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Home My WebLink AboutR-2015-168 Loan Repayment Terms MOU with the Seasons Music Festival; Seasons Music HallRESOLUTION NO. R-2015-168 A RESOLUTION authorizing the City Manager to execute a Memorandum of Understanding with The Seasons Music Festival establishing the repayment terms for a loan balance for which the Seasons Music Hall is the collateral WHEREAS, in April 2009 United Builders received a loan from the City in the amount of $200,000 to pay for required fire safety improvements to the Seasons Music Hall, and WHEREAS, United Builders executed promissory notes and a deed of trust on the Season property to secure the loan amount requiring the loan to be repaid to the City within two years, and WHEREAS, In April 2011 the entire balance of the loan was still outstanding; to allow more time for United Builders to repay the loan the City and United Builders entered a Modification and Restatement Of Promissory Note dated September 5, 2012 that provided terms of payment of accrued interest and allowed 2 more years for full retirement of the loan balance; and WHEREAS, as of April, 2014 the City had received no interest payment or payment on the principle of the loan balance and the City was advised that United Builders had transferred title to the Seasons Performance Hall over to the Seasons Music Festival Board without the consent of the City; and WHEREAS, the City then entered discussion with the Season Board to attempt to work out a repayment plan for the balance of the loan and accruing interest to avoid the City's foreclosure of the loan and recovery of the collateral property; and WHEREAS, the Season Board and the City successfully negotiated a repayment plan that will retire the City's loan principle and accrued interest through a series of annual payments, all as described in the attached and incorporated documents and Memorandum of Understanding between the Seasons Music Festival and the City that will allow the Season Board to retain ownership of the Seasons property; and WHEREAS, in order to preserve the City's right of recovery in the underlying loan to United Builders during the agreed upon repayment period the City and United Builders entered into the attached and incorporated Tolling Agreement to preserve the City's statute of limitations on its time to prosecute the underlying loan, Now, Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is hereby authorized and directed to execute the attached and incorporated Memorandum of Understanding providing for the repayment of the principle and accrued interest of the City's United Builders loan by the Seasons Music Festival Board. ADOPTED BY THE CITY COUNCIL this 8th day of December, 2015. 17712/44k4 Micah Cawley, Mayor TOLLING AGREEMENT This Tolling Agreement (this "Agreement") is entered into by the City of Yakima ("Yakima" or "the City") and United Builders of Washington, Inc., J. Patrick Strosahl, and Stephen R. Strosahl, personally and for their respective marital communities, sometimes collectively referred to herein as the "Parties." This Agreement shall be effective upon the date of its execution and delivery to the other Party by the last Party to execute. RECITALS The Parties submit the following recitals in support of this Tolling Agreement as representations of the potential allegations that may be asserted in the event of future litigation of the issues subject to this Agreement. The Parties may not mutually agree with certain representations set forth in the following recitals, but present them as individual perspectives supporting potential claims and as a basis for warranting this Tolling Agreement. If the Parties should litigate the issues identified herein in the future the -Parties agree that each and every element of any future claim(s) shall be subject to proof before a finder of fact, and are in no way conceded by either Party based upon the recitals set forth. r A. United Builders of Washington, Inc. is a private, for-profit corporation that sought and received Two Hundred Thousand Dollars ($200,000) in loan funds from the City for use as operating funds, said loan secured under the terms and conditions set forth in the attached AGREEMENT, including a Promissory Note and personal Unconditional Guarantees (Attachment A), and Deed Of Trust (Attachment B). B. Yakima is a first class city located in Yakima County, Washington and is a Washington municipal corporation. C. Under the terms of the Agreement and Deed of Trust United Builders was to have repaid the City Loan in full on the second annual anniversary of the Agreement, that date of repayment being April 22;2011. D. As of April 22, 2011 United Builders did not make any payment whatsoever on the Loan balance, or the interest accruing thereon. As a result of the non-performance the City entered into a MODIFICATION AND RESTATEMENT OF PROMISSORY NOTE dated September 5, 2012 with United Builders (Attachment D) whereby United Builders was to deed over to the City a parcel of real property as payment on the accrued loan interest as of said date of execution of the Modification, and in consideration of that transfer/compensation the City agreed to modify the underlying promissory note to extend the repayment of the Loan balance to April 22, 2014. E. As of April 22, 2014 the City had received no payment whatsoever from United Builders on the outstanding Loan amount. In the meantime United Builders had deeded the title to the secured property, known generally as the Seasons Performance Hall, to the Seasons Board of Directors, said transfer having taken place without the notice to and consent by the City as required in paragraph 4 and 5 of the Deed of Trust executed by United Builders. Tolling Agreement Page 1 of 6 F. To attempt to recover the unpaid Loan balance and accrued interest owed to the City the City initiated negotiations with the Seasons Board, as current deed holders, to attempt to arrange a repayment plan that the City and the Seasons could each accommodate in order to satisfy the Loan balance and accrued interest thereon and to also allow the Seasons to continue to operate in the venue rather than subjecting the property to a foreclosure sale. G. The Seasons Board and the City successfully negotiated a repayment plan that the parties are in agreement on, as represented in the attached Memorandum of Understanding (Attachment E). In order for the City to preserve its right to pursue a claim of foreclose on the secured property for full recovery of the Loan value in the event the Seasons Board's efforts to repay the Loan are not successful during the period permitted to the Seasons for repayment of the Loan in accord with the Memorandum of Understanding, United Builders, and Patrick and Steve Strosahl and their marital communities would have to agree to the tolling of the remaining period under the applicable statutes of limitation and similar Timing Defenses, as stated below, which United Builders and the Strosahls are willing to do subject to the terms and conditions set forth below. NOW, THEREFORE, in consideration of the foregoing RECITALS and documents attached hereto, which are collectively deemed to be a part of this Agreement, and of the benefits to and burdens upon each, the Parties agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: (a). "Effective Date" shall mean the latest date upon which both Parties have ratified this Agreement by providing a signature in the space provided below. (b). "Tolling Period" shall mean the period from and including the Effective Date (as defined above) of this Agreement until and including the Expiration Date (as defined below) of this Agreement, or as such Expiration Date may be hereafter extended in writing by the mutual agreement of the Parties hereto. Unless terminated by any Party prior thereto in accordance with the terms of subparagraph 1(d), below, or extended in writing by the Parties, this Agreement shall expire fifteen and one-half (151/2) years from the Effective Date of this Agreement, at which time the statute of limitations shall no longer be tolled and the statute of limitations shall begin to run again. (c). "Expiration Date" shall mean the date that falls exactly fifteen (15) years and six (6) months after the Effective Date of this Agreement. (d). "Early Termination" shall mean the termination of this Agreement by either Party by delivery of a notice of termination to the other Party not less than 30 days before termination is effective. (e). "Timing Defenses" shall mean any affirmative defenses to any Claim that any Party may have to the extent based upon any statute of limitations and/or any failure of any Party to file a damage claim, institute or commence litigation, or institute or commence any other legal proceeding within some specified period, before a specified date, or before the happening of a specified event, including any equitable defense of a similar nature. (f). "Claim" or "Claims" shall mean any and all right of recovery of the full Two Hundred Thousand Dollar ($200,000) Loan value, together with all accrued interest thereon in accord with the terms of the underlying Loan Agreement, including the right to foreclose on the real property securing the Loan under the Deed of Trust attached hereto. Tolling Agreement Page 2 of 6 2. The Parties stipulate, covenant and agree that Timing Defenses applicable to the Claims shall be tolled during the Tolling Period. Any limitation periods for filing complaints or demands with any federal, state or municipal court, agency or dispute resolution service applicable to any existing claim or cause of action, including any claim or cause of action grounded in contract, tort, statute or equity that either of the Parties may possess against the other Party with regard to said Claim are tolled and shall be suspended from running from the "Effective Date" set forth in this Agreement. Any sale, transfer, exchange or assignment of interest in United Builders of Washington, Inc. to any other entity during the term of this Agreement shall not impair the application of its terms upon the party receiving said United Builders' interest, responsibilities and obligations herein. 3. The Parties stipulate, covenant, and agree that this Agreement shall have no effect on any Timing Defenses that may be available to any Party prior to the Effective Date, and that all time periods prior to the Effective Date and after the Expiration Date shall be included in the calculation of and running of any applicable Timing Defenses. Nothing contained herein shall preclude any Party from asserting any Timing Defenses to the extent that such defenses already exist as of the Effective Date, and nothing herein shall be deemed to revive any Claims barred as of the Effective Date. Furthermore, this Agreement shall have no effect on any defenses asserted by any party other than the Parties to this Agreement. 4. The Parties stipulate, covenant and agree that by executing and entering into this Agreement no Party waives or otherwise impairs, by estoppel or any other means, any Party's right and ability to raise any Timing Defenses available for the periods prior to the Effective Date and after the Expiration Date. 5. The Parties stipulate, covenant and agree that in the event the Seasons Board successfully repays the full balance of the Loan, together with accrued interest thereon in accord with the terms of the Memorandum of Understanding attached hereto, the final payment of said repayment shall entitle United Builders and the Strosahls to a full and complete settlement, extinguishment and release of any and all obligations as represented in the underlying Loan Agreement, Promissory Note, Deed of Trust and Unconditional Guaranty that are identified in this Tolling Agreement, together with any and all claims, actions or demands whatsoever that may have been asserted by one of the Parties hereto against another. 6. The provisions of this Agreement comprise all of the terms, conditions, agreements and representations of the Parties respecting the tolling of the Timing Defenses. This Agreement may not be altered or amended except by mutual written agreement executed by the Parties. The Parties hereby agree that terms of this Agreement have not been changed, modified, or expanded by any oral agreements or representations entered into or made by the Parties prior to or at the execution of this Agreement. 7. The Parties hereto acknowledge that each of them has had the benefit of counsel of their choice and has been offered an opportunity to review this Agreement with chosen counsel. The Tolling Agreement Page 3 of 6 Parties hereto further acknowledge that they have, individually or through their respective counsel, participated in the preparation of this Agreement, and it is understood that no provision hereof shall be construed against any Party hereto by reason of any Party having drafted or prepared this Agreement. 8. This Agreement may be executed in one or more original facsimile counterparts, each of which shall be deemed an original, but also which together will constitute one and the same instrument. 9. This Agreement shall terminate on the Expiration Date as provided in paragraph 1(c) above, unless there has been an Early Termination as provided for in paragraph 1(d) above, or it has been extended in writing prior to termination by the Parties to be bound. 10. Nothing in this Agreement shall be construed as an admission or denial by either of the Parties to the merits of any Party's claims or the merits of any Party's defenses. 11. This Agreement is not intended to be admissible against any Party as an admission of any liability and/or fault in any matter. Notwithstanding the immediately preceding sentence, this Agreement, if otherwise admissible, may be introduced into evidence at any proceeding held between or among the Parties for the specific purpose of enforcing its terms. 12. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. Venue for any action taken to enforce or construe the terms of this agreement shall reside in the Yakima County Superior Court in Yakima County, Washington. 13. If any portion of this Agreement is changed per mutual agreement of the Parties, or any portion is held invalid by a court of competent jurisdiction, the remainder of the Agreement shall continue in full force and effect. 14. Time shall be of the essence as to this Agreement. 15. If any Party brings an action upon this Agreement, the prevailing Party shall be entitled to recover its actual expenses, including, but not limited to, sums expended for its engagement of expert witnesses and their costs and expenses, whether or not called to testify, and actual costs and attorney fees incurred in connection therewith, whether at trial, arbitration, or any appeal therefrom, including, without limitation, those incurred in connection with any bankruptcy, insolvency or reorganization proceeding or receivership in which any Party is involved, including, without limitation, those incurred in making any appearances in any such proceeding or in seeking relief from any stay or injunction issued in or arising out of any such proceeding. 16. Any demand, notice, or request required or permitted under this Agreement shall be given in writing, and shall be deemed to have been properly made, as of the time of such delivery, if personally delivered, delivered by email of facsimile; or as of the third (3rd) day after Tolling Agreement Page 4 of 6 such mailing, if sent by Certified Mail, postage prepaid, return receipt requested, to the addresses set forth below: YAKIMA: City of Yakima City Manager 129 N. 2nd Street Yakima, WA 98901 UNITED BUILDERS OF WASHINGTON, INC.: �y 13,07-430x-948'8 6 i UNITED BUILDERS OF WASHINGTON, INC. President J. Patrick Strosahl personally of r, 2015. Judith L. Strosahl personally of Dated this day of €mer, 2015. Dated this 1 day Dated this el day Dated this Iday Stephen R. Strosahl personally of September, 2015. Geanette L. Strosahl personall of September, 2015 A/C Mr5/9/2. Tolling Agreement Page 6 of 6 Attachment A R- z oal sS AGREEMENT BETWEEN THE CITY OF YAKIMA OFFICE OF NEIGHBORHOOD DEVELOPMENT SERVICES AND UNITED BUILDERS OF WASHINGTON INC. THIS AGREEMENT (hereinafter "Agreement") is made and entered into by and between the City of Yakima, Washington, a first-class city incorporated under the laws of the State of Washington, through the Office of Neighborhood Development Services (hereinafter "City") and United Builders of Washington Inc., a Washington corporation (hereinafter "United Builders of Washington"). WHEREAS, United Builders of Washington is a private, for-profit corporation. WHEREAS, United Builders of Washington seeks use of loan funds from the City for use as operating funds in the conduct of its business within the City of Yakima for two years. WHEREAS, the City has received and is responsible for the administration of annual Entitlement Grants of CDBG funds made available through the United States Department of Housing and Urban Development (HUD) and authorized by Title I of the Housing and Community Development Act of 1974, as amended. WHEREAS, federal regulations governing the use of CDBG funds for special economic development projects allow the City to use such funds as an economic incentive to provide loans to assist private, for-profit businesses with projects that provide an appropriate level of public benefit. WHEREAS, the City has determined that the CDBG assistance described below is necessary and appropriate to ensure that United Builders of Washington continues its business activity within the City of Yakima. WHEREAS, continuation of United Builders of Washington's business activity within the City of Yakima would provide substantial appropriate public benefits to the City, particularly by creating and retaining jobs. WHEREAS, accordingly, the City is willing to use CDBG funds to assist United Builders of Washington through a working capital loan of not more than $200,000 according to the following terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements set forth herein, it is agreed by and between the City and United Builders of Washington as follows: 1. Term of Agreement. This Agreement shall commence upon execution by the parties hereto and full performance of all United Builders of Washington, Inc.'s obligations shall be due no later than the second annual anniversary date of this Agreement, unless the Agreement is earlier terminated by the parties in accordance with the terms of this Agreement. Page 1 of 9 2. The Loan. Subject to availability of loan funds from the identified source of funds and the other provisions of this Agreement, the City shall provide a loan to United Builders of Washington of $200,000, to be disbursed in accordance with the terms of the Promissory Note. The loan shall be paid as follows: A. United Builders of Washington shall make full and final payment of all amounts due and payable under the Promissory Note no later than the second annual anniversary date of the Promissory Note. 3. Source of Funds. The source of funds for this Agreement is the City's CDBG loan funds administered by HUD. It is expressly understood and agreed by the City and United Builders of Washington that the obligations under this Agreement are contingent upon the City's receipt of CDBG funds adequate to meet the City's loan funding obligations under this Agreement. 4. Contact with HUD. United Builders of Washington understands and agrees that, without the written consent of the City, all direct contact with HUD over any matter related to the project under this Agreement shall be made solely by the City unless otherwise provided herein or provided by law. 5. Conditions of Loan. The obligation of the City to advance any portion of the loan amounts identified in section 3 of this Agreement are subject to the following additional conditions: A. All actions undertaken in connection with this Agreement and all documents incidental thereto shall be satisfactory in form, scope and substance to the City in its reasonable discretion. B. United Builders of Washington shall have all applicable and necessary permits, licenses and approvals of any federal, state, and local government or governmental authority. The City shall not unreasonably withhold its approval of any necessary permit, license or other approval necessary for the project described in this Agreement. C. If United Builders of Washington, or an entity constituting part of United Builders of Washington, is a corporation, there shall be delivered to the City (with respect to each such corporation, if there be more than one) a certified copy of the record(s) of minutes and Board Resolution of the Board of Directors of each such corporation specifically authorizing its officers to execute this Agreement and all other documents necessary for the consummation of this transaction. The record(s) of the minutes and Resolution of the Board of Directors meeting shall be certified to be true by the Secretary or Assistant Secretary of such corporation(s). Page 2 of 9 D. United Builders of Washington shall have provided to The City a copy of an appraisal prepared by a real estate appraiser licensed by the State of Washington indicating a fair market value of the real property legally described on Exhibit "A" attached hereto (the "Collateral") of not less than One Million Dollars which valuation date is not more than six months old. E. United Builders of Washington shall have provided to The City a first position lien against the Collateral evidenced by a fully executed Deed of Trust. F. The loan shall be further secured by the personal Guaranties signed by J. Patrick Strosahl and Stephen L. Strosahl, with each jointly and severally guaranteeing the full repayment of the loan. 6. Maintenance and Inspection of Records. United Builders of Washington shall maintain standard business and accounting records, any other records required herein, and any other records required by the City in writing. Such records shall be available for inspection by City representatives, at the City's expense, at reasonable times during the term of this Agreement and for a period of three (3) years following termination of this Agreement. In the event that any audit or inspection identifies any discrepancy, United Builders of Washington shall provide the City with appropriate clarification and/or financial adjustments within thirty (30) calendar days of notification of the discrepancy by the City. 7. No City Funds. It is expressly understood that, except for CDBG Entitlement Grant funds, this Agreement shall in no way obligate any funds or resources of the City. 8. No Third Party Benefit. The City shall not be obligated or liable under this Agreement for provision of any goods or services or for payment of any monies to any party other than United Builders of Washington. 9. Disallowed Loan Advances. Should any loan advance made by the City to United Builders of Washington be subsequently disallowed or disapproved as a result of any auditing or monitoring by the City, HUD, or any other federal agency, United Builders of Washington shall repay such amount to the City within ten (10) working days of receipt of written notice specifying the amount disallowed. Repayment of disallowed loan advances may not be made from any CDBG, HUD, or other federal funds received from or through the City. 10. Annual Financial Report. During the term of this Agreement, United Builders of Washington shall submit a written financial report reviewed by a certified public accountant duly licensed by the State of Washington to the City within twenty (20) days after the end of its fiscal year that demonstrates United Builders of Washington' maintenance of a net worth sufficient to repayment the Loan. Page 3 of 9 11. Compliance with Law. United Builders of Washington must comply with any and all applicable laws, rules, and regulations promulgated by any federal, state, and/or local governmental agency or regulatory body. Laws that may apply to this Agreement include without limitation: • Title VI of the Civil Rights Act of 1964 (42 USC 200(d)); • Title VIII of the Civil Rights Act of 1968 (42 USC 3601); • Section 3 of the Housing and Urban Development Act of 1968, as amended (12 USC 1701(u)); • Section 109 of the Housing and Urban Development Act of 1974, as amended (42 USC 5309); • Age Discrimination Act of 1975, as amended (42 USC 6101); • Americans with Disabilities Act of 1990; • Civil Rights Restoration Act of 1987; • 49 CFR Part 21; • 24 CFR Part 570; • RCW 49.60; • Davis -Bacon Fair Labor Standards Act (40 US27600000a-276a-5); • Grant Agreement Work Hours and Safety Standards Act, as amended (40 USC 327-333); • Section 504 of the Rehabilitation Act of 1973 (29 USC 794); • Architectural Barriers Act of 1968, as amended (42 USC 4151); • Section 504 of the Rehabilitation Act of 1973, as amended (29 USC 792); • Equal Employment Opportunity (Executive Order 11246, September 24, 1965); • Equal Opportunity in Housing (Executive Order 11063, as amended by Executive Order 12259); • The Hatch Act (5 USC 1501 et seq.); • The National Environmental Policy Act of 1969; • Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 and Amendments of 1987; • Title IV of the Lead -Based Paint Poisoning Prevention Act (42 USC 4831); • HUD Reform Act; • Office of Management and Budget Circulars; • A -87 --Cost Principles for State and Local Governments and 24 CFR Part 85, Administrative Requirements for Grants and Cooperative Agreements to State, Local and Federally Recognized Indian Tribal Governments; • A-128—Single Audit Act. 12. Status of United Builders of Washington. United Builders of Washington and the City understand and expressly agree that United Builders of Washington is an independent contractor in the performance of each and every part of this Agreement. United Builders of Washington, as an independent contractor, assumes the entire responsibility for carrying out and accomplishing the terms and conditions of this Agreement on its part to be performed. Additionally, and as an independent contractor, United Builders of Washington, its agents, employees, Page 4 of 9 and/or representatives shall make no claim of City employment nor shall claim against the City any related employment benefits, social security, and/or retirement benefits. Nothing contained herein shall be interpreted as creating a relationship of servant, employee, partnership or agency between United Builders of Washington and the City. 13. Representations and Warranties. 13.1 United Builders of Washington represents and warrants that: A. All information, reports and data furnished to the City are complete and accurate. B. The financial statement dated October 31, 2008 furnished to the City fairly reflects the financial condition of United Builders of Washington and there has been no material change in the financial condition of United Builders of Washington since the date of said financial statement. C. United Builders of Washington is current on all tax reports and returns required to be filed with all Washington State and United -States of America governmental agencies and has paid all taxes assessable under those tax returns and reports. D. United Builders of Washington has obtained and is in good standing with regard to all necessary city, county, state and federal business certificates, licenses and permits. E. United Builders of Washington has obtained and fully paid all premiums for all commercially reasonable liability insurance relating to the conduct of its business for the next year. F. No provision of this Agreement contravenes or conflicts with the authority under which United Builders of Washington is doing business or with the provisions of any existing indenture or agreement of United Builders of Washington. G. United Builders of Washington possesses the legal authority to enter into this Agreement and accept payments hereunder and has taken all necessary action to authorize such acceptance. H. This Agreement will not violate any provision of law or result in any breach or constitute a default under any agreement to which United Builders of Washington is presently a party, or result in the creation of any lien, charge or encumbrance upon any of its property or its assets other than as specifically may be allowed under this Agreement. 13.2 J. Patrick Strosahl represents and warrants that his personal and marital community financial statement dated March 13, 2009 furnished to the' City fairly reflects the financial condition of his marital community and Page 5 of 9 there has been no material change in the financial condition of his marital community since the date of said financial statement. 13.3 Stephen R. Strosahl represents and warrants that his personal and marital community financial statement dated November 25, 2008 furnished to the City fairly reflects the financial condition of his marital community and there has been no material change in the financial condition of his marital community since the date of said financial statement. 14. No Insurance. It is understood the City does not maintain liability insurance for United Builders of Washington and/or its employees, agents, officers, and subcontractors. 15. Liability Insurance. A. On or before the effective date of this Agreement, United Builders of Washington shall provide the City with a certificate of insurance as proof of commercial liability insurance with a minimum liability limit of Two Million Dollars ($2,000,000.00) per occurrence combined single limit bodily injury and property damage, and Four Million Dollars ($4,000,000.00) general aggregate. The certificate shall clearly state who the provider is, the coverage amount, the policy number, and when the policy and provisions provided are in effect. Said policy shall be in effect for the duration of this Agreement. The policy shall name the City, its elected officials, officers, agents and employees as additional insureds and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City thirty (30) calendar days' prior written notice. The insurance shall be with an insurance company rated A -VII or higher in Best's Guide and admitted in the State of Washington. 16. Indemnification and Hold Harmless. United Builders of Washington agrees to protect, defend, indemnify, and hold harmless the City, its elected officials, officers, employees and agents from any and all claims, demands, losses, liens, liabilities, penalties, fines, lawsuits, and other proceedings and all judgments, awards, costs and expenses (including reasonable attorneys' fees and disbursements) to the extent arising out of, relating to, or resulting from United Builders of Washington' performance and/or nonperformance related to this Agreement. In the event that both United Builders of Washington and the City are negligent, United Builders of Washington' liability for indemnification of the City shall be limited to the contributory negligence for any resulting suits, actions, claims, liability, damages, judgments, costs and expenses (including reasonable attorney's fees) that can be apportioned to United Builders of Washington, its officers, employees, agents, and/or subcontractors. Page 6 of 9 Nothing contained in this section of this Agreement shall be construed to create a liability or a right of indemnification in any third party. This section of the Agreement shall survive the term or expiration of this Agreement and shall be binding on the parties to this Agreement. 17. Limitation of Liability. Neither party will be liable to the other party with respect to any subject matter of this Agreement for any indirect, incidental, consequential, special, or exemplary damages (including, without limitation, loss of revenue or goodwill or anticipated profits or lost business), even if such party have been advised of the possibility of such damages. 18. Assignment. United Builders of Washington' rights and duties under this Agreement, or any interest herein, or claim hereunder, shall not be assigned or transferred in whole or in part by United Builders of Washington to any other person or entity without the prior written consent of the City which shall not be unreasonably withheld. In the event that such prior written consent to an assignment is granted, then. the assignee shall assume all duties, obligations, and liabilities of United Builders of Washington stated herein. 19. Termination. This Agreement may be terminated as follows: A. In the event that the funding contemplated herein is no longer available, United Builders of Washington may terminate this Agreement upon ten (10) calendar days written notice to the City. 20. Conflict of Interest. United Builders of Washington represents that it, its members, officers, employees, and/or agents do not have any interest, direct or indirect, and shall not hereafter acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of this Agreement. United Builders of Washington further covenants that it will not knowingly hire anyone or any entity having such a conflict of interest during the performance of this Agreement. 21. Non Waiver. The waiver of either the City or United Builders of Washington of the breach of any provision of this Agreement by the other party shall not operate and/or be construed as a waiver of any subsequent breach by either party or prevent either party from enforcing such provision or the remaining terms of this Agreement. 22. Survival. Any provision of this Agreement that imposes an obligation after termination or expiration of this Agreement shall survive the term or expiration of this Agreement and shall be binding on the parties to this Agreement. 23. Severability. It is understood and agreed by the parties hereto that if any part, term, or provision of this Agreement is held by the courts to be illegal, the validity of the remaining provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular provision held to be invalid. If it should appear that any provision hereof is in conflict with any statutory and/or regulatory provision of the United States or Page 7 of 9 the State of Washington, said provision which may conflict therewith shall be deemed modified to conform to such statutory and/or regulatory provision. 24. Integration and Modification. This Agreement sets forth all of the terms, conditions, and agreements of the parties relative to the subject matter hereof and supersedes any and all such former agreements which are hereby declared terminated and of no further force and effect upon the execution and delivery hereof. There are no terms, conditions, or agreements with respect thereto, except as herein provided and no amendment or modification of this Agreement shall be effective unless reduced to writing and executed by the parties. 25. Notices. Unless stated otherwise herein, all notices and demands shall be in writing and sent to the parties to their addresses as follows: TO CITY: City of Yakima Office of Neighborhood Development Services Attn: Archie Mathews City Hall—Second. Floor 129 North Second Street Yakima, WA 98901 TO UNITED BUILDERS OF WASHINGTON: United Builders of Washington, Inc. P.O. Box 9488 Yakima, Washington 98907 Attn: J. Patrick Strosahl TO J. PATRICK STROSAHL: P.O. Box 9488 Yakima, Washington 98907 TO STEPHEN R. STROSAHL: P.O. Box 9488 Yakima, Washington 98907 or to such other addresses as the parties may hereafter designate in writing. Notices and/or demands shall be sent by registered or certified mail, postage prepaid, or hand delivered. Such notices shall be deemed effective when mailed or hand delivered at the addresses specified above. 26. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. 27. Venue. The venue for any action to enforce or interpret this Agreement shall lie in the Superior Court of Washington for Yakima County, Washington. Page 8 of 9 28. Authority. The person executing this Agreement on behalf of United Builders of Washington represents and warrants that he or she has been fully authorized by United Builders of Washington to execute this Agreement on its behalf and to legally bind United Builders of Washington to all the terms, performances and provisions of this Agreement: The person executing this Agreement on behalf of the City represents and warrants that he or she has been fully authorized by the City to execute this Agreement on its behalf and to legally bind the City to all the terms, performances and provisions of this Agreement. EXECUTED by the City of Yakima EXECUTED by United Builders of Washin�� , Inc. this Ai "Clay of / ri ( , 2009. this 32'x' day of 2009. CITY OF YAKIMA „ATZilif,P UNITED BUILDERS OF WASHINGTON, INC. By: Title: /17&511.0 J. atrick trosahl Stephen . Strosahl Date: i( (� 07 , 2009 Date: 2.Q_ , 2009 ATTEST: Deborah Moore, City Clerk City Contract No. 2009-14 Resolution No. R -A0 O 9-i X:\CI?Y OF YAKIMA-20009\ONUS - United Builders COBG Loan -2009081 \Loan Documenis\L.oan Agt (04 1409).DOC Page 9 of 9 Exhibit A SUBJECT PROPERTY: The term "Subject Property" means and refers to the property located at 101 N. Naches Avenue, Yakima, WA 98902, commonly referred to as "The Seasons Building," "Seasons Performance Hall" and Yakima County Parcel No. 191319-21482, which is legally described as follows: Lots 15 and 16 Block, 109, Town of North Yakima, now Yakima, recorded in Volume "A" of Plats, page 10, re-recorded in Volume "E" of Plats, page 1, records of Yakima County, Washington Situated in Yakima County, Washington. PROMISSORY NOTE $200,000.00 April 12, 2009 Yakima, Washington 1. Promise to Pay. UNITED BUILDERS OF WASHINGTON, INC., a Washington corporation (referred to as "Maker" herein), hereby promises to pay to the order of THE CITY OF YAKIMA OFFICE OF NEIGHBORHOOD DEVELOPMENT SERVICES, ("Holder" herein), at Yakima, Washington or at such other place as the Holder may designate in writing, in lawful money of the United States of America, the principal sum of TWO HUNDRED THOUSAND ($200,000.00), with interest on the principal from the date of each advance, on the terms and conditions set forth herein. The loan funds shall be delivered to Maker upon execution of loan documents and adherence to terms and conditions. 2. Interest Rate. The rate of interest assessed from the date hereof upon the unpaid principal balance and any fees, expenses and charges chargeable under the terms of this Note shall be equal to four percent (4.0%) per annum. 3. Payment. Maker shall make full and final payment of all unpaid principal, interest, and any accrued fees, costs and charges to Holder on the second annual anniversary date of the Note Date stated above. 4. Prepayment. Maker shall have the right to prepay this Note in full or in part at any time without the prior approval of Holder. 5. Application of Payments. Payments made hereunder may be applied in any order to payments of costs, interest or principal due hereunder, at the option of the Holder. 6. Acceleration; Cross -Default; Default Interest Rate. This Note shall be in default if payment of any installment is not made when due or a default occur under any instrument evidencing, securing or relating to any other indebtedness of Maker to the Holder (whether direct or indirect), and such default continues after any notice from the Holder to Maker and the expiration of any period granted to Maker for curing such default as provided for in any such instrument. In the event of such default, the whole sum of principal and accrued interest hereunder shall, at the option of the Holder, become immediately due and payable, anything herein or any instrument securing this Note to the contrary notwithstanding, time being of the essence. As long as this Note is in default, then, at the option of the Holder, AFTER notice, this Note shall bear interest at a rate which is three and one-half (3.5) percentage points per annum above the Interest Rate. 7. Late Payment Charge - Curing of Monetary Defaults. If any payment is not delivered to Holder within five days after the payment due date, then a late payment fee of five percent (5.0%) of the payment due will be charged and immediately payable. A default in payment of any amount due hereunder may be cured only by payment in full of such amount Promissory Note Page -1- plus the applicable fees and charges, plus any attorneys' fees incurred by the Holder by reason of such default. 8. Nonwaiver. Failure to exercise any right the Holder may have or be entitled to in the event of any default hereunder shall not constitute a waiver of such nght or any other right in the event of any subsequent default. 9. Waiver of Presentment. The Maker and all guarantors and endorsers hereof hereby severally waive presentment for payment, protest and demand, notice of protest, demand, dishonor and nonpayment of this Note; and consent that the Holder may extend the time of payment or otherwise modify the terms of payment of any part of the whole of the debt evidenced by this Note. Each and every party signing or endorsing this Note binds itself as a principal and not as a surety. In any action or proceeding to recover any sum herein provided for, no defense of adequacy of security or that resort must first be had to security or to any other person shall be asserted. This Note shall bind the undersigned and its or their successors and assigns, jointly and severally. 10. Security of Note. To secure full payment and performance of Maker hereunder, Maker has granted a first lien against Maker's real property commonly known as 101 North Naches Avenue in Yakima, Washington and Yakima County Tax Parcel Number 191319-21482. 11. Collection Costs. Maker agrees to pay all costs, including reasonable attorneys' fees, incurred by the Holder in any suit, action or appeal therefrom, or without suit, in connection with collection hereof or enforcement of Holder's rights under the other documents executed m connection with the loan evidenced hereby. 12. Maximum Interest. Neither this Note nor any instrument securing payment hereof or otherwise relating to the debt evidenced hereby shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law. If this Note or any other instrument does so provide, the provisions of this paragraph shall govern, and neither Maker nor any guarantors or endorsers of this Note nor their respective heirs, personal representatives, successors or assigns shall be obligated to pay the amount of interest in excess of the amount permitted by applicable law. 13. Business Purpose. The undersigned warrants and represents that all funds advanced under this Note shall be applied and are intended substantially for business or commercial purposes. 14. Notice. Any demand or notice to be made or given under the terms hereof or any instrument now or hereafter securing this Note by the Holder to Maker shall be effective when mailed to the following addresses: United Builders of Washington, Inc. c/o J. Patrick Strosahl P.O. Box 9488 Yakima, Washington 98907 Promissory Note Page -2- City of Yakima, Office of Neighborhood Development Services c/o Archie Mathews City Hall—Second Floor 129 North Second Street Yakima, WA 98901 United Builders of Washington, Inc. By: Title: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. X\CITY OF YAKIMA-20009\ONDS - United Builders COBG Loan-2009081\Loan Documents\Promissory Note • Business.doc Promissory Note Page -3- UNCONDITIONAL GUARANTY PARTIES: City: The City of Yakima, a Washington municipal corporation through the Office of Neighborhood Development Services. Obligor: United Builders of Washington, a Washington corporation. Guarantor: J. Patrick Strosahl, a married person. RECITALS: Concurrent with this Guaranty, City and Obligor have entered into a Loan Agreement ("Agreement") and Promissory Note. Pursuant to the terms of the Agreement, Obligor is accepting a loan in the amount of Two Hundred Thousand Dollars ($200,000.00) from the City. The undersigned has agreed to enter into this Unconditional Guaranty of all Obligor's obligations under the Agreement. AGREEMENT: As an inducement and in consideration of any and all contemporaneous or future financial accommodations by City to Obligor, the undersigned Guarantor unconditionally guarantees the prompt payment when due and at all times thereafter of the Loan, including any and all existing, contemporaneously incurred and future indebtedness and liability of every kind arising therefrom (including all extensions, renewals, and modifications thereof), absolute or contingent, however created or evidenced, owing from Obligor to City plus such interest as may accrue thereon. City may grant credit to Obligor from time to time without further authorization of or notice to Guarantor. Guarantor agrees to pay City all expenses of every kind including, without limitation, any and all fees and expenses incurred by it on account of the services of any attorney employed or retained by it, including in-house counsel, in protecting or defending City's interest and in attempting to collect all or any part of such indebtedness and in enforcing this guaranty, with or without suit. Every immediate and successive assignee of any part of such indebtedness guaranteed hereby shall have the right to enforce all agreements and obligations contained in this guaranty for its own benefit as fully as if named herein, but City shall nevertheless have the right to enforce this Guaranty Page 1 guaranty for its own benefit as to so much of the liability guaranteed as has not been assigned. Guarantor waives notice of (a) the acceptance of this guaranty; (b) any and all indebtedness of any kind covered by the guaranty; and (c) any and all demands, nonpayments or other defaults in respect of such indebtedness. If more than one person or legal entity signs this Unconditional Guaranty, all references to "Guarantor" herein shall bind each of the undersigned jointly and severally. The liability of Guarantor under this guaranty shall be continuing and shall remain in full force and effect as long as Obligor is or may be indebted to City on account of any indebtedness covered by the guaranty. It shall not be affected in any way by (and the City is hereby expressly authorized to make without notice to anyone) any sale, pledge, surrender, compromise, release, acceleration, discharge, renewal, extension, substitution, exchange, or modification of any kind whatsoever of all or any part of the indebtedness covered by the guaranty, or of all or any part of the security or collateral given to secure such indebtedness, including the release or addition of other guarantors. In addition, such liability of Guarantor shall not be affected in any way by the failure or invalidity of or any defect in any security or collateral given to secure such indebtedness. No exercise or non -exercise, waiver, change, impairment, or suspension by City of any right or remedy given it by this Unconditional Guaranty or by Obligor and no dealings by City with Obligor or any other person shall in any way affect any of the obligations of Guarantor hereunder or any security furnished by Guarantor, now or hereafter, or give Guarantor any recourse against City. The obligations of Guarantor to City hereunder are independent of Obligor's obligations and a separate action or actions may be brought and prosecuted by City against Guarantor, whether or not such action or actions are also brought against Obligor, other guarantors or any security granted to City. Guarantor waives and agrees not to assert or otherwise take advantage of (a) any right which it may have to require City to proceed against Obligor or any other person, firm or corporation or to proceed against or exhaust any security held by it at any time or to pursue any other remedy in its power; (b) any defense which it may have in the nature of statute of limitations in any action hereunder or for the collection of any indebtedness or the performance of any obligation guaranteed hereby; (c) any defense which it may have by reason of incapacity, lack of authority, or lack of shareholder or other approvals relating either to Obligor or Guarantor or the failure of City to file or enforce a claim against the estate (either in administration, bankruptcy, or other proceeding) of Obligor or of any other or others; (d) any lack of demand, protest and notice of any kind including, without limitation, notice of the existence, creation or incurring of new or additional indebtedness or of any action or non -action on the part of Guaranty Page 2 Obligor, City, any endorser, creditor of Obligor or Guarantor under this or any other agreement, or any person whomsoever, in connection with any obligation or evidence of indebtedness held by City as collateral or in connection with any indebtedness guaranteed hereby; (e) any defense which is may have based upon an election of remedies by City; and (f) any duty which City may have to disclose to Guarantor any facts which it may now or hereafter know about Obligor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Obligor and of all circumstances bearing on the risk of non- payment of any indebtedness guaranteed hereby. Until all indebtedness of Obligor to City is paid in full, Guarantor shall have no right of subrogation and waives any right which it may otherwise have to enforce any remedy whatsoever which City may have against Obligor and any benefit of or right to participate in realization or any security now or hereafter granted to City. With or without notice to Guarantor, City may, in its sole discretion and at any time and from time to time and in such manner and upon such terms as it considers fit, apply any or all payments or recoveries from Obligor, Guarantor, any other guarantor or source, or from any security granted to City, under this or any other agreement, in such manner and order or priority as City may determine, to any indebtedness of Obligor to City, whether or not such indebtedness is guaranteed hereby or is otherwise secured or is due at the time of such application. For consideration as recited above, Guarantor subordinates any and all indebtedness of Obligor to Guarantor to any and all indebtedness of Obligor to City. If City so requests, any such indebtedness of Obligor to Guarantor shall be collected and received by Guarantor as trustee for City and paid to City on account of Obligor's indebtedness to it, without reducing or affecting Guarantor's liability under any of the provisions of this guaranty. This guaranty is in addition to and independent of any other guaranties at any time in effect with respect to all or any part of Obligor's indebtedness to City and may be enforced regardless of the existence of any such other guaranties which shall continue to remain in full force and effect. No provision of this guaranty or any right or remedy of City hereunder can be waived, nor can Guarantor be released from its obligations hereunder except in writing duly executed by an authorized officer of City. Should any one or more provisions of this guaranty be determined to be illegal or unenforceable, all other provisions shall nevertheless be effective. This guaranty shall be construed and performed according to the laws of the State of Washington. Guarantor irrevocably submits to the jurisdiction of any state or federal Guaranty Page .3 court sitting in Yakima County, Washington, in any action or proceeding brought to enforce or otherwise arising out of or relating to this guaranty and irrevocably waives to the fullest extent permitted by law any objection which it may have now or hereafter to venue or any claim that such forum is an inconvenient forum. EXECUTED this ZZ day of ' , 2009. Patrick Strosahl CONSENT OF SPOUSE The undersigned, being the spouse of the J. PATRICK STROSAHL, and hereby acknowledges and consents to the personal guaranty set forth above as to any community property interest in which J. PATRICK STROSAHL and I now have or acquire in the future. Dated this -e202-clay of , 2009. : . UDI H . STROSAHL K\CITY OF YAKIMA-20009\ONDS - United Builders COBG Loan-2009081\Loan Documents \Guaranty - Pat Strosahl (040909)doc Guaranty Page 4 UNCONDITIONAL GUARANTY PARTIES: City: The City of Yakima, a Washington municipal corporation through the Office of Neighborhood Development Services. Obligor: United Builders of Washington, a Washington corporation. Guarantor: Stephen R. Strosahl, a married person. RECITALS: Concurrent with this Guaranty, City and Obligor have entered into a Loan Agreement ("Agreement") and Promissory Note. Pursuant to the terms of the Agreement, Obligor is accepting a loan in the amount of Two Hundred Thousand Dollars ($200,000.00) from the City. The undersigned has agreed to enter into this Unconditional Guaranty of all Obligor's obligations under the Agreement. AGREEMENT: As an inducement and in consideration of any and all contemporaneous or future financial accommodations by City to Obligor, the undersigned Guarantor unconditionally guarantees the prompt payment when due and at all times thereafter of the Loan, including any and all existing, contemporaneously incurred and future indebtedness and liability of every kind arising therefrom (including all extensions, renewals, and modifications thereof), absolute or contingent, however created or evidenced, owing from Obligor to City plus such interest as may accrue thereon. City may grant credit to Obligor from time to time without further authorization of or notice to Guarantor. Guarantor agrees to pay City all expenses of every kind including, without limitation, any and all fees and expenses incurred by it on account of the services of any attorney employed or retained by it, including in-house counsel, in protecting or defending City's interest and in attempting to collect all or any part of such indebtedness and in enforcing this guaranty, with or without suit. Every immediate and successive assignee of any part of such indebtedness guaranteed hereby shall have the right to enforce all agreements and obligations contained in this guaranty for its own benefit as fully as if named herein, but City shall nevertheless have the right to enforce this Guaranty Page 1 guaranty for its own benefit as to so much of the liability guaranteed as has not been assigned. Guarantor waives notice of (a) the acceptance of this guaranty; (b) any and all indebtedness of any kind covered by the guaranty; and (c) any and all demands, nonpayments or other defaults in respect of such indebtedness. If more than one person or legal entity signs this Unconditional Guaranty, all references to "Guarantor" herein shall bind each of the undersigned jointly and severally. The liability of Guarantor under this guaranty shall be continuing and shall remain in full force and effect as long as Obligor is or may be indebted to City on account of any indebtedness covered by the guaranty. It shall not be affected in any way by (and the City is hereby expressly authorized to make without notice to anyone) any sale, pledge, surrender, compromise, release, acceleration, discharge, renewal, extension, substitution, exchange, or modification of any kind whatsoever of all or any part of the indebtedness covered by the guaranty, or of all or any part of the security or collateral given to secure such indebtedness, including the release or addition of other guarantors. In addition, such liability of Guarantor shall not be affected in any way by the failure or invalidity of or any defect in any security or collateral given to secure such indebtedness. No exercise or non -exercise, waiver, change, impairment, or suspension by City of any right or remedy given it by this Unconditional Guaranty or by Obligor and no dealings by City with Obligor or any other person shall in any way affect any of the obligations of Guarantor hereunder or any security furnished by Guarantor, now or hereafter, or give Guarantor any recourse against City. The obligations of Guarantor to City hereunder are independent of Obligor's obligations and a separate action or actions may be brought and prosecuted by City against Guarantor, whether or not such action or actions are also brought against Obligor, other guarantors or any security granted to City. Guarantor waives and agrees not to assert or otherwise take advantage of (a) any right which it may have to require City to proceed against Obligor or any other person, firm or corporation or to proceed against or exhaust any security held by it at any time or to pursue any other remedy in its power; (b) any defense which it may have in the nature of statute of limitations in any action hereunder or for the collection of any indebtedness or the performance of any obligation guaranteed hereby; (c) any defense which it may have by reason of incapacity, lack of authority, or lack of shareholder or other approvals relating either to Obligor or Guarantor or the failure of City to file or enforce a claim against the estate (either in administration, bankruptcy, or other proceeding) of Obligor or of any other or others; (d) any lack of demand, protest and notice of any kind including, without limitation, notice of the existence, creation or incurring of new or additional indebtedness or of any action or non -action on the part of Guaranty Page 2 Obligor, City, any endorser, creditor of Obligor or Guarantor under this or any other agreement, or any person whomsoever, in connection with any obligation or evidence of indebtedness held by City as collateral or in connection with any indebtedness guaranteed hereby; (e) any defense which is may have based upon an election of remedies by City; and (f) any duty which City may have to disclose to Guarantor any facts which it may now or hereafter know about Obligor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Obligor and of all circumstances bearing on the risk of non- payment of any indebtedness guaranteed hereby. Until all indebtedness of Obligor to City is paid in full, Guarantor shall have no right of subrogation and waives any right which it may otherwise have to enforce any remedy whatsoever which City may have against Obligor and any benefit of or right to participate in realization or any security now or hereafter granted to City. With or without notice to Guarantor, City may, in its sole discretion and at any time and from time to time and in such manner and upon such terms as it considers fit, apply any orall-paymentsor recoveries from Obligor, Guarantor, any other guarantor or source, or from any security granted to City, under this or any other agreement, in such manner and order or priority as City may determine, to any indebtedness of Obligor to City, whether or not such indebtedness is guaranteed hereby or is otherwise secured or is due at the time of such application. For consideration as recited above, Guarantor subordinates any and all indebtedness of Obligor to Guarantor to any and all indebtedness of Obligor to City. If City so requests, any such indebtedness of Obligor to Guarantor shall be collected and received by Guarantor as trustee for City and paid to City on account of Obligor's indebtedness to it, without reducing or affecting Guarantor's liability under any of the provisions of this guaranty. This guaranty is in addition to and independent of any other guaranties at any time in effect with respect to all or any part of Obligor's indebtedness to City and may be enforced regardless of the existence of any such other guaranties which shall continue to remain in full force and effect. No provision of this guaranty or any right or remedy of City hereunder can be waived, nor can Guarantor be released from its obligations hereunder except in writing duly executed by an authorized officer of City. Should any one or more provisions of this guaranty be determined to be illegal or unenforceable, all other provisions shall nevertheless be effective. This guaranty shall be construed and performed according to the laws of the State of Washington. Guarantor irrevocably submits to the jurisdiction of any state or federal Guaranty Page 3 court sitting in Yakima County, Washington, in any action or proceeding brought to enforce or otherwise arising out of or relating to this guaranty and irrevocably waives to the fullest extent permitted by law any objection which it may have now or hereafter to venue or any claim that such forum is an inconvenient forum. EXECUTED this29% day of , 2009. L Stephen R. Strosahl CONSENT OF SPOUSE The undersigned, being the spouse of the STEPHEN R. STROSAHL, and hereby acknowledges and consents to the personal guaranty set forth above as to any community property interest in which STEPHEN R. STROSAHL and I now have or acquire in the future. Dated this 3 day of 4 , 2009. A.L a4Adke GEANETTE L. STROSAHL R.\CITY OF YAK MA-20009\ONDS • United Builders COBG Loan•2009081\Loan Documents \Guaranty • Steve Strosahl (040909).doc Guaranty Page 4 Attachment B Return Address: Donald A. Boyd Carlson, Boyd & Bailey, PLLC 230 South 2nd Street, Suite 202 Yakima, WA 98901 1111111 11111 11111 IJII I1II 11111 IIIU 1111 1 DEED OF TRUST -.1K.) Grantor(s): 1. UNITED BUILDERS OF WASHINGTON, INC. FILE# 7650327 YAKIMA COUNTY, WA 04/24/2009 12:54:18PN DEED OF TRUST PAGES: 6 FIDELITY TITLE COMPANY Recording Fee: 48.00 Grantee(s): 1. THE CITY OF YAKIMA OFFICE OF NEIGHBORHOOD DEVELOPMENT SERVICES Legal Description: 1. LOTS 15 and16, BLK 109, TOWN OF NORTH YAKIMA, now Yakima. Assessor's Property Tax Parcel Number(s): 191319-21482 DEED OF TRUST (For Use in the State of Washington Only) THIS DEED OF TRUST, made this 22/r9iiay of April, 2009, between UNITED BUILDERS OF WASHINGTON, INC., a Washington corporation, GRANTOR, whose address is P.O. Box 9488, Yakima, Washington 98907; FIDELITY TITLE COMPANY, a Washington Corporation, TRUSTEE, whose address is 117 North 4th Street, Yakima, Washington 98901; and THE CITY OF YAKIMA OFFICE OF NEIGHBORHOOD DEVELOPMENT SERVICES, BENEFICIARY, whose address is City Hall—Second Floor, 129 North Second Street, Yakima, WA 98901. WITNESSETH: GRANTORS hereby bargain, sell and convey to TRUSTEE in Trust, with power of sale, the following described real property in Yakima County, Washington: Lots 15 and 16, Block 109, TOWN OF NORTH YAKIMA, now Yakima. 1 which real property is not used principally for agricultural or farming purposes, together with all the tenements, hereditaments, and appurtenances now or hereafter thereunto belonging or in any wise appertaining, and the rents, issues and profits thereof. This deed is for the purpose of securing performance of each agreement between GRANTOR and BENEFICIARY, and to secure all obligations and indebtedness owed by Grantor to the Beneficiary either owing as of the date of this Deed of Trust or owed at any time prior to the reconveyance of this Deed of Trust, including, but not limited to any and all obligations of Grantor arising from or evidenced by in accordance with the terms of a Promissory Note in the original principal balance of Two Hundred Thousand Dollars of even date herewith, payable to BENEFICIARY or order, and made by GRANTORS, and all renewals, modifications and extensions thereof, and also such further sums as may be advanced or loaned by BENEFICIARY to GRANTORS, or any of their successors or assigns, together with interest thereon at such rate as shall be agreed upon. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, GRANTORS COVENANT AND AGREE: 1. To keep the property in good condition and repair; to permit no waste thereof; to complete any building, structure or improvement being built or about to be built thereon; to restore promptly any building, structure or improvement thereon which may be damaged or destroyed; and to comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the property. 2. To pay before delinquent all lawful taxes and assessments upon the property; to keep the property fee and clear of all other charges, liens or encumbrances impairing the security of this Deed of Trust. 3. To keep all buildings now or hereafter erected on the property described herein continuously insured against loss by fire or other hazards in an amount not less than the total debt secured by this Deed of Trust. All policies shall be held by the Beneficiary, and be in such companies as the Beneficiary may approve and have loss payable first to the Beneficiary, as its interest may appear, and then to the Grantor. The amount collected under any insurance policy may be applied upon any indebted- ness hereby secured in such order as the Beneficiary shall determine Such application by the Beneficiary shall not cause discontinuance of any proceedings to foreclose this Deed of Trust. In the event of foreclosure, all rights of the Grantor in insurance policies then in force shall pass to the purchaser at the foreclosure sale. 4. If all or any part of the property securing this Deed of Trust and the Promissory Note above referred to, or any interest therein is sold, transferred, leased or any other interest therein is created by GRANTORS without BENEFICIARY'S prior written consent; BENEFICIARY may, at their sole, unrestricted option, declare all 2 sums due hereunder and secured hereby immediately due and payable. Consent once given by BENEFICIARY shall not be deemed a waiver to any future consent. The parties recognize that strict enforcement of this provision is necessary for the protec- tion of the BENEFICIARY. 5. GRANTORS shall not dispose of or otherwise allow the release of any hazardous substance, waste or materials in, on or under the premises, or any adjacent property, or in any improvements placed on the premises, and GRANTORS represent and warrant that GRANTORS' intended use of the premises does not involve the use, production, disposal or bringing onto the premises of any hazardous substance, waste or materials. As used herein, the term "hazardous substance, waste or materials" includes any substance, waste or material defined or designated as hazardous, toxic or dangerous (or any similar such term) by any federal, state or local statute, regulation, rule or ordinance now or hereafter in effect, including, but not limited to, Federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and the Washington Model Toxics Control Act, RCW Chapter 70.105D. GRANTORS shall promptly comply with all statutes, regulations and ordinances, and with all orders, decrees or judgments of governmental authorities or courts having jurisdiction, relating to the use, collection, treatment, disposal, storage, control, removal or clean up of hazardous substances, waste or materials in, on or under the premises, or any adjacent property, or any improvements thereon, at GRANTORS' sole expense. GRANTORS agree to indemnify, defend and hold harmless BENEFICIARY and TRUSTEE against any and all losses, liabilities, suits, obligations, fines, damages, judgments, penalties, claims, charges, clean up costs, remedial action, costs and expenses (including, without limitation, attorney fees and disbursements) which may be imposed on, incurred or paid by, or asserted against BENEFICIARY and/or TRUSTEE in connection with all of those matters referred to or related to the provisions, representations and/or warranties of this provision. 6. GRANTORS must obtain and shall have the pre -approval and consent of BENEFICIARY at the time of any development and/or usage plan, improvements, tenancies, and/or financing arrangements for any improvements to the above-described premises. 7. To defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of title search and attorney's fees in a reasonable amount, in any such action or proceedings, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 8. To pay all costs, fees and expenses in connection with this Deed of Trust, including the expenses of the Trustee incurred in enforcing the obligation secured hereby and Trustee's and attorney's fees actually incurred, as provided by statute. 3 9. Should Grantors fail to pay when due any taxes, assessments, insurance premiums, liens, encumbrances or other charges against the property hereinabove described, Beneficiary may pay the same, and the amount so paid, with interest at the rate set forth in the Note secured hereby, shall be added to and become a part of the debt secured in this Deed of Trust. 10. To not engage in any illegal activity and to not allow any illegal activity to occur on the subject property. IT IS MUTUALLY AGREED THAT: 1. In the event any portion of the property is taken or damaged in an eminent domain proceeding, the entire amount of the award or such portion as may be necessary to fully satisfy the obligation secured hereby, shall be paid to Beneficiary to be applied to said obligation. 2. By accepting payment of any sumsecured hereby after its due date, Beneficiary does not waive its right to require prompt payment when due of all other sums so secured or to declare default for failure to so pay. 3. The Trustee shall reconvey all or any part of the property covered by this Deed of Trust to the person entitled thereto, on written request of the Grantor and the Beneficiary, or upon satisfaction of the obligation secured and written request for reconveyance made by the Beneficiary or the person entitled thereto. 4. Upon default by Grantor in the payment of any indebtedness secured hereby or in the performance of any agreement contained herein, all sums secured hereby shall immediately become due and payable at the option of the Beneficiary. In such event and upon written request of Beneficiary, Trustee shall sell the trust property, in accordance with the Deed of Trust Act of the State of Washington, at public auction to the highest bidder. Any person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of the sale as follows: (1) to the expense of the sale, including a reasonable Trustee's fee and attorney's fee; (2) to the obligation secured by this Deed of Trust; (3) the surplus, if any, shall be deposited with the Clerk of the Superior Court of the County in which the sale took place, to be distributed in accordance with the provisions of RCW 61.24.080. 5. Trustee shall deliver to the purchaser. at the sale its deed, without warranty, which shall reconvey to the purchaser the interest in the property which Grantor had or had the power to convey at the time of his execution of this Deed of Trust, and such- as he may have acquired thereafter. Trustee's deed shall recite the facts showing that the sale was conducted in compliance with all the requirements of law and of this Deed of Trust, which recital shall be prima facie evidence of such compliance and conclusive evidence thereof in favor of bona fide purchaser and encumbrances for value. 4 a ,. 6. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act of the State of Washington is not an exclusive remedy; Beneficiary may cause this Deed of Trust to be foreclosed as a mortgage. 7. In the event of the death, incapacity, disability or resignation of Trustee, Beneficiary may appoint in writing a successor trustee, and upon the recording of such appointment in the mortgage records of the county in which this Deed of Trust is recorded, the successor trustee shall be vested with all powers of the original trustee. The trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Grantor, Trustee or Beneficiary shall be a party unless such action or proceeding is brought by the Trustee. 8. This Deed of Trust applies to, inures to the benefit of, and is binding not only on the parties hereto, but on their heirs, devisees, legatees, administrators, executors and assigns. The term Beneficiary shall mean the holder and owner of the note secured hereby, whether.or not named as Beneficiary herein. STATE OF WASHINGTON ) ss: County of Yakima United Builders of Washington, Inc. By: Its: Pr ,! . ley :. ,mor, - RFT , dr? 9 rest On this day personally appeared before me*1�._ c t `41\ff-4NX-A , to me known to bethe `�`OS oKIttl,,tkis of United Builders of Washington, Inc., who executed the within and foregoing instrument, and acknowledged that he signed the same in his official capacity as authorized corporate officer and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. • GIVEN hand and official seal this 22r d.ay of April, 2009. NOTARY PUBLIC in and for the State of Washington Residing at My Commission Expires: % COBG Loan-2009081\Loan Documents \ deed of trust.doc 5 2-'1,11Q Lots 15 and 16, Block 109, TOWN OF NORTH YAKIMA, now Yakima, recorded in Volume "A" of Plats, Page 10, re-recorded in Volume "E" of Plats, Page 1, records of Yakima County, Washington. Situated in Yakima County, State of Washington. Attachment C Instructions: To use the Payment Calculator, enter all RED information Payment amounts and Debt Schedule will appear below PAYMENT CALCULATOR Borrowed Amount Rate Lease/Loan Term Payments per Year $260,024.79 2.000% 15 1 years payments per year Payment Payment Total Payments -$20,236.55 -$20,236.55 -$303,548.28 per Bill per Year Total over Life Debt Schedule Period Beginning Balance Payment Interest Principal Paydown 1 $260,024.79 2 $244,988.74 3 $229,651.96 4 $214,008.44 5 $198,052.06 6 $181,776.55 7 $165,175.53 8 $148,242.49 9 $130,970.79 10 $113,353.65 11 $95,384.17 12 $77,055.30 13 $58,359.85 14 $39,290.50 15 $19,839.76 16 $0.00 17 $0.00 18 $0.00 19 $0.00 20 $0.00 21 $0.00 22 $0.00 23 $0.00 24 $0.00 25 $0.00 26 $0.00 27 $0.00 28 $0.00 29 $0.00 - $20,236.55 - $20,236.55 -$20,236.55 - $20,236.55 -$20,236.55 - $20,236.55 - $20,236.55 -$20,236.55 -$20,236.55 -$20,236.55 -$20,236.55 - $20,236.55 -$20,236.55 - $20,236.55 - $20,236.55 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$5,200.50 - $4,899.77 - $4,593.04 -$4,280.17 - $3,961.04 -$3,635.53 -$3,303.51 -$2,964.85 -$2,619.42 -$2,267.07 -$1,907.68 -$1,541.11 -$1,167.20 -$785.81 -$396.80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 - $15,036.06 -$15,336.78 - $15,643.51 -$15,956.38 - $16,275.51 - $16,601.02 - $16,933.04 - $17,271.70 - $17,617.14 -$17,969.48 -$18,328.87 -$18,695.45 - $19,069.36 - $19,450.74 - $19,839.76 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 30 $0.00 $0.00 $0.00 $o.00 31 $0.00 $0.00 $0.00 $0.00 32 $0.00 $0.00 $0.00 $0.00 33 $0.00 $0.00 $0.00 $0.00 34 $0.00 $0.00 $0.00 $0.00 35 $0.00 $0.00 $o.00 $0.00 36 $0.00 $0.00 $o.00 $0.00 37 $0.00 $0.o0 $0.00 $0.00 38 $0.00 $0.00 $0.00 $0.00 39 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 $0.00 $0.00 41 $0.00 $0.00 $0.00 $0.00 42 $0.00 $0.00 $0.00 $o.00 43 $0.00 $0.00 $0.00 $0.00 44 $0.00 $0.00 $0.00 $0.00 45 $0.00 $0.00 $0.00 $0.00 46 $0.00 $0.00 $0.00 $0.00 47 $0.00 $0.00 $0.00 $o.00 48 $0.00 $0.00 $o.00 $0.00 49 $0.00 $0.00 $o.00 $o.00 50 $0.00 $0.00 $o.00 $0.00 51 $0.00 $o.00 $0.00 $0.00 52 $0.00 $0.00 $0.00 $0.00 53 $0.00 $0.00 $0.00 $0.00 54 $0.00 $o.00 $0.00 $0.00 55 $0.00 $0.00 $0.00 $0.00 56 $0.00 $0.00 $o.00 $0.00 57 $0.00 $0.00 $0.00 $0.00 58 $0.00 $0.00 $0.00 $0.00 59 $0.00 $0.00 $0.00 $0.00 60 $0.00 $0.00 $o.00 $0.00 61 $0.00 $0.00 $0.00 $0.00 62 $0.00 $0.00 $0.00 $0.00 63 $0.00 $0.00 $0.00 $0.00 64 $0.00 $0.00 $0.00 $0.00 65 $0.00 $0.00 $0.00 $0.00 66 $0.00 $0.00 $0.00 $0,00 67 $0.00 $0.00 $0.00 $0.00 68 $0.00 $0.00 $0.00 $0.00 69 $0.00 $0.00 $0.00 $0.00 70 $0.00 $0.00 $0.00 $0.00 71 $0.00 $0.00 $0.00 $0.00 72 $0.00 $0.00 $0.00 $0.00 73 $0.00 $0.00 $0.00 $0.00 74 $0.00 $0.00 $0.00 $0.00 75 $0.00 $0.00 $0.00 $0.00 76 $0.00 $0.00 $0.00 $0.00 77 $0.00 $0.00 $0.00 $0.00 78 $0.00 $0.00 $0.00 $0.00 79 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 81 $0.00 $0.00 $0.00 $0.00 82 $0.00 $0.00 $0.00 $0.00 83 $0.00 $0.00 $0.00 $0.00 84 $0.00 $0.00 80.00 $0.00 85 $0.00 $0.o0 $0.00 $0.00 86 $0.00 $0.00 $0.00 $0.00 87 $0.00 $0.00 $0.00 $0.00 88 $0.00 $0.00 $0.00 $0.00 89 $0.00 $0.00 $0.00 $0.00 90 $0.00 $0.00 $0.00 $0.00 91 $0.00 $o,00 $0.00 $0,00 92 $0.00 $0.00 $0.00 $0.00 93 $0.00 $0.00 $0.00 $0.00 94 $0.00 $0.00 $0.00 $0.00 95 $0.00 $0.00 $0.00 $0.00 96 $0.00 $0.00 $0.00 $0.00 97 $0.00 $0.00 $0.00 $0.00 98 $0.00 $0.00 $0.00 $0.00 99 $0.00 $0.00 $0.00 $0.00 100 $0.00 $0.00 $0.00 $0.00 101 $0.00 $0.00 $0.00 $0.00 102 $0.00 $0.00 $0.00 $0.00 103 $0.00 $0.00 $0.00 $0.00 104 $0.00 $0.00 $0.00 $0.00 105 $0.00 $0.00 $0,00 $0.00 106 $0.00 $0.00 $0.00 $0.00 107 $0.00 $0.00 $0.00 $0.00 108 $0.00 $0.00 $0.00 $0.00 109 $0.00 $o.00 $0.00 $0.00 110 $0.00 $0.00 $0.00 $0.00 111 $0.00 $0.00 $0.00 $0.00 112 $0.00 $0.00 $0.00 $0.00 113 $0.00 $0.00 $0.00 $0.00 114 $0.00 $0.00 $0.00 $0.00 115 $0.00 $0.00 $0.00 $0.00 116 $0.00 $0.00 $0.00 $0.00 117 $0.00 $0.00 $0.00 $0.00 118 $0.00 $0.00 $0.00 $0.00 119 $0.00 $0.00 $0.00 $0.00 120 $0.00 $0.00 $0.00 $0.00 121 $0.00 $0.00 $0.00 $0.00 122 $0.00 $0.00 $0.00 $0.00 123 $0.00 $0.00 $0.00 $0.00 124 $0.00 $0.00 $0.00 $0.00 125 $0.00 $0.00 $0.00 $0.00 126 $0.00 $0.00 $0.00 $0.00 127 $0.00 $0.00 $0.00 $0.00 128 $0.00 $0.00 $0.00 $0.00 129 $0.00 $0.00 $0.00 $0.00 130 $0.00 $0,00 $0.00 $0.00 131 $0.00 $0.00 $0.00 $0.00 132 $0.00 $0.00 $0.00 $0.00 133 $0.00 $0.00 $0.00 $0.00 134 $0.00 $0.00 $0.00 $0.00 135 $0.00 $0.00 $0.00 $0,00 136 $0.00 $0.00 $0.00 $0.00 137 $0.00 $0.00 $0.00 $0.00 138 $0.00 $0.00 $0.00 $0.00 139 $0.00 $0.00 $0.00 $0.00 140 $0.00 $0.00 $0.00 $0.00 141 $0.00 $0.00 $0.00 $0.00 142 $0.00 $0.00 $0.00 $0.00 143 $0.00 $0.00 $0.00 $0.00 144 $0.00 $0.00 $0.00 $0.00 145 $0.00 $0,00 $0.00 $0.00 146 $0.00 $0.00 $0.00 $0.00 147 $0.00 $0.00 $0.00 $0,00 148 $0.00 $0.00 $0.00 $0.00 149 $0.00 $0.00 $0.00 $0.00 150 $0.00 $0.00 $0.00 $0.00 151 $0.00 $0.00 $0.00 $0.00 152 $0.00 $0.00 $0.00 $0.00 153 $0.00 $0.00 $0.00 $0.00 154 $0.00 $0.00 $0.00 $0.00 155 $0.00 $0.00 $0.00 $0.00 156 $0.00 $0.00 $0.00 $0,00 157 $0.00 $0.00 $0.00 $0.00 158 $0.00 $0.00 $0.00 $0.00 159 $0.00 $0,00 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 161 $0.00 $0.00 $0.00 $0.00 162 $0.00 $0.00 $0,00 $0.00 163 $0.00 $0.00 $0.00 $0.00 164 $0.00 $0.00 $0.00 $0.00 165 $0.00 $0.00 $0.00 $0.00 166 $0.00 $0.00 $0.00 $0.00 167 $0.00 $0.00 $0.00 $0.00 168 $0.00 $0.00 $0.00 $0.00 169 $0.00 $0.00 $0.00 $0.00 170 $0.00 $0.00 $0.00 $0.00 171 $0.00 $0.00 $0.00 $0.00 172 $0.00 $0.00 $0.00 $0.00 173 $0.00 $0.00 $0.00 $0.00 174 $0.00 $0.00 $0.00 $0.00 175 $0.00 $0.00 $0.00 $0.00 176 $0.00 $0.00 $0,00 $0.00 177 $0.00 $0.00 $0.00 $0.00 178 $0.00 $0.00 $0.00 $0.00 179 $0.00 $0.00 $0.00 $0.00 180 $0.00 $0.00 $0.00 $0.00 181 $0.00 $0.00 $0.00 $0.00 182 $0.00 $0.00 $0.00 $0.00 183 $0.00 $0.00 $0.00 $0.00 184 $0.00 $0.00 $0.00 $0.00 185 $0.00 $0.00 $0.00 $0.00 186 $0.00 $0.00 $0.00 $0,00 187 $0.00 $0.00 $0.00 $0.00 188 $0.00 $0.00 $0.00 $0.00 189 $0.00 $0.00 $0.00 $0.00 190 $0.00 $0.00 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$0.00 $0.00 $0.00 298 $0.00 $0.00 $0.00 $0.00 299 $0.00 $0.00 $0.00 $0.00 300 $0.00 $0.00 $0.00 $0.00 301 $0.00 $0.00 $0.00 $0.00 302 $0.00 $0.00 $0.00 $0.00 303 $0.00 $0.00 $0.00 $0.00 304 $0.00 $0.00 $0.00 $0.00 305 $0.00 $0.00 $0.00 $0.00 306 $0.00 $0.00 $0.00 $0.00 307 $0.00 $0.00 $0.00 $0.00 308 $0.00 $0.00 $0.00 $0.00 309 $0.00 $0.00 $0.00 $0.00 310 $0.00 $0.00 $0.00 $0.00 311 $0.00 $0.00 $0.00 $0.00 312 $0.00 $0.00 $0.00 $0.00 313 $0.00 $0.00 $0.00 $0.00 314 $0.00 $0.00 $0.00 $0.00 315 $0.00 $0.00 $0.00 $0.00 316 $0.00 $0.00 $0.00 $0.00 317 $0.00 $0.00 $0.00 $0.00 318 $0.00 $0.00 $0.00 $0.00 319 $0.00 $0.00 $0.00 $0.00 320 $0.00 $0.00 $0.00 $0.00 321 $0.00 $0.00 $0.00 $0.00 322 $0.00 $0.00 $0.00 $0.00 323 $0.00 $0.00 $0.00 $0.00 324 $0.00 $0.00 $0.00 $0.00 325 $0.00 $0.00 $0.00 $0.00 326 $0.00 $0.00 $0,00 $0.00 327 $0.00 $0.00 $0.00 $0.00 328 $0.00 $0.00 $0.00 $0.00 329 $0.00 $0.00 $0.00 $0.00 330 $0.00 $0.00 $0.00 $0.00 331 $0.00 $0.00 $0.00 $0.00 332 $0.00 $0.00 $0.00 $0.00 333 $0.00 $0.00 $0.00 $0.00 334 $0.00 $0.00 $0.00 $0.00 335 $0.00 $0.00 $0.00 $0.00 336 $0.00 $0.00 $0.00 $0.00 337 $0.00 $0.00 $0.00 $0.00 338 $0.00 $0.00 $0.00 $0.00 339 $0.00 $0.00 $0.00 $0.00 340 $0.00 $0.00 $0.00 $0.00 341 $0.00 $0.00 $0.00 $0.00 342 $0.00 $0.00 $0.00 $0.00 343 $0.00 $0.00 $0.00 $0.00 344 $0.00 $0.00 $0.00 $0.00 345 $0.00 $0.00 $0.00 $0.00 346 $0.00 $0.00 $0.00 $0.00 347 $0.00 $0.00 $0.00 $0.00 348 $0.00 $0.00 $o.00 $0.00 349 $0.00 $0.00 $0.00 $0.00 350 $0.00 $0.00 $0.00 $0.00 351 $0.00 $0.00 $0.00 $0,00 352 $0.00 $0.00 $0,00 $0.00 353 $0.00 $0.00 $0.00 $0.00 354 $0.00 $0.00 $0.00 $0.00 355 $0.00 $0.00 $0.00 $0.00 356 $0.00 $0.00 $0.00 $0.00 357 $0.00 $0.00 $0.00 $0.00 358 $0.00 $0.00 $0.00 $0.00 359 $0.00 $0.00 $0.00 $0.00 360 $0.00 $0.00 $0.00 $0.00 361 $0.00 $0.00 $0.00 $0.00 Seasons Music HaII/United Builders Initial loan on 4/24/2009 $200,000.00 $205,501.37 $213,721.42 $222,270.28 $231,161.09 $240,407.54 $250,023.84 Interest Rate Annual interest Total due Time Period 4% $5,501.37 $205,501.37 4/24/09-12/31/09 4% $8,220.05 $213,721.42 12/31/2010 4% $8,548.86 $222,270.28 12/31/2011 4% $8,890.81 $231,161.09 12/31/2012 4% $9,246.44 $240,407.54 12/31/2013 4% $9,616.30 $250,023.84 12/31/2014 4% $10,000.95 $260,024.79 12/31/2015 Attachment 0 MODIFICATION AND RESTATEMENT OF PROMISSORY NOTE Atipi 2012 Yakima, Washington 41, This Agreement is made and executed this ? day of 0 , 2012, by and between City of Yakima, Office of Neighborhood Development Serviced ("Lender"), and United Builders of Washington, Inc. ("Maker") and modifies and amends that certain note dated April 22, 2009, in the principal sum of $200,000.00 executed by Maker (the "Note"). 1. The Note is hereby modified as follows: a. Maker shall cause the owner of that certain real property located at 112 South Sixth (6th) Street, Yakima, Washington, Yakima County Tax Parcel No. 191319-13418, to deed to Lender by Bargain and Sale Deed free and clear of all liens and encumbrances thereon, except those specifically approved by Lender. The transfer of said property to Lender shall be in payment of all accrued base interest and late charges on the Note through the date hereof which the parties agree to be in the amount of $20,000.00. Lender hereby waives default interest under the Note through the date hereof. The parties agree that upon recording of the Deed on said property, the Note shall be current and in good standing. b. Section 3. of the Note is hereby changed as follows, effective as of the date hereof: Maker shall make full and final payment of all principal, interest, costs and charges due under the Note on April 22, 2014. 2. Except as modified herein, the terms and conditions of the Note and any other agreements shall continue in full force and effect, including without limitation the provisions for default specified therein. Each of the Makers agree to and are bound jointly and severally by the terms of the Note, as modified herein. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. United Builders of Washington, Inc. By City of Ya ima By Its e Its Vi P.O Box 9488 City Hall— Yakima, Washington 98907 129 North Second Street Yakima, WA 98901 Note Modification Agreement Page -1- CITY CONTRAC r NO: (,{ RESOLUTION NO. Ola- x:\city of yakima-20009\onds - united builders cobg loan-2009081\loan documents\united builders -seasons promissory note amendment- jc amended note-8-22-2012.doc Promissory Note Page -2- RESOLUTION NO. R-2012-114 A RESOLUTION authorizing the execution of a Promissory Note Modification Agreement to extend the final payment date of indebtedness owed to the City by United Builders of Washington, Inc. resulting from a loan of certain CDBG funds the City previously provided to United Builders of Washington, Inc., said loan being secured by certain real property owned by United Builders of Washington, Inc commonly known as The Seasons Music Hall and by the personal guarantees of J. Patrick Strosahl and by Stephen R. Strosahl. WHEREAS, the City of Yakima entered into a Loan Agreement with United Builders of Washington, Inc. on April 22, 2009 whereby The City of Yakima loaned United Builders of Washington, Inc. $200,000 00 for use as operating funds for business operations within the City of Yakima, and WHEREAS, the loan to United Builders of Washington, Inc incurred interest at the rate of 4.0% per annum and the loan was fully due and payable within two (2) years; and WHEREAS, the loan to United Builders of Washington, Inc was secured by real property located in Yakima, Washington commonly known as the Seasons Music Hall, and also by the personal guarantees of J. Patrick Strosahl and by Stephen R. Strosahl, owners of United Builders of Washington, Inc.; and WHEREAS, United Builders of Washington, Inc. of has not been able to operate sufficiently profitably to pay off the loan when it became due and payable; and WHEREAS, United Builders of Washington, Inc. has requested that the City of Yakima agree to an extension of the payment due date on the loan to April 22, 2014; and WHEREAS, J. Patrick Strosahl has proposed transferring title to certain vacant residential real property owned by Nob Hill Realty Co , Inc., a Washington corporation, which real property is commonly known as 112 South Sixth Street, Yakima, Washington and is listed as Yakima County Tax Parcel 191319-13418 having a current assessed value of $16,500.00, to satisfy the current accrual of interest under the Promissory Note; and WHEREAS, the City Council finds it to be in the best interests of the citizens of Yakima to amend the promissory note provided by United Builders of Washington, Inc. and to accept the real property identified in the MODIFICATION AND RESTATEMENT OF PROMISSORY NOTE attached hereto and incorporated herein by this reference; Now, Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is hereby authorized and directed to: 1. execute the attached and incorporated MODIFICATION AND RESTATEMENT OF PROMISSORY NOTE; and 2. execute any and all other documents necessary and appropriate for full performance of this Resolution and the MODIFICATION AND RESTATEMENT OF PROMISSORY NOTE. ADOPTED BY THE CITY COUNCIL this 4th day of September, 2012. ATTEST: /s/ Sonya Claar Tee Sonya Claar Tee, City Clerk /s/ Micah Cawley Micah Cawley, Mayor Certified to be a true and correct co original filed in my office. CIT Attachment E DATE: Memorandum of Understanding , 2015 PARTIES: (1) (2) (3) UNITED BUILDERS OF WASHINGTON, INC. a Washington corporation (referred to in this Memorandum as "United Builders") THE SEASONS MUSIC FESTIVAL a Washington nonprofit corporation (referred to in this Memorandum as "Seasons") CITY OF YAKIMA, a Washington municipality, through OFFICE OF NEIGHBORHOOD DEVELOPMENT SERVICES (referred to in this Memorandum as "City") SUBJECT PROPERTY: The term "Subject Property" means and refers to the property located at 101 N. Naches Avenue, Yakima, WA 98902, commonly referred to as "The Seasons Building," "Seasons Performance Hall" and Yakima County Parcel No. 191319-21482, which is legally described as follows: Lots 15 and 16 Block, 109, Town of North Yakima, now Yakima, recorded in Volume "A" of Plats, page 10, re-recorded in Volume "E" of Plats, page 1, records of Yakima County, Washington Situated in Yakima County, Washington. BACKGROUND AND PURPOSE: On or about April 22, 2009, United Builders of Washington, Inc. and the City of Yakima Office of Neighborhood Development Services executed an Agreement Between the City of Yakima Office of Neighborhood Development Services and United Builders of Washington Inc. ("Agreement"). The purpose of the Agreement was to memorialize a loan from the City to United Builders in the amount of $200,000 ("Loan"). A copy of the Agreement and accompanying promissory notes are attached hereto as Attachment A. To secure the City's Loan, United Builders pledged the Subject Property as collateral. The City recorded a Deed of Trust on the Subject Property. A copy of the Deed of Trust is attached hereto as Attachment B. At the time that United Builders and the City executed Agreement, United Builders held legal title to the Subject Property. On or about August 3, 2009, however, United Builders transferred title to the Subject Property to the Seasons, and the Seasons thereafter became the legal owner of the Subject Property. The Seasons is the current owner of the Subject Property. The repayment obligations for United Builders that were created by the Agreement were not transferred to Seasons in conjunction with the transfer of title to the Subject Property. Nonetheless, the Subject Property remains subject to the Deed of Trust that the City recorded to secure the repayment obligations under the Agreement. No payments have been made towards the City's Loan by United Builders, or any person or entity on behalf of United Builders. In recent months, the City has demanded repayment of the Loan to United Builders. United Builders is not in a position to make payments towards the outstanding Loan balance. The City has stated that it will foreclose on the Subject Property pursuant to its rights as the Grantee of the Deed of Trust if repayment of the Loan does not occur. The Seasons does not want to lose the Subject Property in a foreclosure, so it has agreed to make payments towards the outstanding balance of the Loan as set forth herein. To preserve the Subject Property, the Parties to this Memorandum of Understanding have agreed to the following terms in an effort the preserve the Seasons and the Seasons Performance Hall. UNDERSTANDING. THE PARTIES AGREE AS FOLLOWS: 1. Memorandum Effect. This Memorandum is not a contract or binding agreement between the Parties and is merely an expression of good faith intention to preserve the Subject Property for the Seasons. Accordingly, the Parties are not bound or otherwise obligated by this Memorandum. Instead, the Parties merely intend for the terms of this Memorandum to serve as a guide for the repayment of the Loan and continued operation of the Seasons and the Seasons Performance Hall. 2. The Loan. The Agreement is and shall remain a legally binding contract between the City and United Builders. The legal obligations to repay the Loan will continue to belong to United Builders pursuant to the terms of the Agreement. The opportunity presented under this Memorandum of Understanding allowing The Seasons to provide repayment of the Loan shall only exist so long as United Builders executes a Tolling Agreement staying the statute of limitations applicable to the City's action on collection of the outstanding Loan balance throughout the entire term of the repayment period. This Memorandum of Understanding does not require the Seasons or its Board of Directors to assume any terms or conditions of the Agreement, or in any way assume the underlying obligation of repaying the Loan. 2. Preserve the Subject Property. Notwithstanding the Parties' respective legal rights and obligations regarding the repayment of the Loan, the Parties recognize that the Subject Property is the collateral for the Loan, and therefore the Subject Property is at risk if the Loan is not repaid. The Seasons is, therefore, agreeing to make payments towards the outstanding Loan repayment obligations of United Builders in order to preserve the Subject Property and continue the operations of the Seasons and the Seasons Performance Hall. 3. Payments. The Seasons will make annual payments towards the outstanding Loan balance as set forth in Attachment C. The first payment shall be due and payable to the City on January 1, 2016 in the annual payment amount set forth in Exhibit C, and annual payments shall be made on January first of each year thereafter until the balance of the Loan, together with the accrued interest thereon, has been repaid. 4. Foreclosure Abeyance. So long as the Seasons makes all annual payments in accordance with Paragraph 3, and United Builders remains a viable entity or assigns its interest and obligations for this Loan to a viable entity that will remain responsible for the outstanding debt, and so long as United Builders executes a Tolling Agreement that tolls the limitations period in which to foreclose upon the Loan, as set forth in Paragraph 2, the City will not initiate legal action to foreclose on the Loan. 4. Governing Law. This Memorandum is governed and will be interpreted under the laws of the State of Washington. Jurisdiction and venue for any disputes shall be Yakima County, Washington. EXECUTED as of the dates listed below. CITY OF YAKIMA:� By: ([� /VIA Its:c,(p,�,i,, Date: / Z - /0 - /5 UNITED By ILDERS. INC. Its: rte, � e L.Lr Date: ///2-c/ SEASONS MUSIC FESTIVAL By: Its: r .G S 'att. Date: 11 /z- /� r BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 12. For Meeting of: December 8, 2015 ITEM TITLE: Resolution authorizing Memorandum of Understanding with the Seasons Music Festival Board of Directors establishing the terms of repayment of the City's loan for improvements to the Seasons Music Hall to United Builders of Washington, Inc. SUBMITTED BY: Jeff Cutter, City Attorney SUMMARY EXPLANATION: In 2009, the City loaned $200,000 to United Builders of Washington, Inc. for required fire safety equipment that was installed in The Seasons Music Hall. United Builders failed to make the required payments to the City and therefore, in 2011, a Modification of the original loan agreement was executed by the parties allowing for an additional two years for the repayment of the loan and accrued interest. United Builders was unable to satisfy the terms of repayment and transferred the title to The Seasons Music Hall to the Seasons Board without the consent of the City as required in the loan agreement. To avoid the City's foreclosing on the property, the City negotiated with the Seasons Musical Festival Board to arrange the terms of repayment of the loan balance and accrued interest. The terms of that agreement were set forth in the attached and incorporated Memorandum of Understanding (MOU) between the Seasons Music Festival Board and the City. To preserve the City's right of recovery from United Builders in the underlying loan during the agreed loan repayment period the City executed a Tolling Agreement with United Builders to toll the running of the City's statute of limitations while the repayment was being accomplished. This negotiated repayment plan will allow the Seasons Music Festival Board to retain ownership of the Seasons Music Hall so long as the terms of the repayment MOU are complied with. Correction to exhibit C of Tolling Agreement made 12-7-15. Resolution: X Ordinance: Other (Specify): Memorandum of Understanding and Incorporated Documents Contract: Contract Term: Start Date: End Date: Item Budgeted: Amount: Funding Source/Fiscal Impact: Strategic Priority: Economic Development Insurance Required? No Mail to: Sean Russel Phone: 509-853-3000 APPROVED FOR SUBMITTAL: RECOMMENDATION: i9m City Manager Approve the Memorandum of Understanding. ATTACHMENTS: Description Resolution -Seasons -Memorandum of Understanding - Loan Repayment -12 2015 D tolling agreement ❑ Upload Date 11/30/2015 12/7/2015 Type Resolution Coker Memo