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2012-2425464 AT Lilo. r(EQL;1+4)a CO, L L� WHEN RECORDED PLEASE MAIL TC City of Encinitas 505 S. Vulcan Avenue 1 , Encinitas, California 92024 Attn: Housing Administrator DOC k 2012 - 0242546 IIIIIIIIIIIIIIIIIIIIIIIIII1111IIItlI11MINNINNIIINIkNIIIVIII APR 25, 2012 3:57 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J Dronenburg, Jr , COUNTY RECORDER FEES 0.00 WAYS 2 DA. 1 12082 PAGES: 18 (Space above this line for Recorder's use) CITY OF ENCINITAS DEED OF TRUST WITH ASSIGNMENT OF RENTS This Deed of Trust is made this aP.-�Vay of April, 2012, by IRIS APARTMENTS CIC, LP, a California limited partnership, ( "Borrower "), whose business address is c/o Chelsea Investment Corporation, 5993 Avenida Encinas, Suite 101, Carlsbad, CA 92008 -4459, to Chicago Title Company, having an address at 2365 Northside Drive, Suite 500, San Diego, CA 92108 ( "Trustee "), in favor of the City of Encinitas ( "Lender "), whose principal office is at 505 S. Vulcan Avenue, Encinitas, California 92024. 1. BORROWER HEREBY IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee in trust, with power of sale and right of entry and possession, all of Borrower's rights, title and interest now held or hereafter acquired in and to the following: (a) all of that certain real property located in the City of Encinitas, County of San Diego, State of California, described in Attachment A, which is hereby incorporated by reference, and (b) all buildings and improvements now or hereafter erected thereon, and all appurtenances, easements, and articles of property now or hereafter affixed to, placed upon or used in connection with the property and owned by Borrower or in which Borrower has an interest, together with all additions to, substitutions for, changes in or replacements of the whole or any part of said articles of property. All of such real and personal property (hereinafter the "Property ") and are hereby pledged and assigned, transferred, and set over unto Trustee, and for purposes of this Deed of Trust declared to be part of the realty. 2. BORROWER HEREBY ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY ASSIGNS to the Lender all rents, royalties, issues, accounts and profits of or relating to the Property and all of Borrower's interest under all leases, subleases, rental agreements and other contracts and occupancy agreements relating to the use and possession of the Property, for the purposes and upon the terms and conditions hereinafter set forth. This assignment is absolute, primary and direct and is not intended to be a separate or secondary pledge, or other form of additional security, and no further act or step is or shall be required of Lender to perfect this assignment. Notwithstanding the foregoing, the Lender confers upon the Borrower a license to collect and retain the rents, issues and profits of the Property as they become due and payable except during the continuance of an Event of Default, upon the occurrence of which said license shall be automatically revoked; provided however, that such license shall be automatically reinstated upon the cure of such Event of Default. This assignment shall not impose upon Lender any duty to cause the Property to produce rents nor shall the 61994\41468600 1 12083 Lender be deemed to be a mortgagee in possession by reason thereof for any purpose. 3. THE ABOVE GRANT, TRANSFER, AND ASSIGNMENT IS FOR THE PURPOSE OF SECURING: (a) Payment of Borrower's indebtedness evidenced by a promissory note (the "Note ") of even date herewith in the principal amount of $350,000 (the "Loan "), together with interest on such indebtedness according to the terms of such Note, and any and all amendments, modifications, extensions or renewals of the Note and the indebtedness and all other sums becoming due and payable to the Lender, or Trustee, pursuant to the terms of this Deed of Trust; (b) Payment of such additional indebtedness, when evidenced by a promissory note or notes reciting the same to be secured by this Deed of Trust, together with interest, as the Lender may advance to Borrower, or its successor in interest, from time to time and payment or performance of such other obligations as the then record owner of the Property may agree to pay or perform when evidenced by a promissory note or other instrument or agreement reciting that it is secured hereby; and (c) Performance and observance of all of the terms, covenants and conditions to be performed or observed by Borrower under the Regulatory Agreement, the Development Agreement, the Promissory Note, the Deed of Trust with Assignment of Rents, the Security Agreement, the Financing Statement, and other instruments required and /or referenced by those agreements and between the Borrower and the Lender executed in connection herewith (collectively referred to as the "Loan Documents "), which are incorporated herein and made part of this Deed of Trust. 4. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, BORROWER AGREES: 4.1 Maintenance of the Propert y. (a) Upon completion of the apartment complex intended for construction at the Property, to keep the Property in a decent, safe, sanitary, and tenantable condition and repair and permit no waste thereof, (b) not to commit or suffer to be done or exist on or about the Property any condition causing the Property to become less valuable; (c) not to construct any buildings and improvements on the Property, other than the buildings and improvements now or hereinafter located on the Property and which are listed in the Development Agreement without the Lender's prior written consent, which shall not be unreasonably withheld; (d) to rebuild promptly any buildings or improvements on the Property that may become damaged or be destroyed while subject to the lien of this Deed of Trust; (e) to comply with all applicable laws or governmental regulations affecting the Property or requiring any alteration or improvement thereof, and not to suffer or permit any violations of any such laws, ordinances or governmental regulations, nor of any covenant, condition or restriction affecting the Property; (f) not to initiate or acquiesce in any change in any zoning or other land use or legal classification which affects any of the Property without the Lender's prior written consent; and (g) not to alter the use of all or any part of the Property without the prior written consent of the Lender. 61994 \41468600 2 12084 4.2 Insurance. Borrower shall comply with the insurance requirements set forth in the Regulatory Agreement. 4.3 Payment of Taxes and Utility Charges. Borrowers shall pay, at least ten (10) days prior to delinquency, all taxes and assessments, both general and special, fines, penalties, levies and charges of every type or nature levied upon or assessed against any part of the Property or upon Trustee's or the Lender's interest in the Property, subject to rights to challenge such charges in good faith. 4.4 Escrow Deposits. Upon and during the duration of an Event of Default, at Lender's option and upon its demand, Borrower shall pay to Lender on the day upon which installments of interest and /or principal are due under the Note, such amounts as Lender from time to time estimates as necessary to create and maintain a fund (the "Fund ") from which to pay, before the same become due, the next maturing taxes, assessments, levies, charges and insurance premiums on or against the Property Any excess accumulated in the Fund over the amount required for such purposes shall be held for future use in connection with the Property or refunded to Borrower, at the Lender's option. Borrower shall make up any deficiency on written demand of Lender. Lender shall place the amounts in the Fund in an interest bearing account and shall credit the interest earned on such amounts to the Fund semiannually provided that upon the Fund's termination, any interest amount due shall not be payable sooner than six months from the date of the last payment credited to the Fund. Amounts in the Fund shall be released to Borrower for application to or shall be applied by Lender to payment of such taxes, assessments, levies, charges and insurance premiums, even though subsequent owners of the Property may benefit thereby, provided, however, that upon the occurrence of an Event of Default under this Deed of Trust, all or any part of the Fund may be applied to any indebtedness or obligation hereby secured in such order and manner as Lender may determine at its option. Notwithstanding the foregoing, the amounts impounded for taxes, assessments, levies, charges and insurance premiums on or against the Property under the requirements of any loan secured by the Property that is senior in priority to the Loan shall be counted toward the applicable impound requirements set forth herein. Borrower agrees that any conveyance of its interest in the Property shall have the effect of transferring to the grantee of said conveyance all of Borrower's interest in and all its rights to the Fund without further act on the part of Borrower, and that in refunding all or any part of the Fund, Lender may deal with whoever is represented to be the owner of the Property. The collection by Lender, pursuant to the terms of this paragraph, of monthly installments to cover taxes, assessments, levies, charges and insurance premiums may be suspended or terminated by Lender at any time upon written notice sent to the owners of the Property, such collection being solely for the added protection and benefit of Lender and entailing no responsibility on Lender other than to apply sums actually received by it and to pay interest on sums held by it as provided in the Deed of Trust. 4.5 Payment and Discharge of Liens. Borrower will pay, when due, all claims of every kind and nature which might or could become a lien on the Property or any part thereof of any kind or nature other than this Deed of Trust except for the following: (a) liens for taxes and assessments which are not delinquent although by law are given the status of a lien and (b) such 61994 \41468600 3 12085 of the above claims as are, and only during the time they are, being contested by Borrower in good faith and by appropriate legal proceedings. Borrower shall post security for the payment of these contested claims as may be requested by Lender. 4.6 Rights of Lender to Remedy Defaults. If Borrower defaults in payment of any tax, assessment, lien, claim, insurance premium, or any other proper charge in whole or in part, or defaults in the performance of any of the Loan Documents, Lender at any time after notice to Borrower and Borrower's failure to cure such default within the applicable cure period (or if no cure period is specified, within a reasonable period), may make such payments or perform any such acts required of Borrower, to such extent and in any form or manner deemed expedient by Lender and pay any other sums, expenses and charges, including reasonable attorneys' fees, necessary to protect the Property and the lien of this Deed of Trust, without incurring any obligation to do so or releasing Borrower from any obligations and without waiving or curing any default. Lender, in its sole but reasonable discretion, shall judge the validity, priority, and amount of any such tax, assessment, lien, premium, claim or charge so paid by it and the necessity for the performance by Lender of any such obligation which Borrower was required but failed to perform. Lender, at its option, shall be subrogated to any tax, assessment, lien, premium, claim or charge which it has paid under these provisions and any such subrogation rights shall be additional and cumulative security to those set forth in the Loan Documents. 4.7 Repayment to Lender. Upon Lender's payment of any tax, assessment, lien, claim, insurance premium or other charge which Borrower fails to pay or upon Lender's performance of any obligation which Borrower fails to perform, all as set forth in paragraph 4.6 above, the amount so paid or the cost of performing any such obligation, together with other sums paid or incurred by Lender, including charges, expenses and reasonable attorneys' fees thereon from date of payment at the rate of eight percent (8 %) per annum, shall be paid by Borrower to Lender upon written demand. The aggregate of all such amounts, including interest, shall be secured by the lien of this Deed of Trust. 4.8 Defense of Actions and Payment of Costs. Borrower will appear in and defend all actions and proceedings purporting to affect the Property or any right or power of Lender or Trustee hereunder, provided that during the continuance of an Event of Default Lender and Trustee, or either of them, may appear in and defend any such action or proceeding and Lender is authorized to pay, purchase or compromise on behalf of Borrower any lien or claim which in its judgment appears to or purports to affect the security of or to be superior to this Deed of Trust. Borrower will pay on demand all sums so expended and all charges, expenses and reasonable attorneys' fees incurred, with interest, from the date of expenditure at eight percent (8 %) per annum. Borrower shall give Lender prompt written notice in writing of (a) the assertion of any claim, (b) the filing of an action or proceeding, (c) the occurrence of any damage to any of the Property, (d) any condemnation and (e) any other material non - monetary default. 5. IT IS MUTUALLY AGREED THAT: 5.1 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (a) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (b) any other injury or 61994 \41468600 4 12086 damage to all or any part of the Property, are hereby assigned to and shall be paid to Lender. Lender is authorized and empowered (but not required) to collect and receive any such sums and to apply them in whole or in part upon any indebtedness or obligation secured hereby, and entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by Lender may be released to Borrower upon such conditions as Lender may impose for its disposition. Application of all or any part of the amounts collected and received by Lender or the release thereof shall not cure or waive any default under this Deed of Trust. Notwithstanding the above, all rights of the Lender pursuant to this section 5.1 shall be subject to the rights of senior lien holders. Notwithstanding the foregoing, unless the Lender, Borrower and its limited partner otherwise agree in writing, so long as there is (i) no uncured monetary default or (ii) no uncured non - monetary default which is not caused by the casualty or condemnation event giving rise to such proceeds, any proceeds received from the insurance policies with respect to the Property and any proceeds received from any governmental agency due to a partial or complete . condemnation of the Property shall be applied as follows: (a) if Borrower so elects, then any insurance proceeds arising from a casualty event shall be applied to restore, repair or rebuild the damage to the Property caused by such casualty; (b) if the Property is subject to a partial condemnation or taking and Borrower so elects, then the proceeds received there from shall be applied to restore the Property taken, provided Borrower determmes that such restoration is economically feasible and no default exists under the Loan Documents following the expiration of all applicable cure periods; and (c) if the Property is subject to a total condemnation, or if Borrower determines that restoration of the Property is not feasible following a partial condemnation, then the proceeds from any condemnation award or claim for damages shall be used first to repay the Loan, with the excess, if any, paid to Borrower. 5.2 Sales and Encumbrances Prohibited. Without prior consent of the Lender, which shall not be unreasonably withheld, Borrower shall not make any sale, assignment or conveyance, or transfer in any other form, nor shall Borrower make any further pledge, encumbrance, mortgaging, or refinancing of the Property, or any part thereof or of any of its interest therein, other than in accordance with the terms of the Loan Documents. Notwithstanding the foregoing, neither the exercise by the General Partner of the Borrower of its option to purchase the property nor the admission by the Borrower of a nonprofit corporation as its "managing general partner" shall violate this Section 5.2. 5.3 Sale or Forbearance. No sale of the Property, forbearance on the part of Lender or extension of the time for payment of the indebtedness hereby secured shall operate to release, discharge, waive, modify, change or affect the liability of Borrower either in whole or in part. 5.4 Late Pant. Lender's acceptance of late payment of any sum shall not constitute a waiver of its rights to require prompt payment when due of all other indebtedness, or to declare a default for any failure so to pay, or to proceed with foreclosure or sale for any other default then existing. Lender's acceptance of partial payment of any sum after default shall not 61994 \4146860\,3 5 12087 cure such default or affect any notice of default unless such notice of default is expressly revoked in writing by Lender. 5.5 Lender's Right to Release. Without affecting the liability of any person for payment of any indebtedness hereby secured (other than any person released pursuant hereto), including without limitation, any one or more endorsers or guarantors, and without affecting the lien hereof upon any of the Property not released pursuant hereto, at any time and from time to time without notice: (a) Lender may, at its sole but reasonable discretion, (i) release any person now or hereafter liable for payment of any or all such indebtedness, (ii) extend the time for or agree to alter the terms of payment of any or all of such indebtedness, and (iii) release or accept additional security for such indebtedness, or subordinate the lien or charge hereof, and (b) Trustee, acting pursuant to the written request of Lender, may reconvey all or any part of the Property, consent to the making of any map or plat thereof, join in granting any easement thereon, or loin in any such agreement of extension or subordination. 5.6 Reconveyance. Upon written request of Lender stating that all sums and obligations secured hereby have been discharged, or otherwise as requested in writing by Lender, and upon surrender of this Deed of Trust and the Note and any additional loan notes to Trustee for cancellation, and upon payment to Trustee of its fees and expense, Trustee shall reconvey, without warranty, the Property or that part thereof then held hereunder. The recitals in any reconveyance shall be conclusive proof of their truthfulness and the grantee in any such reconveyance may be described "as the person or persons legally entitled thereto " When the Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all of the rents, royalties, issues, accounts and profits of the Property to the person or persons legally entitled thereto unless such reconveyance expressly provides to the contrary 5.7 Events of Default. (a) Event Defined. Any one or more of the following events which is not cured after notice and within the time period set forth below shall constitute an Event of Default under this Deed of Trust: (1) failure of the Borrower to pay the indebtedness secured hereby or any installment thereof, whether principal or interest, payable, whether at maturity or by acceleration or otherwise; or (2) failure of Borrower to observe or to perform any covenant and /or condition to be observed or performed by Borrower pursuant to the Loan Documents. (b) Notice of Default. In the event of any material breach of this Agreement, Lender shall give written notice to Borrower or Borrower's Agent of breach by specifying: (a) the nature of the event or deficiency giving rise to the breach; (b) the action required to cure the deficiency, if an action to cure is possible; (c) a date, which shall not be less than thirty (30) calendar days from the mailing of the notice, by which such action to cure must be accomplished (or if such breach is not reasonably susceptible to cure within such a thirty (30) day period, then within such additional time as is reasonably necessary to cure such failure, provided that Borrower has commenced cure within the initial (30) day period and diligently pursues cure to completion). A 61994 \41468600 6 • copy of any notice of violation or default under this Agreement or any of the other Loan Documents given to the Borrower or Borrower's Agent by the Lender, shall be delivered to Borrower, c/o Chelsea Investment Corporation, 5993 Avenida Encinas, Suite 101, Carlsbad, CA 92008 -4459, and Borrower's limited partner at the address set forth below the signatures hereto or at such address as the limited partner or Borrower provides to the Lender in a written notice. Notwithstanding anything to the contrary contained in any of the Loan Documents, the Borrower's limited partner shall have the right, but not the obligation, to cure defaults of the Borrower as set forth in this Section 5.7. The Lender agrees that the Borrower shall not be considered to be in default or breach until the expiration of all notice and cure periods provided to the Borrower and its limited partner. (c) Remedies. After the expiration of all applicable notice and cure periods, the Lender may, without further notice, declare in writing a default effective on the date of such declaration of default. Lender's obligation to disburse Loan proceeds to Borrower shall terminate. Upon any such declaration of default, the Lender may apply to any court, state or federal, for specific performance, for the appointment of a receiver to take over and operate the Project in accordance with the terms of the Loan Documents, or for such other relief as may be appropriate, it being agreed by the Borrower that the injury to the Lender ansing from a default under any of the teens of the Loan Documents would be irreparable and that it would be extremely difficult to ascertain the amount of compensation of the Lender which afford adequate relief in light of the purposes and policies of the Project. 5.8 Acceleration and Sale. (a) Acceleration. During the continuance of an Event of Default as set forth in Section 5.7, Lender, without demand on Borrower, may declare all sums hereby secured immediately due and payable by notice thereof to the Borrower or by executing and recording or by causing the Trustee to execute and record a notice of default and election to cause the Property to be sold to satisfy the obligations secured hereby, or by the commencement of an appropriate action to foreclose this Deed of Trust or by any other appropriate manner. (b) Foreclosure Procedure. Whenever a notice of default and intent to sell is issued pursuant to Civil Code Section 2924, the Lender will follow the notice and hearing procedures established in 25 C.C.R. § 7938 in addition to other applicable provisions of law. Lender agrees to comply with the provisions in Section 42 (h) (6) (E) (ii) of the Internal Revenue Code of 1989. 5.9 Enta Possession and Receivership. During the continuance of an Event of Default hereunder and irrespective of whether Lender accelerates the maturity of all indebtedness secured hereby or files a notice of default hereunder, Lender at any time, without notice of demand or regard to the adequacy of any security for the indebtedness and obligations hereby secured, in person, or by any agent or employee, or by receiver appointed by court, may enter upon and take the possession of the Property or any part thereof and including the not to rent, lease, operate and maintain any part or all of the Property, and may sue for or otherwise collect and receive all rents, royalties, issues, accounts and profits thereof, including these past due as 61994 \41468600 7 12089 well as those accruing thereafter. Borrower hereby presently assigns to Lender, absolutely and regardless of possession of the Property, all rents and other monies now due or hereafter to become due under any lease or agreement or otherwise for the use of occupation of all or any part of the Property, now existing or hereafter made, reserving to Borrower such rents as they become due, but not otherwise. Borrower shall on demand execute such further assignments to Lender of any or all such leases, agreements, rents or monies as the Lender may require, and deliver to Lender a fully executed original of any or all such leases or agreements. During the continuance of an Event of Default, Lender by any agent, employee or receiver, may also take possession of, and for these purposes use, any and all of Borrower's personal property contained in or on the Property and used by Borrower in the operation, rental or leasing thereof or any part thereof. The expense (including, but not limited to, receivers' fees, reasonable attorneys' fees and agents' compensation) incurred by Lender pursuant to the power herein contained shall be secured hereby. During the continuance of an Event of Default, Lender may bring or defend any legal action in connection with the Property, as it may deem proper, and may, from time to time, make all necessary or proper repairs, replacements and alterations to the Property, as it may seem judicious, and may insure and reinsure the same, and may lease the property or any part or parts thereof in such parcels and for such periods and on such terms as it may seem fit, including leases for terms and for terms expiring after the maturity of the indebtedness hereby secured, and may terminate any lease for any case which would entitle Borrower to terminate it. After deducting the expenses of managing and operating the same and all maintenance, repairs, replacements and alterations and all payments which may be made for taxes, assessments, liens, claims, insurance premiums, or other proper charges of the Property or any part and for agents employed by Lender to manage and operate the Property, Lender may apply any and all remaining funds to the payments of the indebtedness hereby secured in such order and proportion as Lender may determine. Neither application of said amounts to such indebtedness nor any other action taken by Lender under this paragraph shall cure or waive any default hereunder or nullify the affect of any such notice of default or invalidate any act done pursuant to such notice or any cause of action to foreclose this Deed of Trust. The right to enter and take possession of the Property, to manage and operate the same, and to collect the rents, issues and profits thereof, whether by a receiver or otherwise, shall be in addition to any other right to remedy hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof Lender shall be liable to account only for such rents, royalties, issues, accounts and profits actually received by it. Notwithstanding the above, all rights of the Lender pursuant to this section 5.9 shall be subject to the rights of the senior hen holders. 5.10 Attorneys' Fees. If Trustee or Lender shall be made parties to or shall intervene in any action or proceeding affecting the Property or the title thereto or the interest of Trustee or Lender under this Deed of Trust, or if Lender employs an attorney (including the City of Encinitas Counsel) to collect any or all of the indebtedness hereby secured or to foreclose this Deed of Trust, or authorizes Trustee to act on its behalf, Lender shall be reimbursed by Borrower, immediately and without demand, for all reasonable costs, charges and attorneys' fees incurred by them or either of them in any such case whether or not a suit be commenced, and the same, together with interest thereon from the date of payment at the rate of eight percent (8 %) per annum, shall be secured hereby as provided in paragraph 4.7. 61994',414686Ov3 8 12090 5.11 Exercise of Remedies; Delay. No exercise of any right or remedy herein contained or provided by law, and no delay by Lender or Trustee in exercising any such right or remedy hereunder shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any default hereunder. 5.12 Trustee Substitution. The irrevocable power to appoint a substitute trustee or trustees hereunder is hereby expressly granted to Lender to be exercised at any time hereafter, without specifying any reason therefor by filing for record in the office where this Deed of Trust is recorded a deed of appointment, and said power of appointment of successor trustee or trustees may be exercised as often as and whenever Lender deems advisable. The exercise of said power of appointment, no matter how often, shall not be deemed an exhaustion thereof, and upon recording of such deed or deeds of appointment, the trustee or trustees so appointed shall thereupon, without further act or deed of conveyance, succeed to and become fully vested with identically the same title and estate in and to the Property hereby conveyed and with all the rights, powers, trusts and duties of the predecessor in the trust hereunder, with the like effect as if originally named as trustee or as one of the trustees. 5.13 Remedies Cumulative. No remedy herein contained or conferred upon Lender or Trustee is intended to be exclusive of any other remedy or remedies afforded by law or by the terms hereof to the Lender or Trustee but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. 5.14 Successors, Assigns Gender Number. The covenants and agreements herein contained shall bind, and the benefit and advantages shall inure to, the respective heirs, executors, administrators, successors and assigns of the parties. Wherever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall be applicable to all genders. 5.15 Headings. The headings are inserted only for convenience of reference and in no way define, limit, or describe the scope or intent of this Deed of Trust, or of any particular provision thereof, or the proper construction thereof. 5.16 Actions on Behalf of Lender. Except as is otherwise specifically provided herein, whenever any approval, notice, direction, consent, request or other action by Lender is required or permitted under this Deed of Trust, such action shall be in writing. 5.17 Obligations of Borrower If more than one person has executed this Deed of Trust as Borrower, the obligations of all such persons hereunder shall be joint and several. 5 18 Miscellaneous Provisions. (a) Beneficiary Statement. Lender may require reimbursement for actual costs incurred in preparing and furnishing any statement required by California Civil Code Section 2943. 61994 \41468600 9 12091 (b) Severab>lity. If any provision of this Deed of Trust shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. (c) Indemnification. Borrower will indemnify and hold Lender, its officers and agents (collectively referred to as "City Parties ") harmless against any and all losses, claims, demands, penalties and liabilities which City Parties may sustain or suffer by reason of anything done or omitted in good faith pursuant to or in connection with this Deed or Trust and not assert any claim against City Parties by reason of any action so taken or omitted. Borrower shall, at Borrower's expense, defend, indemnify, save and hold expenses, damages (general, punitive or otherwise), causes of action (whether legal or equitable in nature) asserted by any person, firm, corporation or other entity arising out of this Deed of Trust and Borrower shall pay Lender upon demand all claims, judgments, damages, losses or expenses (including reasonable legal expense) incurred by Lender as a result of any legal action arising out of this Deed of Trust. The Borrower will not be obligated to indemnify the Lender for any losses caused by or resulting from the Lender's sole active negligence and willful misconduct. Borrower shall indemnify and hold harmless City Parties as set forth herein regardless of the existence or degree of fault or negligence, whether active or passive, primary or secondary, on the part of the Lender or the Borrower or their respective agents, officers, employees, contractors or subcontractors provided, however, that Borrower's duty to indemnify and hold harmless hereunder shall not extend to liability arising from sole negligence or willful misconduct of the Lender. (d) Offset. Borrower shall not under any circumstances fail or delay to perform (or resist the enforcement of) any of its obligations to Lender in connection with this Deed of Trust or any other contract, note or instrument executed by Borrower in favor of Lender because of any indebtedness or obligation of Lender which has not been confirmed in a final judgment of a court of competent jurisdiction (sustained on appeal, if any) against Lender, and Borrower hereby waives any such rights of set -off (or offset) which it might otherwise have with respect to any such claims or causes of action against Lender or any such obligations or indebtedness of Lender, unless and until such right of set -off (or offset) is confirmed and liquidated by such final judgment. Borrower further waives any right which it might otherwise have (if any) to require a marshaling of any security of the Lender or to direct the order in which Lender pursues its rights or remedies with respect to any of its security. (e) If low- income housing tax credits under the provisions of Sections 17058 and 23610.5 of the Revenue and Taxation Code of the State of California and under Section 42 of the Internal Revenue Code of 1986, as amended (the "Code "), are allocated to the Property, then the Property will be subject to certain requirements of Section 42 of the Code. Lender acknowledges the provisions of Section 42 of the Code and agrees to comply with the Code as required. [signatures on following page] 61994 \41468600 10 12092 IN WITNESS WHEREOF, Borrower has executed this Deed of Trust on the day and year set forth above. If mailing addresses are set forth below the Borrower and Lender shall be deemed to have requested that a copy of any notice of default and of any notice of sale hereunder be mailed to such addresses. BORROWER: IRIS APARTMENTS CIC, LP, a California limited partnership By- CIC Iris Apartments, LLC, a California limited liability company, its Administrative General Partner By: Chelsea Investment Corporation, a Cali fo is corporation, its Manager By: - A & y Cheri Hoffman President By: Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner By: Robert Laing / Executive Director/President MAILING ADDRESSES FOR NOTICES: LENDER: CITY OF ENCINITAS M. Gus Vma, City Manager Borrower- Limited Partner- Iris Apartments CIC, LP c/o Chelsea Investment Corporation, RJCHOF I -- Iris Apartments CIC L.L.C. 5993 Avenida Encmas Suite 101 c/o Raymond James Tax Credit Funds, Inc. Carlsbad, CA 92008 -4459 880 Carillon Parkway St. Petersburg, Florida 33716 Attention: Ronald Diner, President Lender: City of Encinitas 505 S Vulcan Avenue Encinitas, California 92024 Attn: Housing Administrator 61994 \41468600 11 12093 IN WITNESS WHEREOF, Borrower has executed this Deed of Trust on the day and year set forth above. If mailing addresses are set forth below the Borrower and Lender shall be deemed to have requested that a copy of any notice of default and of any notice of sale hereunder be mailed to such addresses. BORROWER: IRIS APARTMENTS CIC, LP, a California limited partnership By: CIC Ins Apartments, LLC, a California limited liability company, its Administrative General Partner By: Chelsea Investment Corporation, a California corporation, its Manager By: Cheri Hoffman President By: Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner LOW Robert Laing Executive Director /President MAILING ADDRESSES FOR NOTICF,�- LENDER: CITY OF ENCINITAS By: 4usta, Ci anager C'Lf I(. "its Borrower- Limited Partner: Ins Apartments CIC, LP c/o Chelsea Investment Corporation, RJCHOF I -- Iris Apartments CIC L.L.C. 5993 Avenida Encinas Suite 101 c/o Raymond James Tax Credit Funds, Inc. Carlsbad, CA 92008 -4459 880 Carillon Parkway St. Petersburg, Florida 33716 Attention: Ronald Diner, President Lender- City of Encinitas 505 S Vulcan Avenue Encinitas, California 92024 Attn: Housing Administrator 61994 \41468600 11 12094 ATTACH ACKNOWLEDGMENTS HERE 61994\41468600 12 12095 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California County of fi er On / /0 before me, Date Here Name and Title of the Of ' personally appeared �'° ^a � � N me ) of Signer(s) who proved to me on the basis of satisfactory evidence to be the persor-> - whose name* is /aresubscribed to the within instrument and acknowledged to me that G. R. N,:THERS he /she4hey- executed the same in his /he#theirauthorized Commission # 1903166 Notary Public - California i capacityfies); and that by his /het�eiF signaturef) on the San Diego County instrument the person(s); or the entity upon behalf of My Comm. E=ep 6, 2014 t which the persnp{* 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 and and icial al rl G(S Place Notary Seal Above Signature Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date. Signer(s) Other Than Named Above Capacity(ies) Claimed by Signer(s) Signer's Name ❑ Individual ❑ Corporate Officer — Title(s) ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact • ❑ Trustee Top of thumb here ❑ Guardian or Conservator ❑ Other- Signer Is Representing: Number of Pages: Signer's Name. ❑ Individual ❑ Corporate Officer — Title(s) ❑ Partner — ❑ Limited ❑ General _ ❑ Attorney in Fact ❑ Trustee Top of thumb here El Guardian or Conservator ❑ Other Signer Is Representing: 02007 National Notary Association - 9350 De Soto Ave., PO. Box 2402 - Chatsworth, CA 91313 -2402 - www.NationalNotaryorg Item #5907 Reorder Call Toll -Free 1 -800- 876 -6827 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of Ca County of 0� On ��� fo/r /e e, Date �! Here Insert Name andTitle of the Officer, personally appeared G. R. WTHERS CGn1n'liaaion # 1903166 Notary Public - California Z San Diego County MY Comm. Expires Sep 6, 2014 12096 who proved to me on the basis of satisfactory evidence to be the person{* whose name(&) is /are--subscribed to the within instrument and acknowledged to me that 4e /she / executed the same in -kris /her /theiFauthorized capacity{ies), and that by -14i6/herMwir-signature4s.) on the instrument the persor4o, or the entity upon behalf of which the person(a) 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 an nd official eal Signaturea, Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date Signer(s) Other Than Named Above Capacity(ies) Claimed by Signer(s) Signer's Name ❑ Individual • Corporate Officer — Title(s) • Partner — ❑ Limited ❑ General _ • Attorney in Fact • ❑ Trustee Top of thumb here ❑ Guardian or Conservator ❑ Other - Signer Is Representing. Number of Pages: Signer's Name ❑ Individual ❑ Corporate Officer — Title(s) _ ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other- Signer Is Representing RIGHTUMBPRINT OF THSIGNER •. - ©2007 National Notary Association - 9350 De Soto Ave., P.O. Box 2402 - Chatsworth, CA 91313 -2402 - www.NationaiNotary.org Item #5907 Reorder Call Toll -Free 1 -800- 876 -6827 12097 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT �?�'.ceec�%er.S�cs= r��CY'.�� ��-:< �< ��..���c;�,e:�•.cc.c;<>c�:c�'.� -rte State of California ��}} County of 'J"41 AL ul (U On �,),DL r l before me, ��/iyl k /�/vt'F� �r'i /rte �� ��il � y /fir' U cam, Date Here Insert Name and Title 6f the Officer personally appeared 4)U`) l`,/U��- _ — i - - - -- Name(s) of Signer(s) GINA FRANCES ZENNS Commission #-18-78-44-5- z -� Notary Public - California i = San Diego County MY Comm. Ex Tres Jan 29, 2014 Place Notary Seal Above 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 /shefthey executed the same in his /herfl:teir authorized capacity(ies), and that by his /herAheir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(e) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal Signature`s ?ti1(s' Signature of Notary Publ' OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document ()-M OF 'T�u5F 1Qii3I &t- K't&FI J Document Date i9rEI L -X&/D- Number of Pages: EJy I Signer(s) Other Than Named Above C hi?.0 Capacity(ies) Claimed by Signer(s) Signer's Name (343 V, AA--) ❑ Individual ❑ Corporate Officer — Title(s) ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee Top of thumb here ❑ Guardiap or Conservator ff Other-- 'i T� /,y4Z / CV- Signer Is Representing: Signer's Name: ❑ Individual ❑ Corporate Officer — Title(s) ❑ Partner — ❑ Limited ❑ Ge ❑ Attorney in Fact , ❑ Trustee ❑ Guardian or Coi ❑ Other Signer_twilepresenting: RIGHTTHUMBPRINT OF SIGNER of thumb here 02007 National Notary Association - 9350 De Soto Ave., P.O. Box 2402 - Chatsworth, CA 91313-2402 - www.NationalNotaryorg Item #5907 Reorder, Call Toll -Free 1-800- 876 -6827 12098 ATTACHMENT A PROPERTY DESCRIPTION Real property in the City of Encinitas, County of San Diego, State of California, described as follows: Assessor's Parcel Number (APN): 265 - 100 -55 THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOT 1 OF CITY OF ENCINITAS T.M. 02 -233, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO 15501, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JANUARY 5, 2007 61994 \41468600 13 12099 REQUEST FOR RECONVEYANCE TO: , Trustee: The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. When all sums secured by said Deed of Trust have been fully paid and satisfied, you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness secured by said Deed of Trust, delivered to you herewith together with said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you under the same Mail Reconveyance to Iris Apartments CIC, LP c/o Chelsea Investment Corporation, 5993 Avenida Encinas Suite 101 Carlsbad, CA 92008 -4459 Date. 61994 \41468600 14