, relating directly or indirectly to the Loan evidenced by the Note, this Deed of Trust and any security instrument or any acts or omissions of Lender, its officers, employees, directors or agents in connection therewith. If any legal proceeding is filed in a court and the preceding jury waiver is not enforceable in such action or proceeding, Trustor and Lender agree that such dispute will be determined by a general reference proceeding in accordance with California Code of Civil Procedure sections 638 through 645.1, with the exception of: (i) non judicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This Deed of Trust does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) - (iv) and any such exercise or opposition does not waive the right of any party to a reference proceeding pursuant to this Deed of Trust. The parties intend this agreement for a general reference to be specifically enforceable in accordance with California Code of Civil Procedure section 638. Upon the written request of any party, the parties shall select a single referee, who shall be a retired judge or justice, and the matter will be decided by the referee, not a jury. If the parties do not agree upon a referee within 10 days of such written request, then, any party may request the Court to appoint a referee pursuant to California Code of Civil Procedure section 640(b). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except when any party so requests, a court reporter will be used and the transcript will be provided to all parties at the requesting party's expense. The referee's fees shall ultimately be borne by the party who does not prevail, as determined by the referee. The referee may require one or more prehearing conferences. The parties hereto shall be entitled to discovery, and the referee shall oversee discovery in accordance with the rules of discovery, and may enforce all discovery orders in the same manner as any trial court judge in proceedings at law in the state of California. The referee shall apply the rules of evidence applicable to proceedings at law in the state of California and shall determine all issues in accordance with applicable state and federal law. The referee shall be empowered to enter equitable as well as legal relief and rule on any motion which would be authorized in a trial, including, without limitation, motions for default judgment or summary judgment. The referee shall report his decision, which report shall also include findings of fact and conclusions of law. Waiver of Right of Redemption. Notwithstanding any of the provisions to the contrary contained in this Deed of Trust, Trustor hereby waives any and all rights of redemption from sale under any order or judgment of foreclosure on Trustor's behalf and on behalf of each and every person, except judgment creditors of Trustor, acquiring any interest in or title to the property subsequent to the date of this Deed of Trust. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Deed of Trust: Amendments. This Deed of Trust, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Deed of Trust. No alteration of or amendment to this Deed of Trust shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Annual Reports. If the Property is used for purposes other than Trustor's residence, Trustor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Trustor's previous fiscal year in such form and detail as Lender shall require. "Net operating income" shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property. Caption Headings. Caption headings in this Deed of Trust are for convenience purposes only and are not to be used to interpret or define the provisions of this Deed of Trust. Merger. There shall be no merger of the interest or estate created by this Deed of Trust with any other interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender. Governing Law. This Deed of Trust will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions. This Deed of Trust has been accepted by Lender in the State of California. Attachment No. 2 DEED OF TRUST (Continued) Page 8 Choice of Venue. If there is a lawsuit, Trustor agrees upon Lender's request to submit to the jurisdiction of the courts of San Diego County, State of California. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Deed of Trust unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Deed of Trust shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Deed of Trust. No prior waiver by Lender, nor any course of dealing between Lender and Trustor, shall constitute a waiver of any of Lender's rights or of any of Trustor's obligations as to any future transactions. Whenever the consent of Lender is required under this Deed of Trust, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Severability. If a court of competent jurisdiction finds any provision of this Deed of Trust to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Deed of Trust. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Deed of Trust shall not affect the legality, validity or enforceability of any other provision of this Deed of Trust. Successors and Assigns. Subject to any limitations stated in this Deed of Trust on transfer of Trustor's interest, this Deed of Trust shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in a person other than Trustor, Lender, without notice to Trustor, may deal with Trustor's successors with reference to this Deed of Trust and the Indebtedness by way of forbearance or extension without releasing Trustor from the obligations of this Deed of Trust or liability under the Indebtedness. Time is of the Essence. Time is of the essence in the performance of this Deed of Trust. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Deed of Trust. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Deed of Trust shall have the meanings attributed to such terms in the Uniform Commercial Code: Beneficiary. The word "Beneficiary" means Western Alliance Bank, an Arizona corporation, and its successors and assigns. Borrower. The word "Borrower" means CASA FAMILIAR, INC., a California nonprofit public benefit corporation and includes all co-signers and co -makers signing the Note and all their successors and assigns. Deed of Trust. The words "Deed of Trust" mean this Deed of Trust among Trustor, Lender, and Trustee, and includes without limitation all assignment and security interest provisions relating to the Personal Property and Rents. Default. The word "Default" means the Default set forth in this Deed of Trust in the section titled "Default". Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Default. The words "Event of Default" mean any of the events of default set forth in this Deed of Trust in the events of default section of this Deed of Trust. Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Improvements. The word "Improvements" means all existing and future improvements, buildings, structures, mobile homes affixed on the Real Property, facilities, additions, replacements and other construction on the Real Property. Indebtedness. The word "Indebtedness" means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Trustor's obligations or expenses incurred by Trustee or Lender to enforce Trustor's obligations under this Deed of Trust, together with interest on such amounts as provided in this Deed of Trust. Lender. The word "Lender" means Western Alliance Bank, an Arizona corporation, its successors and assigns. Note. The word "Note" means the promissory note dated July 7, 2015, in the original principal amount of $ I ,245,000.00 from Trustor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. NOTICE TO TRUSTOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE. Personal Property. The words "Personal Property" mean all equipment, fixtures, and other articles of personal property now or Attachment No. 2 DEED OF TRUST (Continued) Page 9 hereafter owned by Trustor, and now or hereafter attached or affixed to the Real Property; together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property; and together with all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property. Property. The word "Property" means collectively the Real Property and the Personal Property. Real Property. The words "Real Property" mean the real property, interests and rights, as further described in this Deed of Trust. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness; except that the words do not mean any guaranty or environmental agreement, whether now or hereafter existing, executed in connection with the Indebtedness. Rents. The word "Rents" means all present and future leases, rents, revenues, income, issues, royalties, profits, and other benefits derived from the Property together with the cash proceeds of the Rents. Trustee. The word "Trustee" means Western Alliance Bank, an Arizona corporation, whose address is 550 W. "C" Street Suite 100, San Diego , CA 92101 and any substitute or successor trustees. Trustor. The word "Trustor" means CASA FAMILIAR, INC., a California nonprofit public benefit corporation. TRUSTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST, AND TRUSTOR AGREES TO ITS TERMS, INCLUDING THE VARIABLE RATE PROVISIONS OF THE NOTE SECURED BY THIS DEED OF TRUST. TRUSTOR: ILIAR, INC., A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION �r �-� f AS A..F._ Andrea S. Skorep , President/CEO of ASA FAMILIAR, INC., a California nonprofit public benefit corporation CERTIFICATE OF ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy or validity of that document. On ) SS , 20 /5 before me, A/4�k, - (here insert name and title of the officer) personally appeared Andrea S. Skorepa, who proved to me on the basis of satisfactory evidence to be t • rson(s) whose name(gl i ee subscribed to the ithin instrument and acknowledged to me that r hey executed the same in h igrer heir authorized capacity(ies), and that by hi eir 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 . a Signature D. E. TEVIK-WOOD Commission # 1959916 Notary Public - California San Diego County a M Comm. Ex • Tres Nov 11, 2015 (Seal) Attachment No. 2 DEED OF TRUST (Continued) Page 10 (DO NOT RECORD) REQUEST FOR FULL RECONVEYANCE (To be used only when obligations have been paid in full) To: , Trustee The undersigned is the legal owner and holder of all Indebtedness secured by this Deed of Trust. All sums secured by this Deed of Trust have been fully paid and satisfied. You are hereby directed, upon payment to you of any sums owing to you under the terms of this Deed of Trust or pursuant to any applicable statute, to cancel the Note secured by this Deed of Trust (which is delivered to you together with this Deed of Trust), and to reconvey, without warranty, to the parties designated by the terms of this Deed of Trust, the estate now held by you under this Deed of Trust. Please mail the reconveyance and Related Documents to: Date: Beneficiary: By: Its: LaserPro, Ver. 15.2.0.024 Copr. D+H USA Corporation 1997, 2015. All Rights Reserved. - CA G:\LPLending\CFI\LPL\G01.FC TR-50436 PR-10 PROMISSORY NOTE Attachment No. 3 Principal- Loan Date Matur€ty Loan No can / Cc11 ACCOunt Ofi€C r . €n€tuts $1, 245, 04, } .: < 07-07"2015 , 08d34•2 5 ....: 530163S45 } .6940 3512 References in the boxes above are or Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing has been omitted due to text length limitations. Borrower: CASA FAMILIAR, INC., a California nonprofit public benefit corporation 1901 Del Sur Blvd. San Ysidro, CA 92173 Lender: Western Alliance Bank, an Arizona corporation San Diego Downtown Office 550 W. "C" Street, Suite 100 San Diego, CA 92101 (619) 233-2500 Principal Amount: $1,245,000.00 Date of Note: July 7, 2015 PROMISE TO PAY. CASA FAMILIAR, INC., a California nonprofit public benefit corporation ("Borrower") promises to pay to Western Alliance Bank, an Arizona corporation ("Lender"), or order, in lawful money of the United States of America, the principal amount of One Million Two Hundred Forty-five Thousand & 00/100 Dollars ($1,245,000.00}, together with interest on the unpaid principal balance from August 4, 2015, until paid in full. PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance with the following payment schedule: Beginning September 4, 2015, and on the 4th day of each and every month thereafter through August 4, 2020, Borrower will pay fixed monthly principal and Interest payments of $6,432.14, the amount of which was derived by amortizing the principal balance of this Note over thirty (30) years at a fixed interest rate of 4.500%. On August 4, 2020, the interest rate for the fixed monthly principal and interest payments for the next five (5) years shall be adjusted by applying the then current Index (as defined below) plus two and three-quarters percentage points (2.75%), adjusted if necessary for the minimum and maximum rate limitations for this Loan, to the then outstanding principal balance, amortized over twenty-five (25) years, with the first adjusted fixed monthly principal and interest payment due on September 4, 2020, and subsequent monthly payments due on the 4th day of each and every month thereafter until August 4, 2025, at which time the entire amount of outstanding principal and interest, together with any other unpaid amount under the Note, shall be due and payable. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the 5 year LIBOR/Swap rate for the relevant Interest Period determined two business days prior to such Interest Period. Lender's LIBOR/Swap rate is to be strictly interpreted and is not intended to serve any other purpose other than providing an index to determine the interest rate used herein. Lender's LIBOR/swap rate may not necessarily be the same as the quoted offer side in the Eurodollar time deposit market by any particular institution or service applicable to any interest period. As used herein, Lender's LIBOR/Swap rate shall mean the rate per annum quoted by Lender as Lender's 5 year LIBOR/Swap rate based upon the LIBOR/Swap rate as quoted for U.S. Dollars by Bloomberg or other comparable pricing services selected by Lender (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each five years from the date of the Note. Interest Rate will be fixed for the first five years from the date of the Note, then will adjust every five years thereafter for the remaining term of the Loan. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 1.644% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate of 2.750 percentage points over the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.500%. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.500% per annum or more than the maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (A) increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, (B) increase Borrower's payments to cover accruing interest, (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the same amount and increase Borrower's final payment. INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note. PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Western Alliance Bank, an Arizona corporation; San Diego Downtown Office; 550 W. "C" Street. Suite 100; San Diego, CA 92101. LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or 310.00, whichever is greater. INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law, immediately increase by adding an additional 5.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents. Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with any loan. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower's existence as a going business, the Insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party PROMISSORY NOTE Attachment No. 3 Loan No: 3530/63945 (Continued) Page 2 of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Cure Provisions. If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California. CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of San Diego County, State of California. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph. COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein: (A) a Deed of Trust dated July 7, 2015, to a trustee in favor of Lender on real property described as "Real Property located at 119-121 West Hall Avenue, San Ysidro, CA 92173" and located in San Diego County, State of California. That agreement contains the following due on sale provision: Lender may, at Lender's option, declare immediately due and payable all sums secured by the Deed of Trust upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease -option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Borrower is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Borrower. However, this option shall not be exercised by Lender if such exercise is prohibited by applicable law. (B) an Assignment of All Rents to Lender on real property described as "Real Property located at 119-121 West Hall Avenue, San Ysidro, CA 92173" and located in San Diego County, State of California. (C) a Deed of Trust dated July 7, 2015, to a trustee in favor of Lender on real property described as "Real Property located at 145-149 West San Ysidro Blvd., San Ysidro, CA 92173" and located in San Diego County, State of California. That agreement contains the following due on sale provision: Lender may, at Lender's option, declare immediately due and payable all sums secured by the Deed of Trust upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease -option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Borrower is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Borrower. However, this option shall not be exercised by Lender if such exercise is prohibited by applicable law. (D) an Assignment of All Rents to Lender on real property described as "Real Property located at 145-149 West San Ysidro Blvd., San Ysidro, CA 92173" and located in San Diego County, State of California. (E) a Deed of Trust dated July 7, 201 5, to a trustee in favor of Lender on real property described as 'Real Property located at 304 East 5th Street, National City, CA 91950" and located in San Diego County, State of California. That agreement contains the following due on sale provision: Lender may, at Lender's option, declare immediately due and payable all sums secured by the Deed of Trust upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease -option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Borrower is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Borrower. However, this option shall not be exercised by Lender if such exercise is prohibited by applicable law. (F) an Assignment of All Rents to Lender on real property described as "Real Property located at 304 East 5th Street, National City, CA 91950" and located in San Diego County, State of California. (G) fixtures described in a Commercial Security Agreement dated July 7, 2015. DISHONORED ITEM FEE. Borrower will pay a tee to Lender, in an amount determined by Lender from time to time, if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored. PREPAYMENT FEE. In the event the loan is prepaid within years one through three end six through eight from the date of the Note, Borrower shall pay Lender a prepayment fee as follows: Prepayment Fee within the 1st year - 3.00% of the outstanding principal balance at the time of prepayment Prepayment Fee within the 2nd year - 2.00% of the outstanding principal balance at the time of prepayment Prepayment Fee within the 3rd year - 1 .00% of the outstanding principal balance at the time of prepayment Prepayment Fee within the 6th year - 3.00% of the outstanding principal balance at the time of prepayment Prepayment Fee within the 7th year - 2.00% of the outstanding principal balance at the time of prepayment Prepayment Fee within the 8th year - 1.00% of the outstanding principal balance at the time of prepayment No prepayment penalty will be assessed in years four, five, nine and ten from the date of the Note. BORROWER ACKNOWLEDGES AND AGREES THAT BORROWER HAS NO RIGHT TO PREPAY THE INDEBTEDNESS EVIDENCED BY THIS NOTE, IN WHOLE OR IN PART, WITHOUT PAYMENT OF THE PREPAYMENT FEE IN ACCORDANCE WITH THE PROVISIONS AND CONDITIONS OF THIS NOTE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BORROWER SHALL PAY THE PREPAYMENT FEE UPON THE PREPAYMENT OF THE INDEBTEDNESS ON ACCELERATION (UPON DEFAULT OR OTHERWISE) PURSUANT TO THE PROVISIONS AND CONDITIONS OF THIS NOTE. BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS AND BENEFITS BORROWER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10, OR ANY SUCCESSOR STATUTE. BORROWER ACKNOWLEDGES AND AGREES THAT LENDER HAS MADE THE LOAN EVIDENCED BY THIS NOTE IN RELIANCE ON THE AGREEMENTS AND WAIVERS OF BORROWER AND THAT LENDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVERS OF BORROWER. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, PROMISSORY NOTE Attachment No. 3 Loan No: 3530163945 (Continued) Page 3 guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER: CASA FMILIINC., .JJ!1 NONPROFIT PUBLIC BENEFIT CORPORATION By: Andrea S. Skorepa, President/CEO of CASA FAMILIAR, INC., a California nonprofit public benefit corporation 1pprho Ver 16 2 0024 Cop 0 ♦11 USA Co.protioo 1.7 201S All ROW Mowwe CA G 1lRpr.d....21UPL1020 PC IT S0476 RR 10 RESOLUTION NO. 2015 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT WITH CASA FAMILIAR, INC. SUBORDINATING THE DEED OF TRUST THAT SECURES A HOME INVESTMENT PARTNERSHIP PROGRAM LOAN FOR $835,000 ON RESTRICTED RENTAL UNITS LOCATED AT 305 EAST FIFTH STREET IN NATIONAL CITY FOR THE PURPOSE OF REFINANCING EXISTING DEBT WHEREAS, Casa Familiar, Inc., a non-profit public benefit corporation, organized under the laws of the State of California ("Borrower") is the owner of a 10-unit multifamily rental housing project ("Project") located at 305 East Fifth Street in National City; and WHEREAS, in 2009, the Community Development Commission of the City of National City made a loan for $835,000 from the HOME Investment Partnerships Program to assist in the substantial rehabilitation of the Project; and WHEREAS, the Borrower desires to refinance existing debt of $654,000 on the Project through a new mortgage for the principal amount of $1,245,000 from Western Alliance Bank ("Lender"); and WHEREAS, since the debt of other projects owned by the Borrower in the amount of $591,000 is included in the principal amount of the new loan, the lien under the Lender's Deed of Trust on the Project for the new mortgage will not exceed the existing debt of the Project ($654,000); and WHEREAS, In order to provide the loan, the Lender requires the subordination of the Deed of Trust that secures the HOME funds. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement and any other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement will be on file in the office of the City Clerk. PASSED and ADOPTED this 4' day of August, 2015. Ron Morrison, Chairman ATTEST: APPROVED AS TO FORM: Leslie Deese, Secretary Claudia Gacitua Silva CDC General Counsel Wtw"?'"!'n"'nilliil, CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk CASA FAMILIAR Subordination Agreement 305 East 5th Street Carlos Aguirre (Housing & Grants) Forwarded Copy of Agreement to Casa Familiar.