HomeMy WebLinkAboutResolution No. 12-7322 RESOLUTION NO. 12 -7322
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DOWNEY
APPROVING A DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, AND SECURITY INSTRUMENT TO FACILITATE THE
FINANCING OF THE DOWNEY REGIONAL MEDICAL CENTER -
HOSPITAL LOCATED AT 11500 BROOKSHIRE AVENUE IN THE CITY
OF DOWNEY
WHEREAS, the City of Downey is a municipal corporation and a charter city organized
and existing under the Constitution of the State of California ( "City "); and
WHEREAS, City is the owner of the real property located at 11500 Brookshire Avenue,
Downey, California (the "Premises "); and
WHEREAS, City entered into a Lease of the Premises between City of Downey and
Downey Community Hospital Foundation, dated as of February 8, 1983, as extended for a
further 44 years by letter dated October 25, 1988, and as amended by an Amendment of Lease,
dated August 11, 2009 (collectively, the "Lease "); and
WHEREAS, Downey Regional Medical Center Hospital, Inc. ( "DRMC ") is the successor
in interest to Downey Community Hospital Foundation under the Lease; and
WHEREAS, Among other things, the Lease requires that the City cooperate and "take
whatever steps are necessary to enable a lender to obtain a security interest in the City's
-- interest in the Lease [and the City's interest in the Premises] or any part thereof, including but
not limited to, subordinating [the City's] right, title and interest in this Lease, [the Premises], or
any part thereof, in order to enable Lessee to borrow money or enter into other financing
arrangements at the most favorable rates and upon the most favorable terms available" (the
"Financing Obligation "); and
WHEREAS, certain lenders have entered into or are entering into certain financing
transactions with DRMC, and, to facilitate such financing, DRMC has requested that City enter
into a Deed of Trust, Assignment of Leases and Rents, and Security Agreement ( "Deed of
Trust ") for the benefit of the Lenders, which Deed of Trust is attached as Attachment 1; and
WHEREAS, the Deed of Trust is generally consistent with the Financing Obligation and
will facilitate the continuing operation of the Downey Regional Medical Center and DRMC's exit
from bankruptcy.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DOWNEY DOES
RESOLVE AS FOLLOWS:
SECTION 1. The City Council finds and determines that the activities contemplated in
the Deed of Trust have no likelihood of causing any environmental impact because they will
result in no physical change in the environment, and are therefore not subject to and exempt
from analysis under the California Environmental Quality Act.
SECTION 2. The City Council DOES HEREBY APPROVE the Deed of Trust
substantially in the form attached as Attachment 1.
RESOLUTION NO. 12 -7322
PAGE TWO —'
SECTION 3. The City Clerk shall certify the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 14 day of February, 2012.
1.1
ROGE 4C. BROSSMER, Mayor
ATTEST:
I/... . C
ADRIA M. JI NE , CMC
City Clerk
I HEREBY CERTIFY that the foregoing is a true copy of a Resolution adopted by the
City Council of the City of Downey at a regular meeting thereof held on the 14th day of
February, 2012, by the following vote, to wit:
AYES: COUNCILMEMBERS: Guerra, Marquez, Vasquez, Gafin, Mayor Brossmer
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ABSTAIN: COUNCILMEMBERS: None
_ 1
-
ADRIA M. JIMEN , CMC
City Clerk
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FIRST AMERICAN TITLE INSURANCE COMPANY
NATIONAL ANGELES OAL FFICE
SERVICES
RECORDING REQUESTED BY: 07r2012
WHEN RECORDED MAIL TO: III ICI I l !
REED SMITH LLP � ii
1901 Avenue of Stars '20120352240'
Suite 700 - - - - - — - —
Los Angeles, CA 90067 -6078
Attn: Jim Eskilson, Esq.
INSTRUCTIONS TO RECORDER:
Index this document as
(i) a deed of trust;
(ii) an assignment of leases and rents; and
(iii) a security agreement
�� J THE CITY OF DOWNEY, as Owner
to
FIRST AMERICAN TITLE INSURANCE COMPANY, as Trustee
for the benefit of '^
LJNIDN BANK, N.A., as Collateral Agent
DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, AND SECURITY AGREEMENT
Dated: As of Pebr»aru,�, ?.1U
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DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, AND SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, AND
SECURITY AGREEMENT ( "Security Instrument ") is made as of theL,Lday of-Zehrzary, 1v rt
2012, by THE CITY OF DOWNEY, a municipal corporation and charter city, having its place of
business at 11111 Brookshire Avenue, Downey, California 90241 (in such capacity, together
with its successors in such capacity, "Owner "), as trustor, to FIRST AMERICAN TITLE
INSURANCE COMPANY, having an address at 1 First American Way, Santa Ana, California
92707 (in such capacity, together with its successors in such capacity, "Trustee "), for the benefit
of UNION BANK, N.A., a national banking association, having its place of business at 120 S.
San Pedro St., 4th Floor, Los Angeles, CA 90012, in its capacity as Collateral Agent under the
Collateral Agency Agreement referred to below (in such capacity, together with its successors in
such capacity, "Collateral Agent ").
RECITALS:
A. Owner is the owner of certain real property located in the City of Downey, Los
Angeles County, California, as described on Exhibit A attached hereto and incorporated by
reference herein ( "Land "), and is leasing the Land to DOWNEY REGIONAL MEDICAL
CENTER - HOSPITAL, INC., a California nonprofit public benefit corporation, formerly known
as Downey Community Hospital, having its place of business at 11500 Brookshire Avenue,
Downey, California 90241 (together with its successors and assigns, the "Borrower ") pursuant
to that certain Lease Between City of Downey and Downey Community Hospital Foundation
dated as of February 8, 1983, as extended for a further 44 years by letter dated October 25, 1988,
and as amended by an Amendment of Lease, dated August 11, 2009, with respect to which a
Memorandum of Ground Lease has been recorded with the Los Angeles County Recorder's
Office (as the same has been amended, assigned, modified, substituted or extended, the "Ground
Lease ").
B. Borrower and the California Health Facilities Financing Authority (together with
any successor thereto, "CHFFA ") are parties to that certain Loan Agreement, dated as of August
1, 1993 (as amended, restated, supplemented or modified from time to time, the "1993 Loan
Agreement "), pursuant to which Borrower received proceeds of bonds (the "1993 Bonds ")
issued by CHFFA pursuant to that certain Indenture, dated as of August 1, 1993 (as amended,
restated, supplemented or modified from time to time, the "1993 Indentures "), between CHFFA
and Union Bank, N.A., a national banking association, in its capacity as successor trustee
(together with any successor thereto the "1993 Trustee ").
C. Borrower and the Independent Cities Finance Authority (together with any
successor thereto "ICFA ") are parties to that certain Loan Agreement, dated as of the date hereof
(as amended, restated, supplemented or modified from time to time, the "2012 Loan
Agreement" and together with the 1993 Loan Agreement, the "Loan Agreements "), pursuant to
which Borrower received proceeds of bonds (the "2012 Bonds" and together with the 1993
Bonds, the "Bonds ") issued by ICFA pursuant to that certain Indenture, dated as of as of the date
hereof (as amended, restated, supplemented or modified from time to time, the "2012
Indenture" and together with the 1993 Indenture, the "Indentures "), between ICFA and Union
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Bank, N.A., a national banking association, in its capacity as trustee (together with any successor
thereto the "2012 Trustee" and together with the 1993 Trustee, the "Trustees ").
D. Union Bank, N.A. ( "Collateral Agent ") and the Trustees are parties to that
certain Intercreditor and Collateral Agency Agreement, of even date herewith (as amended,
supplemented or otherwise modified from time to time, "Collateral Agency Agreement ").
E. Pursuant to the Collateral Agency Agreement, Collateral Agent has agreed to
serve as the collateral agent for the Trustees and any other "Secured Parties" (as defined therein)
with respect to certain collateral security, including this Security Instrument, granted to further
secure "Parity Obligations" (as defined therein), including, without limitation, repayment of the
Bonds.
F. The Parity Obligations are secured by, among other things, that certain Fee and
Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing ( "Leasehold Security Instrument "), of even date herewith encumbering the Borrower's
leasehold interest in the Land.
G. As a condition to, inter alia, the issuing 2012 Bonds, and pursuant to the
Collateral Agency Agreement, Collateral Agent is obtaining this Security Instrument pursuant to
Section 8C of the Ground Lease.
H. Owner desires, as an accommodation to Borrower, to provide a security interest in
the Property as that term is defined below.
1. This Security Instrument is a "Shared Security Document" as provided in the
Collateral Agency Agreement. Capitalized terms not otherwise defined herein shall have the
meanings given those terms in the Collateral Agency Agreement.
ARTICLE 1 - GRANT OF SECURITY
Section 1.1 GRANT. Owner does hereby irrevocably, unconditionally and absolutely,
grant, convey, bargain, sell, pledge, enfeoff, assign, warrant, transfer and convey to Trustee (with
power of sale) in trust for the purposes herein set forth, the following interests (collectively,
"Property ").
1.1.1 Land. The real property described in Exhibit A attached hereto and
made a part hereof (collectively, the "Land "), together with additional lands, estates and
development rights hereafter acquired by Owner specifically for use in connection with the
development, ownership or occupancy of such real property, and all additional lands that are now
or in the future subject to the Ground Lease and estates therein which may, from time to time, by
supplemental deed of trust or otherwise be expressly made subject to the lien of this Security
Instrument;
1.1.2 Improvements. Those buildings, structures, fixtures, additions,
accessions, enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land that are referred to in the Ground Lease
( "Improvements ");
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1.1.3 Easements. All of Owner's right, title and interest in and to, if any,
easements, private rights -of -way or use, rights, strips and gores of land, private streets, ways,
alleys, passages, sewer connection rights, water connection rights and powers, air rights and
development rights, and all estates, rights, titles, interests, privileges, servitudes, tenements,
hereditaments and appurtenances of any nature whatsoever ("Easements"), in any way now or
hereafter belonging or appurtenant to the Land and the Improvements and the reversion and
reversions, remainder and remainders, property and possession, whatsoever, both at law and in
equity, of Owner in its capacity as the record and beneficial fee owner of the Land or as
Landlord under the Ground Lease (as distinguished from its general rights, including property
rights, and powers as a city or municipal government), in and to the Land and the Improvements
and every part and parcel thereof;
1.1.4 Ground Lease. All right, title and interest of Owner in, to and under the
Ground Lease;
1.1.5 Leases and Rents. All right, title and interest of Owner in, to and under
leases and other agreements affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into (individually, a "Lease "; collectively, the
"Leases "), whether before or after the fling by or against Owner of any petition for relief under
11 U.S.C. § 101 et seq., as the same may be amended from time to time ( "Bankruptcy Code ")
and all right, title and interest of Owner, its successors and assigns therein and thereunder,
including, without limitation, cash or securities deposited thereunder to secure the performance
by the lessees of their obligations thereunder and all rents (including all tenant security and other
deposits), additional rents, revenues, issues and profits (including all oil and gas or other mineral
royalties and bonuses) from the Land and the Improvements whether paid or accruing before or
after the filing by or against Owner of any petition for relief under the Bankruptcy Code
(collectively, "Rents ") and all proceeds from the sale or other disposition of the Leases and the
right to receive and apply the Rents to the payment of the Secured Obligations (as defined
below);
L1.6 Condemnation Awards. All right, title and interest of Owner in, to and
under all awards or payments, including interest thereon, which may heretofore and hereafter be
made with respect to the Property, whether from the exercise of the right of eminent domain
(including but not limited to any transfer made in lieu of or in anticipation of the exercise of the
right), or for a change of grade, or for any other injury to or decrease in the value of the Property;
1.1.7 Insurance Proceeds. All right, title and interest of Owner in and to
property insurance proceeds of and any unearned premiums on any property insurance policies
covering the Property, including, without limitation, the right to receive and apply the proceeds
of any such property insurance, judgments, or settlements made in lieu thereof, for damage to the
Property; but excluding only any general Liability or title insurance policies insuring Owner
against liability for any claims relating to occurrences in connection with the Property andlor
insuring Owner's property interests in the Property or any portion thereof.
1.1.8 Tax Certiorari. All right, title and interest of Owner in and to refunds,
rebates or credits in connection with a reduction in real estate taxes and assessments charged
against the Property as a result of tax certiorari or any applications or proceedings for reduction;
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1.1.9 Conversion. All right, title and interest of Owner in and to proceeds of
the conversion, voluntary or involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and condemnation awards, into cash or liquidation claims;
1.1.10 Rights. The right, in the name and on behalf of Owner, to appear in and
defend any action or proceeding brought with respect to the Property and to commence any
action or proceeding to protect the interest of Borrower, Trustee and/or Collateral Agent in the
Property;
1.1.11 Agreements. All right, title and interest of Owner in its capacity as the
record and beneficial fee owner of the Land or as Landlord under the Ground Lease (as
distinguished from its general rights and powers as a city or municipal government) in, to and
under agreements, contracts (including purchase, sale, option, right of first refusal and other
contracts pertaining to the Property), certificates, instruments, franchises, permits, licenses,
approvals, consents, plans, specifications and other documents, now or hereafter entered into,
and all rights therein and thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Property (including any Improvements or respecting any
business or activity conducted on the Land and any part thereof) by Owner in its capacity as the
record and beneficial fee owner of the Land or as Landlord under the Ground Lease (as
distinguished from its general rights and powers as a city or municipal government) and all right,
title and interest of Owner therein and thereunder, including, without limitation, the right, upon
the happening of any default hereunder, to receive and collect any sums payable to Owner
thereunder; and
1.1.12 Other Rights Any and all other rights of Owner in its capacity as the
record and beneficial fee owner of the Land or as Landlord under the Ground Lease (as
distinguished from its general rights and powers as a city or municipal government)in and to the
Property and any accessions, renewals, replacements and substitutions of all or any portion of the
Property and all proceeds derived from the sale, transfer, assignment or financing of the Property
or any portion thereof
1.1.13 The grants set forth above in Subsections 1.1.1 through 1.1.12 are
intended to convey or pledge the rights of the Owner as an owner of the Property and are not
intended to convey, pledge or restrict any rights or powers that are inherent to the Owner in its
capacity as a governmental entity (nor to impair any interest in property that the Owner holds for
the benefit of the public generally, as distinguished from its rights and powers under the Ground
Lease and as the fee owner of the Land). The Property is and will remain subject to all
Applicable Laws, including, without limitation, all requirement of the Owner's zoning laws and
all other rights and powers of the Owner in its capacity as a governmental entity, notwithstanding
any pledge, assignment or transfer of the Owner's rights in the Property.
Section 1.2 DEFINITION OF PERSONAL PROPERTY. For purposes of this
Security Instrument, the Property identified in Subsections 1.1.5 through 1.1.12, inclusive, shall
be collectively referred to herein as the ".Personal Property."
Section 1.3 PLEDGE OF MONIES HELD. Owner hereby pledges to Collateral
Agent, including, without limitation, any insurance as provided in Section 1.1.7 above, any and
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all monies now or hereafter held by Collateral Agent as additional security for the Secured
Obligations until expended or applied as provided in this Security Instrument.
Section 1.4 CONDITIONS TO GRANT.
TO HAVE AND TO HOLD the above granted and described Property unto and to the
use and benefit of Trustee, and the successors and assigns of Trustee, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower, or any party acting for or on the behalf of Borrower, shall well and truly (a) repay in
full all Bonds and any other Parity Obligations at the time and in the manner provided in the
Secured Party Documents and (b) perform all of Borrower's other obligations as set forth in the
Secured Party Documents (the "Borrower's Other Obligations ") and shall well and truly abide
by and comply with each and every covenant and condition set forth therein, these presents and
the estate hereby granted shall cease, terminate and be void.
IN FURTHERANCE of the foregoing, Owner, warrants, represents, covenants and agrees
as follows:
ARTICLE 2 - OBLIGATIONS SECURED
Section 2.1 OBLIGATIONS SECURED. Owner makes this Security Instrument and
the grants, assignments and transfers made in Article 1 are given for the purpose of securing the
following obligations:
2.1.1 Payment to Collateral Agent of all Parity Obligations as set forth in the
Secured Party Documents, and any other sums owing under the Secured Party Documents as set
forth in the Secured Party Documents (collectively, the "Borrower's Debt ");
2.1.2 Payment and performance of all covenants and obligations on the part of
Borrower under the Secured Party Documents, including without limitation the Borrower's Debt;
and
2.13 The payment of all future advances incurred by Collateral Agent and costs
and expenses and all other obligations of Borrower under Secured Party Documents.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grant made in
Article 1 are also given for the purpose of securing the following Borrower's Other Obligations
including without limitation:
2.2.1 The payment and performance of all modifications, amendments,
extensions and renewals, however evidenced, of any of the Secured Party Documents; provided,
however, Borrower obtains the prior written consent of the Owner to any written modification,
amendment, extension or renewal that by its terms provides for (i) an increase in the principal
amount of the Borrower' s Debt (except as otherwise presently provided under the Secured Party
Documents); (b) increase the interest rate of the Borrower's Debt (except as otherwise presently
.... provided under the Secured Party Documents); or (c) decrease the term of the repayment for the
Borrower's Debt (except as otherwise expressly provided under the Secured Party Documents).
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Section 23 DESCRIPTION OF _ OBLIGATIONS: The obligations described in
Sections 2.1 and 2.2 shall be referred to collectively herein as the "Secured Obligations."
ARTICLE 3 - OWNER RIGHTS
The parties to this Security Instrument agree and acknowledge that:
Section 3.1 PAYMENT OF TAXES, ETC. Owner, at its own expense, may contest
by appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any of the Taxes.
Section 3.2 RETENTION OF GROUND LEASE RIGHTS. Owner retains the right,
but not the obligation, to exercise all rights afforded to it with respect to the Property, whether
under the Ground Lease or otherwise.
ARTICLE 4 — REPRESENTATIONS AND AGREEMENTS
Except as otherwise provided below, Owner represents that, based solely and exclusively
on Owner's Existing and Actual Knowledge, Owner believes that the representations set forth
in this Article 4, are accurate . The term, "Owner's Existing and Actual Knowledge" means
the actual knowledge, as of the effective date of this Security Instrument, of those members of
Owner's staff that were responsible for the review of this Security Instrument, and does not
include (i) constructive and/or imputed knowledge of any documents within the possession of
Owner or accessible to Owner; and/or (ii) any obligation to search, whether diligently or r `
otherwise, any documents or records that are within the possession of Owner or accessible to
Owner and/or (iii) any knowledge whatsoever of any information that is or is not contained in the
documents or records that are within the possession of Owner.
Section 4.1 TITLE. Owner represents and warrants that it has the fee simple interest
in the Land free and clear of all liens or encumbrances except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument ( "Permitted Exceptions ").
Section 4.2 GROUND LEASE.
4.2.1 Owner is the owner of the lessor's interest in the Ground Lease.
4.2.2 Based solely and exclusively on Owner's Existing and Actual
Knowledge, the Ground Lease contains the entire agreement of Owner and Borrower pertaining
to the Property.
4.2.3 The Ground Lease Term is in effect and is scheduled to expire on
February 7, 2082.
4.2.4 Based solely and exclusively on Owner's Existing and Actual
Knowledge, there is no event of default or breach under the Ground Lease.
Section 4.3 AGREEMENTS OF OWNER. The Owner hereby agrees for the benefit
of Collateral Agent as follows:
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4.3.1 Owner agrees that in any case commenced by or against Owner under the
Bankruptcy Code, if Owner elects to reject the Ground Lease pursuant to the provisions of the
Bankruptcy Code, the rejection will not terminate the Ground Lease. Owner further agrees that
in such a bankruptcy case, Borrower shall be deemed in possession of the Premises (as defined in
the Ground Lease) for purposes of Section 365(h) of the Bankruptcy Code, whether Borrower
has retained actual occupancy and use or has, by sublease, assignment or license permitted third
parties to occupy and use portions of the Land, and as a result, upon rejection of the Ground
Lease by Owner, Borrower shall have the right to elect to remain in possession of the Premises
under Section 365(h).
4.3.2 Owner agrees that in any case commenced by or against Borrower under
the Bankruptcy Code, Collateral Agent shall have standing to appear and act as a party to the
Ground Lease for purposes of Section 365 of the Bankruptcy Code, (but shall not have any
obligations under the Ground Lease unless Collateral Agent expressly assumes the Ground
Lease). Owner shall not seek to compel assumption or rejection of the Ground Lease by
Borrower without the prior consent of the Collateral Agent, which consent will not unreasonably
be withheld provided that Owner's interests in the Ground Lease are adequately protected and
preserved.
43.3 If the Ground Lease or Borrower's rights thereunder are terminated for
any reason prior to the end of the term of the Ground Lease, whether by reason of default of
Owner or Borrower, rejection of the Ground Lease in any bankruptcy case, voluntary surrender
and acceptance, or otherwise, Collateral Agent or its nominee shall have the option, exercisable
by written notice to Owner delivered not later than the 30th day after written notice that the
termination has occurred to receive from Owner a new lease of the Land on the same terms and
conditions as the Ground Lease, for the remaining term of the Ground Lease (that is, the portion
of the term of the Ground Lease that would remain absent the termination and the conditions or
events causing the same), and such same terms and conditions shall include any extension rights
provided for in the Ground Lease. If Collateral Agent exercises such option, Collateral Agent or
its nominee shall (i) within three (3) business days of timely exercising its option hereunder, pay
to Owner any amounts of money owing to Owner by Borrower under the terms of the Ground
Lease, and (ii) within thirty (30) days or such other reasonable time as is necessary to cure such
defaults, but in all events not later than sixty (60) days after Collateral Agent's timely exercise of
its option hereunder, Collateral Agent shall cure any defaults of Borrower of a nonmonetary
nature to the extent provided under the Bankruptcy Code, and Collateral Agent shall then be
subrogated to the rights of Owner against Borrower for the same.
4.3.4 So long as Collateral Agent is the beneficiary under this Security
Instrument, Collateral Agent shall have the right but not the obligation to cure any defaults of
Borrower under the Ground Lease within such grace periods or periods for cure allowed
Borrower.
4.3.5 From time to time during the Term, Owner shall, with no cost to Owner
whatsoever, within thirty (30) business days after receipt of any of the following, execute and
deliver to Collateral Agent, a true and accurate estoppel, subordination, consent, lien waiver or
other commercially reasonable (from the point of view of Owner) document requested by
Collateral Agent.
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Section 4.4 ACKNOWLEDGMENT /AGREEMENTS OF COLLATERAL AGENT.
4.4.1 Collateral Agent acknowledges that it has been advised that the Property
is currently used for medical uses, is zoned "1 -I -M" (Hospital and Medical), and was leased by
Owner to Borrower in furtherance of Borrower's use of the land for medical purposes.
4.4.2 Owner acknowledges that Collateral Agent is merely a secured party and
has no control over the use of the Property, which control resides in the Owner and Borrower
pursuant to the terms of the Ground Lease, and that Owner has sole control over the zoning of
the Property. Collateral Agent agrees that (absent the written consent of the Owner, which the
Owner may grant or deny in its sole and absolute discretion), following the foreclosure of its
security interest granted in the Property hereunder and until such time thereafter as the Property
ceases to be zoned "H -M ", the buildings on the Land which are being used as a hospital as of the
date of this Deed of Trust (the "Buildings ") shall be subject to the following use restriction: at
least 95,000 square feet of the gross floor area of such Buildings shall not be used for any
purpose other than that of a hospital. As used in the preceding sentence "hospital" shall have the
meaning given to such term in the zoning code of The City of Downey. This paragraph 4.4.2
constitutes a use restriction that runs with the land for the benefit of Owner so long as the
Property continues to be zoned "II-M".
ARTICLE 5 - OBLIGATIONS AND RELIANCES
Section 5.1 RELATIONSHIP OF OWNER AND COLLATERAL AGENT. Neither .■,
Collateral Agent nor Owner has any fiduciary or other special relationship with the other. In
recognition of this relationship, Owner and Collateral Agent agree as follows:
5.1.1 Owner hereby waives any right it may now or hereafter have to require
Collateral Agent, as a condition to the exercise of any remedy or other right against Owner
hereunder or under any other document executed by Owner in connection with any Secured
Obligation: (a) to proceed against Owner or other person, or against any other collateral
assigned to Collateral Agent by Owner or Borrower or other person; and (b) to pursue any other
right or remedy in Collateral Agent's power. Notwithstanding the foregoing or any provision to
the contrary set forth herein, Collateral Agent shall give notice of the time, place or terms of any
public or private sale of real or personal property collateral assigned to Collateral Agent by
Owner or other person (other than Owner), and shall otherwise to comply with the California
Commercial Code (as modified or recodified from time to time) with respect to any such
personal property collateral; and shall, to the extent required by applicable laws, make or give
any presentment, demand, protest, notice of dishonor, notice of protest or other demand or notice
of any kind in connection with any Secured Obligation or any collateral (other than the Land) for
any Secured Obligation.
5.1.2 Owner hereby waives any defense it may now or hereafter have that
relates to: (a) any legal disability or other defense of Owner or Borrower; (b) the cessation, from
any cause other than full performance, of the obligations of Owner, Borrower or any other
person; (c) the application of the proceeds of any Secured Obligation, by Collateral Agent or
other person, for purposes other than the purposes represented to Owner by Borrower or
otherwise intended or understood by Owner or Borrower; (d) any act or omission by Collateral
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Agent which directly or indirectly results in or contributes to the wrongful release of Owner,
Borrower or other person or any collateral for any Secured Obligation; (e) the unenforceability or
invalidity of any collateral assignment (other than this Security Instrument) or guaranty with
respect to any Secured Obligation, or the lack of perfection or continuing perfection or tack of
priority of any lien (other than the lien hereof) which secures any Secured Obligation; (1) any
failure of Collateral Agent to marshal assets in favor of Owner, Borrower or any other person;
(g) any modification of any Secured Obligation, including any renewal, extension, acceleration
or increase in interest rate; (h) any and all rights and defenses arising out of an election of
remedies by Collateral Agent, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed Owner's rights of
subrogation and reimbursement against the Borrower by the operation of Section 580d of the.
California Code of Civil Procedure or otherwise; (i) any law which provides that the obligation
of a surety or guarantor must neither be larger in amount nor in other respects more burdensome
than that of the Borrower or which reduces a surety's or guarantor's obligation in proportion to
the Borrower's obligation; (j) any failure of Collateral Agent to file or enforce a claim in any
bankruptcy or other proceeding with respect to any person; (k) the election by Collateral Agent,
in any bankruptcy proceeding, of any person, of the application or non - application of Section
1111(b)(2) of the United States Bankruptcy Code; (1) any extension of credit or the grant of any
lien under Section 364 of the United States Bankruptcy Code; (m) any use of cash collateral
under Section 363 of the United States Bankruptcy Code; or (n) any agreement or stipulation
with respect to the provision of adequate protection in any bankruptcy proceeding of any person.
Owner further waives any and all rights and defenses that Owner may have because Borrower's
Debt is secured by a leasehold interest in real property; this means, among other things, that:
(1) Collateral Agent may collect from Owner without first foreclosing on any real or personal
property collateral pledged by Borrower; (2) if Collateral Agent forecloses on any real property
collateral pledged by Borrower, then (A) the amount of the debt may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (B) Collateral Agent may collect from Owner even if Collateral Agent,
by foreclosing on the real property collateral, has destroyed any right Owner may have to collect
from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of any rights
and defenses Owner may have because Borrower's Debt is secured by a leasehold interest in real
property. These rights and defenses being waived by Owner include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure. Without limiting the generality of the foregoing or any other provision hereof, Owner
further expressly waives to the extent permitted by law any and all rights and defenses, including
without limitation any rights of subrogation, reimbursement, indemnification and contribution,
which might otherwise be available to Owner under California Civil Code Sections 2787 to
2855, inclusive, 2899 and 3433, or. under California Code of Civil Procedure Sections 580a,
580b, 580d, and 726, or any of such sections.
5.1.3 Owner hereby waives, until such time as all Secured Obligations are fully
performed: (a) any right of subrogation against Borrower that relates to any Secured Obligation;
(b) any right to enforce any remedy Owner may now or hereafter have against Borrower that
relates to any Secured Obligation; and (c) any right to participate in any collateral now or
hereafter assigned to Collateral Agent with respect to any Secured Obligation.
9
US ACTIVE- 108147104 2. 363019 -60001
a
5.1.4 Owner warrants and agrees: (a) that 1993 Indenture Trustee would not
amend the 1 993 Indenture and the 2012 Indenture Trustee would not enter into the 2012
Indenture and issue the 2012 Bonds but for this Security Instrument; (b) that Owner has not
relied, and will not rely, on any representations or warranties by Collateral Agent to Owner with
respect to the credit worthiness of Borrower or the prospects of repayment of any Secured
Obligation from sources other than the Property: (c) that Owner has established and/or will
establish adequate means of obtaining from Borrower on a continuing basis financial and other
information pertaining to the business operations, if any, and financial condition of Borrower;
(d) that Owner assumes full responsibility for keeping informed with respect to Borrower's
business operations, if any, and financial condition; (e) Collateral Agent shall have a duty to
disclose or report to Owner any information now or hereafter known to Collateral Agent with
respect to Borrower, including, without limitation, any information relating to any of Borrower's
business operations or financial condition; and (f} that Owner is familiar with the terms and
conditions of the Secured Party Documents and consents to all provisions thereof.
5.1.5 Collateral Agent's rights hereunder shall be reinstated and revived, and the
enforceability of this Security Instrument shall continue, with respect to any amount at any time
paid on account of any Secured Obligation which any Secured Party is thereafter required to
restore or return in connection with a bankruptcy, insolvency, reorganization or similar
proceeding with respect to Owner.
5.1.6 Until all of the Secured Obligations have been fully paid and performed:
Owner hereby agrees that Owner's interest in the Property shall be and is hereby subordinated to ---
all Secured Obligations. This subordination and the representations and agreements made herein
are given with the understanding that it constitutes a condition to the extensions of credit to the
Borrower evidencing by the Bonds, and that the Secured Parties will rely upon it. This
subordination shall inure to the benefit of the Secured Parties and their successors and assigns
and shall be binding on the Owner and its successors and assigns.
Section 5.2 NO COLLATERAL AGENT OR OWNER OBLIGATIONS. By
accepting or approving anything required to be observed, performed or fulfilled under this
Security Instrument neither Owner nor Collateral Agent shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, legality or effectiveness of same, and such acceptance
or approval thereof shall not constitute any warranty or affirmation with respect thereto by
Owner and/or Collateral Agent.
Section 5.3 RELIANCE. Owner recognizes and acknowledges that in accepting this
Security Instrument, Collateral Agent is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article 5 without any obligation to
investigate the Property and notwithstanding any investigation of the Property by Collateral
Agent, that such reliance existed on the part of Collateral Agent prior to the date hereof, that
such warranties and representations are a material inducement to Collateral Agent in accepting
this Security Instrument and the Secured Parties would not be willing to extend credit to the
Borrower or accept this Security Instrument in the absence of the warranties and representations
as set forth in Article 5. In relying on such warranties and representations, Collateral Agent
recognizes and acknowledges that such warranties and representations are all qualified by and
subject to Owners Existing and Actual Knowledge.
10
U5.ACTIVE - 148147104.2-363019 -60001
ARTICLE 6 FURTHER ASSURANCES
Section 6.1 RECORDING AND PREPARATION FEES. Owner shall have no
responsibility whatsoever to pay any taxes, filing, registration or recording fees, and/or expenses
incident to the preparation, execution, acknowledgment and/or recording of this Security
Instrument, any note or deed of trust supplemental hereto, any instrument of further assurance,
and any modification or amendment of the foregoing documents, and all federal, state, county
and municipal taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Security Instrument, any deed of trust supplemental
hereto, any instrument of further assurance, and any modification or amendment of the foregoing
documents.
Section 6.2 FURTHER ACTS. Owner will, at no cost to Owner, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust,
assignments, notices of assignments, transfers and assurances as are requested by Collateral
Agent and are reasonably necessary to carry out and effectuate the terms of this Security
Instrument or for filing, registering or recording this Security Instrument or for complying with
all applicable laws; provided, however, that Owner's obligations hereunder shall extend only to
the extent such requests by Collateral Agent are practically and commercially reasonable,
required by and consistent with the obligations imposed on Owner under the Ground Lease, and
require no expansion or extension of Collateral Agent's rights hereunder. Owner, within a
reasonable time following a request received from Collateral Agent, will execute and deliver one
or more financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Collateral Agent in the Property.
ARTICLE 7 - DEFAULT
Section 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default ":
7.1.1 if all or any portion of the Borrower's Debt is not paid in accordance with
the terms of the Secured Party Documents, and the failure to cure such non - payment does not
occur in a timely manner;
7.1.2 if Borrower breaches any provision of any Secured Party Document, and
fails to cure such breach in the manner provided therefor;
7.1.3 if there is an uncured default under. the Leasehold Deed of Trust;
7.1.4 if Owner is divested of its fee title to the Property; or
7.1. S if there are any encumbrances or liens on the Property other than
Permitted Exceptions.
Section 7.2 Prior to Collateral Agent enforcing its remedies under this Security
Instrument, Borrower or any other party in interest agrees to provide Owner with written notice
of any default or breach under this Security Instrument or under the Secured Party Documents
and Owner shall have the right to, within thirty (30) days following receipt of such default
11
(JS 108147104 2- 363019-80001
•1 M
notice, to cure such default by Borrower; provided, however, Owner shall have no obligation to
cure any default by Borrower under the Secured Party Documents. No action by Owner pursuant
to this Security Instrument shall constitute or be deemed to be an assumption by Owner of any
obligation under the Secured Party Documents.
ARTICLE 8 - RIGHTS AND REMEDIES
Section 8.1 REMEDIES Upon the occurrence of any Event of Default, Owner
agrees that Collateral Agent may take such action, by or through Trustee, by Collateral Agent
itself or otherwise, without notice or demand (except as expressly required by law), as it deems
advisable to protect and enforce its rights against the Property, including, but not limited to, the
actions set forth below, each of which may be pursued concurrently or otherwise, at such time
and in such order as Collateral Agent may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Collateral Agent. To the extent that
Collateral Agent shall have any monetary claims of any kind or nature against Owner under this
Agreement, such claims shall be added to the Secured Obligations and Collateral Agent's
remedy to recover such monetary amounts shall be solely against the Property and any other item
of Collateral. However, notwithstanding the foregoing, Collateral Agent shall be entitled to
compel non - monetary specific performance pursuant to the provisions of this agreement and to
take possession and sell the Property and any other item of Collateral in accordance with the
terms of this Security Instrument. ••■••
8.1.1 Collateral Agent may institute a proceeding or proceedings, judicial, or
nonjudicial, by advertisement or otherwise, for the foreclosure of this Security Instrument or the
sale of the Property under power of sale in any manner authorized by law; provided, however,
that Collateral Agent's remedy against Owner for an Event of Default shall be limited
exclusively to the sale of the Property (whether under this Paragraph 8.1 or under Paragraph 8.2).
Upon a foreclosure, Owner's obligations under this agreement shall be discharged in their
entirety and Owner shall have no further obligations to Collateral Agent, under this Security
Instrument or otherwise, and no party hereto shall have any further remedies available as against
Owner.
8.1.2 Subject to the requirements of applicable laws and except as otherwise
provided herein, the following provisions shall apply to any sale or sales of all or any portion of
the Property under or by virtue of Paragraph 8.1.1 above, whether made under the power of sale
herein granted or by virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale:
8.1.2.1 Trustee or Collateral Agent may conduct any number of sales
from time to time. The power of sale set forth above shall not be exhausted by
any one or more such sales as to any part of the Property which shall not have
been sold, nor by any sale which is not completed or is defective in Collateral
Agent's opinion, until the Borrower's Debt shall have been paid in full,
12
USACTIVE- 1081471004.2.363019 -80001
•
8.1.2.2 The sale may be postponed or adjourned by public announcement
at the time and place appointed for such sale or for such postponed or adjourned
sale without further notice.
8.1.3 After the sale, Collateral Agent, Trustee or an officer of any court
empowered to do so shall execute and deliver to the purchaser or purchasers at such sale a good
and sufficient instrument or instruments granting, conveying, assigning and transferring all right,
title and interest of Owner in and to the property and rights sold and shall receive the proceeds of
said sale or sales and apply the same as specified in the Secured Party Documents. Each of
Trustee and Collateral Agent is hereby appointed the true and lawful attorney -in -fact of Owner,
which appointment is irrevocable and shall be deemed to be coupled with an interest, in Owner's
name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the
property and rights so sold, Owner hereby ratifying and confirming all that said attorney or such
substitute or substitutes shall lawfully do by virtue thereof. Nevertheless, Owner, if requested by
Trustee or Collateral Agent, shall ratify and confirm any such sale or sales by executing and
delivering to Trustee, Collateral Agent or such purchaser or purchasers all such instruments as
may be advisable and commercially reasonably requested of Owner, in Trustee's or Collateral
Agent's commercially reasonable judgment, for the purposes as may be designated in such
request.
814 Any such sale or sales shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Owner in and to the
0.■ properties and rights so sold, and shall be a perpetual bar both at law and in equity against Owner
and any and all persons claiming or who may claim the same, or any part thereof or any interest
therein, by, through or under Owner to the fullest extent permitted by applicable laws.
8.1.5 Upon any such sale or sales, Collateral Agent may bid for and acquire the
Property and, in lieu of paying cash therefor, may make settlement for the purchase price by
crediting against all or any portion of the Borrower's Debt the amount of the bid made therefor,
after deducting therefrom the expenses of the sale, the cost of any enforcement proceeding
hereunder, and any other sums which Trustee or Collateral Agent is authorized to deduct under
the terms hereof, to the extent necessary to satisfy such bid.
8.1.6 Upon any such sale, it shall not be necessary for Trustee, Collateral Agent
or any public officer acting under execution or order of court to have present or constructively in
its possession any of the Property.
Section 8.2 COLLATERAL AGENT'S JUDICIAL REMEDIES. Subject to and
consistent with the limitations on remedies set forth in Section 8.1 above, Collateral Agent, or
Trustee upon written request of Collateral Agent, may proceed by suit or suits, at law or in
equity, to foreclose the liens and security interests of this Security Instrument as against all or
any part of the Property, and to have all or any part of the Property sold under the judgment or
decree of a court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to Collateral Agent under this Security Instrument. Proceeding
with a request or receiving a judgment for legal relief shall not be or be deemed to be an election
of remedies or bar any available nonjudical remedy of Collateral Agent. To the extent that
Collateral Agent shall have any monetary claims of any kind or nature against Owner under this
13
US .ACTIVE- 108147104 2- 3630*60001
Agreement, such claims shall be added to the Secured Obligations and Collateral Agent's
remedy to recover such monetary amounts shall be solely against the Property and any other item
of Collateral.
Section 8.3 COMMERCIAL CODE REMEDIES. Collateral Agent may exercise any
of the following rights and remedies granted to a secured party upon default under the Uniform
Commercial Code: (i) the right to take possession of the Personal Property or any part thereof,
and to take such other measures as Collateral Agent may deem necessary for the care, protection
and preservation of such Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Collateral Agent at a convenient place acceptable
to Collateral Agent. Any notice of sale, disposition or other intended action by Collateral Agent
with respect to the Personal Property sent to Borrower in accordance with the provisions hereof
at least ten (10) days prior to such action, shall constitute commercially reasonable notice to
Borrower. To the extent that Collateral Agent shall have any monetary claims of any kind or
nature against Owner under this Agreement, such claims shall be added to the Secured
Obligations and Collateral Agent's remedy to recover such monetary amounts shall be solely
against the Property and any other item of Collateral. However, notwithstanding the foregoing,
Collateral Agent shall be entitled to compel non - monetary specific performance pursuant to the
provisions of this agreement and to take possession and sell the Property and any other item of
Collateral in accordance with the terms of this Security Instrument.
Section 8.4 COLLATERAL AGENT'S RIGHT TO APPLY FUNDS. Collateral
Agent may apply any sums held by Collateral Agent in accordance with the terms of any Secured ---
Party Document to the payment of the following items in any order in its sole discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the 2012 Bonds or the
1993 Bonds (collectively, "Bonds ");
(iv) Amortization of the unpaid principal balance of the Bonds; and
(v) All other sums payable pursuant to the Secured Party Documents,
including without limitation advances made by Collateral Agent pursuant to the
terms of the Secured Party Documents and reasonable internal costs and expenses
incurred by Collateral Agent including, without limitation, Collateral Agent's
reasonable in -house legal fees.
Section 8.5 [RESERVED].
Section 8.6 DISCONTINUANCE OF FORECLOSURE PROCEEDING. In case
Collateral Agent shall have proceeded to invoke any right, remedy, or recourse permitted under
this Security Instrument and shall thereafter elect to discontinue or abandon same for any reason,
Collateral Agent shall have the unqualified right so to do and, in such event, Owner and
Collateral Agent shall be restored to their former positions with respect to this Security
Instrument, the Property or otherwise as if same had never been invoked.
14
US.ACTIVE- 1481471 Q4,2 -383018.80001
,
Section 8.7 REMEDIES CUMULATIVE. To the extent not otherwise prohibited by
applicable laws, all rights, remedies, and recourses of Collateral Agent granted in this Security
Instrument, : (i) shall be cumulative and concurrent; (ii) may be pursued separately,
successively, or concurrently at the sole discretion of Collateral Agent; and (iii) shall be
nonexclusive. Notwithstanding the foregoing, to the extent that Collateral Agent shall have any
monetary claims of any kind or nature against Owner under this Agreement, such claims shall be
added to the Secured Obligations and Collateral Agent's remedy to recover such monetary
amounts shall be solely against the Property and any other item of Collateral.
Section 8.8 APPLICATION OF PROCEEDS. The proceeds from any sale, lease, or
other disposition made pursuant to this Security Instrument, or the proceeds from the surrender
of any property insurance policies as provided herein, or any Rents collected by Collateral Agent
from the Property, or proceeds from property insurance which Collateral Agent elects to apply to
the Borrower's Debt as provided herein, shalt be applied by Trustee, or by Collateral Agent, as
the case may be, to the Borrower's Debt in the any order and priority determined by Collateral
Agent, in its sole discretion. The application of proceeds of sale or other proceeds as otherwise
provided herein shall be deemed to be a payment of the Borrower's Debt like any other payment.
The balance of the Borrower's Debt remaining unpaid, if any, shall remain fully due and owing
in accordance with the terms of the Secured Party Documents; but shall be the solely the
responsibility of Borrower; and shall not in any respect be the responsibility of Owner.
ARTICLE 9 - SECURITY AGREEMENT
Section 9.1 SECURITY AGREEMENT. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform Commercial
Code. The Property includes rights and interests in real property, whether tangible or intangible
in nature, of Owner in the Property. Owner by executing and delivering this Security Instrument
have granted and hereby grants to Collateral Agent, as security for the Obligations, a security
interest in the Property to the full extent that the Property may be subject to the Uniform
Commercial Code (said portion of the Property so subject to the Uniform Commercial Code
being called in this paragraph the "Collateral "). Owner hereby authorizes Collateral Agent to
prepare and file, at no cost to Owner, in form and substance satisfactory to Collateral Agent,
such financing statements, continuation statements, other uniform commercial code forms and
shall pay all expenses and fees in connection with the filing and recording thereof, and such
further assurances as Collateral Agent may from time to time, commercially reasonably consider
necessary to create, perfect, and preserve Collateral Agent's security interest herein granted.
This Security Instrument shall also be effective as a "fixture filing" as to property which is
fixtures. Information concerning the security interest herein granted may be obtained from the
parties at the addresses of the parties set forth in the first paragraph of this Security Instrument.
If. an Event of Default shall occur, Collateral Agent shall have and may exercise immediately and
without demand, any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality of the foregoing, the
right to take possession of the Collateral or any part thereof, and to take such other measures as
Collateral Agent may deem necessary for the care, protection and preservation of the Collateral.
Any notice of sale, disposition or other intended action by Collateral Agent with respect to the
Collateral sent to Owner in accordance with the provisions hereof at least ten (10) days prior to
such action, shall constitute commercially reasonable notice to Owner. The proceeds of any
15
USACTIVE- 108147104.2- 363O19.8OOC1
i 1
disposition of the Collateral, or any part thereof, may be applied by Collateral Agent to the
payment of the Obligations in such priority and proportions as Collateral Agent in its discretion
shall deem proper. Collateral Agent shall also be authorized to prepare and file, at no cost to
Owner, such other additional Uniform Commercial Code forms or continuation statements as
Collateral Agent shall deem necessary, it being understood and agreed, however, that no such
additional documents shall increase Owner's obligations under this Security Instrument or any
other instrument.
Section 9.2 FILING INFORMATION. The information in the subsections below this
paragraph is provided in connection with the filing of this Security Instrument as a financing
statement as referred to above.
9.2.1 Owner is the record owner of the Property. The name and mailing
address of Owner is set forth in the first paragraph of this Security Instrument.
9.2.2 The official name, mailing address, and type of organization of Owner is
set forth in the first paragraph of this Security Instrument. The Organizational Identification
Number of Owner is 95. x1918226 •
9.2.3 The name and mailing address of the Secured Party (Collateral Agent) is:
120 S. San Pedro St., 4th Floor
Los Angeles, CA 90012
Attn: Corporate Trust Department
Fax: (213) 972 -5694
ARTICLE 10 - WAIVERS
Section 10.1 MARSHALLING AND OTHER MATTERS. Owner hereby waives, to
the extent permitted by, law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale hereunder of the Property or any part thereof or any interest therein. Further,
Owner hereby expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Owner, and on behalf of each and
every person acquiring any interest in or title to the Property subsequent to the date of this
Security Instrument and on behalf of all persons to the extent permitted by applicable laws.
Section 10.2 REASONABLY EXERCISED DISCRETION OF COLLATERAL
AGENT AND OWNER. Wherever pursuant to this Security Instrument Collateral Agent
exercises any right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Collateral Agent and/or Owner, the decision of Collateral Agent and/or Owner to
approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory
shall be in the reasonably exercised discretion of Collateral Agent and/or Owner, except as may
be otherwise expressly and specifically provided herein.
Section 10.3 ATTORNEYS' FEES AND COSTS. In any proceeding between the
Owner and Collateral Agent relating to or arising under this Security Instrument, each party shall
16
USACTIVE- 148147104.2 - 383019-80001
bear its own fees and costs, including without limitation expert witness fees, attorney's fees, and
costs of investigation and preparation prior to the commencement of the Action.
ARTICLE 11 NOTICES
Section 11.1 NOTICES. All notices or other written communications hereunder shall
be deemed to have been properly given (i) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged, (ii) one (1) Business Day after having been deposited
for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business
Days after having been deposited in any post office or mail depository regularly maintained by
the U.S. Postal Service and sent by registered or certified mail, postage prepaid, addressed as
follows:
If to Owner: City of Downey
Attn: City Manager
11111 Brookshire Avenue
Downey, CA 90241
F : (562) 904-6388
With a copy to: City of Downey
City Attorney's Office
11111 Brookshire Avenue
- �. Downey, CA 90241
F: (562) 904 -6388
If to Trustee: First American Title Insurance Company
1 First American Way
Santa Ana, California 92707
F:
If to Collateral Agent: Union Bank, N.A.
120 S. San Pedro St., 4th Floor
Los Angeles, CA 90012
Attn: Corporate Trust Department
F: (213) 972 - 5694
or addressed as such party may from time to time designate by written notice to the other parties.
For purposes of this subsection, the term "Business Day" shall mean a day on which commercial
banks are not authorized or required by law to close in Los Angeles, California.
Any party by notice to the other parties may designate additional or different addresses
for subsequent notices or communications.
ARTICLE 12 - APPLICABLE LAW
Section 12.1 GOVERNING LAW: JURISDICTION. This Security Instrument shall
be governed by and construed in accordance with the internal laws of the State of California
without reference or giving effect to any choice of law doctrine. Any action arising under or
17
US_ACTIVE- 108141104 2463019-80001
related to this Security Instrument shall be commenced in the Superior Court of the State of
California, County of Los Angeles or the United States District Court, Central District of
California. The parties hereto expressly waive and relinquish any rights they may have to the
transfer of venue to a court other than the Superior Court of the State of California, County of
Los Angeles or the United States District Court, Central District of California. The parties
hereto further expressly waive and relinquish any rights they may have to claim that, by virtue of
California choice -of -law laws, the laws of another state are applicable to any dispute arising
under or related to this Security Instrument.
Section 12.2 USURY LAWS. This Security Instrument and the Bonds are subject to
the express condition that at no time shall Borrower be obligated or required to pay interest on
the Borrower's Debt at a rate which could subject the holder of the Bonds to either civil or
criminal liability as a result of being in excess of the maximum interest rate which Borrower is
permitted by applicable laws to contract or agree to pay. If by the terms of this Security
Instrument or the Bonds, Borrower is at any time required or obligated to pay interest on the
Borrower's Debt at a rate in excess of such maximum rate, the rate of interest under the Security
Instrument and the Bonds shall be deemed to be immediately reduced to such maximum rate and
the interest payable shall be computed at such maximum rate and all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Bonds. All sums paid or agreed to be paid to Collateral
Agent for the use, forbearance, or detention of the Borrower's Debt shall, to the extent permitted
by applicable laws, be amortized, prorated, allocated, and spread throughout the full stated term
of the Bonds until payment in full so that the rate or amount of interest on account of the
Borrower's Debt does not exceed the maximum lawful rate of interest from time to time in effect
and applicable to the Borrower's Debt for so Tong as the Borrower's Debt is outstanding.
Section 12.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are intended to be limited
to the extent necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the provisions of any
applicable laws. If any term of this Security Instrument or any application thereof shall be
invalid or unenforceable, the remainder of this Security Instrument and any other application of
the term shall, to the extent permitted by applicable laws, not be affected thereby.
ARTICLE 13 SECONDARY MARKET; TRANSFER OF DEBT
Secured Parties may, at any time, sell, transfer or assign the all or any portion of the
Borrower Debt, this Security Instrument and the Secured Party Documents; provided, however,
that Secured Parties shall provide Owner with no less than ten (10) days prior notice to such
sale(s), transfer(s), or assignment(s).. Collateral Agent may forward to each proposed transferee
or assignee, all documents and information which Collateral Agent now has or may hereafter
acquire relating to the Borrower's Debt and to Borrower and the Property, whether furnished by
Borrower or otherwise, as Collateral Agent determines necessary or desirable.
18
US_ ACTIVE - 106147144,2- 363019.80001
ARTICLE 14 - DEFINITIONS
Unless the context clearly indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Security Instrument may be used interchangeably in singular
or plural form and the word "Owner" shall mean "each Owner and any subsequent owner or
owners of the Property," the word "Collateral Agent" shall mean Collateral Agent and any
subsequent holder of this Security Instrument, the word "person" shall include an individual,
corporation, partnership, trust, unincorporated association, government, governmental authority,
and any other entity, the word "Property" shall include only the Property, and the phrases
"attorneys' fees," "legal fees" and "counsel fees" shall include any and all attorneys', paralegal
and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the
pre-trial, trial and appellate levels incurred or paid by Owner in protecting its interest in the
Property enforcing its rights hereunder.
ARTICLE 15 - MISCELLANEOUS PROVISIONS
Section 15.1 NO ORAL CHANGE. This Security Instrument and any provisions
hereof or thereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Owner or Collateral Agent, but
only by an agreement in writing signed by a duly authorized representative of the party against
whom enforcement of any modification, amendment, waiver, extension, change, discharge or
termination is sought.
Section 15.2 SUCCESSORS AND ASSIGNS. This Security Instrument shall be
binding upon and inure to the benefit of Owner, Collateral Agent, and the Secured Parties, and
their respective and its successors and assigns until such time as the obligations under this
agreement are fully performed.
Section 15.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of
this Security Instrument is held to be invalid, illegal or unenforceable in any respect, this
Security Instrument shall be construed without such provision, to the extent permitted by
applicable laws.
Section 15.4 HEADINGS. ETC. The headings and captions of various Sections of this
Security Instrument are for convenience of reference only and are not to be construed as defining
or limiting, in any way, the scope or intent of the provisions hereof.
Section 15.5 NO DUTY TO EXERCISE POWERS. The powers of the parties under
and connection with this Security Instrument shall not impose any duty upon it to exercise any
such powers.
Section 15.6 DUPLICATE ORIGINALS: COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Security Instrument may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Security Instrument. The failure of any party hereto to execute
this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from
their obligations hereunder.
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US_ACTIVE-108147104 2- 363019.80001
• 6
ors
Section 15.7 CONSTRUCTION. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa. References to the
part shall refer to the whole; "or" is not exclusive; and "include," "includes," "including" and
similar terms are not limiting.
Section 15.8 SUBROGATION. If any or all of the proceeds of the Bonds have been
used to extinguish, extend or renew any indebtedness heretofore existing against the Property,
then, to the extent of the funds so used, Collateral Agent shall be subrogated to all of the rights,
claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of,
the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any,
are not waived but rather are continued in full force and effect in favor of Collateral Agent and
are merged with the lien and security interest created herein as cumulative security for the
repayment of the Borrower's Debt, the performance and discharge of Borrower's obligations
under the Secured Party Documents and the performance and discharge of the Borrower's Other
Obligations.
Section 15.9 ENTIRE AGREEMENT. This Security Instrument constitutes the entire
understanding and agreement between Owner and Collateral Agent with respect to the
transactions arising in connection with the Borrower's Debt and supersede all prior written or
oral understandings and agreements between Owner and Collateral Agent with respect thereto.
Owner and Collateral Agent hereby acknowledge that, except as incorporated in writing in this
Security Instrument, there are not, and were not, and no persons are or were authorized by •--
Owner and/or Collateral Agent to make, any representations , understandings, stipulations,
agreements or promises, oral or written, with respect to the transaction which is the subject of
this Security Instrument.
ARTICLE 16 - TRUSTEE
Trustee may resign by the giving of not less than thirty (30) days prior notice of such
resignation in writing to Collateral Agent. If Trustee shall die, resign, or become disqualified
from acting in the execution of this trust, or if, for any reason, Collateral Agent shall prefer to
appoint a substitute trustee or multiple substitute trustees, or successive substitute trustees or
successive multiple substitute trustees, to act instead of the aforenamed Trustee, Collateral Agent
shall have full power to appoint a substitute trustee (or, if preferred, multiple substitute trustees)
in succession who shall succeed (and if multiple substitute trustees are appointed, each of such
multiple substitute trustees shall succeed) to all the estates, rights, powers, and duties of the
aforenamed Trustee. Such appointment may be executed by any authorized agent of Collateral
Agent, and if such Collateral Agent be a corporation and such appointment be executed in its
behalf by any officer of such corporation, such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without proof of any action by the board
of directors or any superior officer of the corporation. If multiple substitute Trustees are
appointed, each of such multiple substitute Trustees shall be empowered and authorized to act
alone without the necessity of the joinder of the other multiple substitute trustees, whenever any
action or undertaking of such substitute trustees is requested or required under or pursuant to this
Security Instrument or applicable laws. Any substitute Trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed, or conveyance, become vested with all the
20
US ACTIVE- 10614T104.2363019400Q1
estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with
like effect as if originally named as Trustee herein; but nevertheless, upon the written request of
Collateral Agent or of the substitute Trustee, the Trustee ceasing to act shall execute and deliver
any instrument transferring to such substitute Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly
assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute
Trustee so appointed in the Trustee's place. No fees or expenses shall be payable to Trustee,
except in connection with a foreclosure of the Property or any part thereof or in connection with
the release of the Property following payment in full of the Borrower's Debt.
ARTICLE 17 - SPECIAL STATE OF CALIFORNIA PROVISIONS
Section 17.1 POWER OF SALE.
17.1.1 Should Collateral Agent elect to foreclose by exercise of the power of
sale contained herein, Collateral Agent shall notify Trustee and shall, if required, deposit with
Trustee the original or a certified copy of this Security Instrument, and such other documents,
receipts and evidences of expenditures made and secured hereby as Trustee may require. Upon
receipt of such notice from Collateral Agent, Trustee shall cause to be recorded and delivered to
Owner such notice as may then be required by law and by this Security Instrument. Trustee
shall, without demand on Owner, after lapse of such time as may then be required by law and
after recordation of such notice of default and after notice of sale has been given as required by
law, sell the Property at the time and place of sale fixed by it in said notice of sale, either as a
whole or in part as Trustee shall deem expedient, 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 the time of
sale. Trustee shall deliver to the purchaser or purchasers at such sale its good and sufficient deed
or deeds conveying the property so sold, but without any covenant or warranty, express or
implied.
17.1.2 After deducting all costs, fees and expenses of Trustee and of this
Security Instrument, including, without limitation, costs of evidence of title and actual and
customary attorneys' fees of Trustee or Collateral Agent in connection with a sale as provided in
subparagraph (i) above, Trustee shall apply the proceeds of such sale: (a) to payment of all sums
expended by Beneficiary under the terms hereof and not then repaid, with accrued interest at the
rate of interest specified in the Secured Party Documents to be applicable on or after maturity or
acceleration of the Secured Party Documents; (b) to payment of all other Secured Obligations;
and (c) the remainder, if any, to the person or persons legally entitled thereto.
Section 17.2 RIGHT OF RESCISSION. Collateral Agent may from time to time
rescind any notice of default or notice of sale before any Trustee's sale in accordance with the
laws of the State of California. The exercise by Collateral Agent of such right of rescission shall
not constitute a waiver of any breach or default then existing or subsequently occurring, or
impair the right of Collateral Agent to execute and deliver to Trustee, as above provided, other
declarations or notices of default to satisfy the obligations of this Security Instrument or secured
hereby, nor otherwise affect any provision, covenant or condition of any Secured Party
Document or any of the rights, obligations or remedies of Trustee or Collateral Agent hereunder
or thereunder.
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,, r a
Section 17.3 FULL RECONVEYANCE. Upon written request of Collateral Agent
stating that all sums secured hereby have been paid, upon surrender to Trustee of the original or a
certified copy of this Security Instrument for cancellation and retention, and upon payment of its
fees by Collateral Agent, Trustee shall fully reconvey, without warranty, the entire remaining
Property then held hereunder
Section 17.4 REQUEST FOR NOTICES Pursuant to California Government Code
Section 27321.5(b), Owner requests that a copy of any notice of default and a copy of any notice
of sale hereunder be mailed to it at the addresses set forth in Section 14.1 of this Security
Instrument.
Section 17.5 COMMERCIAL TRANSACTION Owner agrees that the Borrower's
Debt is for commercial purposes, and not for personal, household or consumer purposes.
[SIGNATURES ON FOLLOWING PAGE]
22
U5„ACTIVE.1 Q8147104.2- 363019.80001
• a
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Owner effective the day and year first above written.
OWNER:
THE CITY OF DOWNEY,
a municipal corporation
By: 6 eAr
Name: Roger . E ro ssmer
Title: Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
It : r
C T Attorney
ACKNOVVLEDGMENT
STATE OF CALIFORNIA
COUNTY OF Lty /h1e/
On 24211 V., before me, rot -7304 _ _ a Notary Public,
(here insert name and title of the officer)
personally appeared / f �� CtJYt�
Na o Signer() '
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(&
is/ere 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 histhet4their signature,) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
23
US ACTIVE - 106147144.2 - 36301980001
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is tree and correct.
WITNESS my hand and official seal. ; �� " T. M. BARNES
o i.' COMM 11840559 2
_ ."s Notary Public - California 8
NJ.A. V-1,4 � Las Angeles C+ounty .•
( Notary Seal} ..f C,ontm. I. Mar. 13 . 1 1
ig o ot is
24
UACTIVE -iO 47iO4.2- 363019-80001
i
J
EXHIBIT A
(Description of Land)
[To be attached by title company]
A -1 Us ACTIVE- 10e147104,7-363019430001
• A
Exhibit "A"
Legal Description
Real property in the City of Downey, County of Los Angeles, State of California, described as follows:
THAT PORTION OF THE TRACT OF THE DOWNEY LAND ASSOCIATION, IN THE RANCHO SANTA
GERTRUDES, IN THE CITY OF DOWNEY, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER
MAP RECORDED IN BOOK 2 PAGE 434 OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, AND THAT PORTION OF CRAWFORD'S ADDITION TO DOWNEY CITY, IN
THE RANCHO SANTA GERTRUDES, IN THE CITY OF DOWNEY, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 21 PAGE 48 OF MISCELLANEOUS RECORDS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF BROOKSHIRE AVENUE 80 FEET WIDE,
FORMERLY CHURCH STREET 40 FEET WIDE AS SHOWN ON MAP OF TRACT 9457 RECORDED IN BOOK
171 PAGE 7 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, WITH THE
CENTER LINE OF MANATEE STREET 60 FEET WIDE, FORMERLY SOUTH STREET, AS SHOWN ON MAP OF
TRACT 14296 AS PER MAP RECORDED IN BOOK 304 PAGES 29 TO 31 INCLUSIVE OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH 32 DEGREES 41' 45" EAST
ALONG SAID CENTER UNE OF BROOKSHIRE AVENUE, 30.07 FEET TO THE NORTHWESTERLY
PROLONGATION OF THE NORTHEASTERLY LINE OF SAID MANATEE STREET; THENCE SOUTH 61
DEGREES 19' 40" EAST THEREON AND ALONG SAID NORTHEASTERLY LINE 56.19 FEET TO A POINT OF
CUSP WITH A CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 15 FEET AND THE TRUE POINT
OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTHERLY ALONG SAID CURVE 24.62 FEET TO A
POINT OF TANGENCY WITH THE SOUTHEASTERLY LINE OF BROOKSHIRE AVENUE 80 FEET WIDE LYING
40 FEET ON EACH SIDE OF THE ABOVE DESCRIBED CENTER LINE; THENCE NORTH 32 DEGREES 41' 45" P=""'
EAST ALONG SAID SOUTHEASTERLY LINE 718.37 FEET TO THE SOUTHWESTERLY LINE OF LAND
DESCRIBED IN DEED TO S. HUSTON RECORDED IN BOOK 152 PAGE 404, OF DEEDS IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY; THENCE SOUTH 57 DEGREES 20' 25" EAST THEREON
420.39 FEET TO THE NORTHWESTERLY LINE OF THE SOUTHEASTERLY 243.41 FEET OF LAND SO
DESCRIBED IN SAID DEED TO HUSTON; THENCE NORTH 31 DEGREES 42' 45" EAST THEREON 17728
FEET TO THE SOUTHERLY CORNER OF MARGARET STREET AS DESCRIBED IN DEED RECORDED IN
BOOK D2353 PAGE 721, OFFICIAL RECORDS; THENCE SOUTH 57 DEGREES 15' 20" EAST ALONG THE
PROLONGATION OF THE SOUTHWESTERLY LINE OF SAID MARGARET STREET 213.44 FEET TO THE
NORTHWESTERLY LINE OF PAITON ROAD 60 FEET WIDE LYING 30 FEET ON EACH SIDE OF THE
NORTHWESTERLY LINE OF LOT "P" OF THE RANCHO SANTA GERTRUDES PER MAP RECORDED IN BOOK
32 PAGE 18 OF MISCELLANEOUS RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY; THENCE SOUTH 31 DEGREES 42' 45" WEST THEREON 852.28 FEET TO THE BEGINNING OF
TANGENT CURVE CONCAVE NORTHERLY AND HAVING A RADIUS OF 15.00 FEET; THENCE WESTERLY
THEREON 22.77 FEET TO A POINT OF TANGENCY WITH SAID NORTHEASTERLY UNE OF MANATEE
STREET; THENCE NORTH 61 DEGREES 19' 40" WEST THEREON 616.95 FEET TO THE PAINT OF
BEGINNING.
TOGETHER WITH THAT PORTION OF MARGARET STREET VACATED BY RESOLUTION NO 6404 AND
RECORDED JANUARY 23, 2001 AS INSTRUMENT NO, 01424648, OFFICIAL RECORDS.
THE BASIS OF BEARINGS FOR THIS DESCRIPTION TAKEN AS THE CENTER LINE OF BROOKSHIRE
AVENUE AS SHOWN ON COUNTY SURVEYOR'S MAP NUMBER B2383 ON FILE IN 'THE OFFICE OF THE
COUNTY SURVEYOR OF SAID COUNTY.
EXCEPT THEREFROM ALL CRUDE OIL, PETROLEUM, GAS, BREA, ASPHALTUM, AND ALL KINDRED
SUBSTANCES AND OTHER MINERALS UNDER AND IN SAID LAND, BELOW A DEPTH OF 500 FEET,
WITHOUT RIGHT OF SURFACE ENTRY THERETO, FROM THAT PORTION OF SAID LAND RESERVED BY
JOSE VELEZ GONZALES AND EULAUA L. DE GONZALES, HUSBAND AND WIFE, SAID JOSE VELEZ
GONZALES ALSO KNOWN AS JOSE V. GONZALES, IN DEED RECORDED OCTOBER 28, 1964 AS
INSTRUMENT NO. 1055, OFFICIAL RECORDS,