LOANAGREEMENT

 

This Loan Agreement (this “Agreement”) is dated for reference purposes August 30, 2010, and is entered into by and between SPT-LAKE ELSINORE HOLDING CO., LLC, a Delaware limited liability company (“Borrower”), and the CARDINAL INVESTMENT PROPERTIES-UNDERWOOD, L.P., a California limited partnership (“Lender”), with reference to the following facts:

A.          Borrower is the owner of certain real property consisting of approximately two hundred and thirty-five (235) acres of unimproved land, commonly referred to as Tentative Tract Map No. 29835, located in the City of Menifee, County of Riverside, California, which real property is more particularly described in Exhibit “A” attached hereto (the “Property”).

B.           Borrower proposes to borrow from Lender the sum of One Million and No/100 Dollars ($1,000,000.00) (the “Loan”).

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1.           Loan. Borrower hereby agrees to borrow from Lender, and Lender hereby agrees to lend to Borrower, the sum of One Million and No/100 Dollars ($1,000,000.00) (the “Loan”) in accordance with the terms and conditions set forth in the Loan Documents [as that term is defined in Section 3(a) below.]

2.           Loan Term/Extensions. The initial term of the Loan shall commence on the date upon which Lender makes the deposit of loan funds into Escrow as provided in Section 3(b) below (the “Disbursement Date”) and continue thereafter to the second anniversary of the Disbursement Date (the “Maturity Date”); provided, however, that Borrower may, at Borrower’s option, extend the Maturity Date as provided in Section 2 of the Note (as that term is defined below). Borrower authorizes Lender to date the Note as of the Disbursement Date.

3.           Conditions to Funding Loan. Lender shall be under no obligation to fund the Loan or any portion thereof unless and until each of the following conditions has been satisfied or waived in writing by Lender, in Lender’s sole discretion.

a.           Execution of Loan Documents. Each of the following (which, in addition to this Agreement, are collectively referred to herein as the “Loan Documents”) shall have been fully executed by the parties thereto, as needed, and delivered to Lender:

(1)           The Promissory Note Secured by Trust Deed evidencing the Loan (the “Note”);

(2)           The Trust Deed with Rider attached encumbering the Property and securing repayment of the Loan (the “Trust Deed”);

(3)           The Security Agreement; and

 

(4)           The UCC-1 Financing Statement in favor of Lender as “Secured Creditor” (execution by Borrower is not required).

b.           Borrower Authorization. Within Thirty (30) days of the Disbursement Date, Borrower shall provide Lender with board approval, or other evidence reasonably acceptable to Lender, of Borrower’s authorization to obtain the Loan.

c.           Close of Escrow. First American Title Insurance Company (“Escrow Holder”) has notified Lender that, upon the deposit by Lender of that portion of the Loan proceeds equal to Eight Hundred Eighty Thousand and No/100 Dollars ($880,000.00) into Escrow for the benefit of Borrower, Escrow will be in position to close.

d.           Issuance of Title Insurance. First American Title Insurance Company (the “Title Company”) has committed to issue to Lender at the closing of Escrow its ALTA Loan Policy (2006) (the “Title Policy”) in the face amount of the Loan assuring that the Trust Deed, when recorded, will constitute a first lien against the Property, subject only to (i) applicable non-delinquent general and special real property taxes, and (ii) those certain exceptions to title described as items 1 through 26, inclusive, of Section Two of Schedule B to that certain Preliminary Title Report dated as of August 12, 2010, issued by the Title Company under Order No. OSA ###-###-#### (50), and such endorsements as Lender may require.

e.           No Default. Borrower shall not be in default under the Loan Documents and no default exists by Borrower or Seller under the Purchase Agreement.

4.           Pre-Payment/Minimum Interest. Borrower hereby acknowledges that the Loan may be prepaid in whole or in part without penalty before the Maturity Date. Interest for the first year of the Loan shall be prepaid out of the Loan Amount and shall be non-refundable.

5.           Service Fee and Costs. Borrower hereby acknowledges that Borrower is obligated to pay a one-time Loan initiation, management and service charge in the amount of Fifty Thousand and No/100 Dollars ($50,000.00) (the “Service Fee”). The Service Fee shall be deemed earned upon the funding of the Loan, and shall be payable to Lender immediately upon the earliest to occur of: (i) full repayment of the Loan, (ii) a default by Borrower under the Loan, or (iii) the first anniversary of date of the Note. In addition, Borrower shall reimburse Lender, directly from Loan funds, for all third-party costs and fees incurred by Lender in making the Loan, including, but not limited to, Lender’s attorneys fees, title company charges and recording fees; provided that the maximum amount of such reimbursement for Lender’s attorneys fees shall be Ten Thousand Dollars ($10,000.00).

6.           Authorization of Parties. This Agreement has been duly and validly authorized, executed and delivered by each party, and no other action is requisite to the valid and binding execution, delivery and performance of this Agreement. No consents or waivers of or by any third party are necessary to permit the consummation of the transactions contemplated pursuant to this Agreement.

7.           Loan Arranged by Broker. The parties acknowledge and agree that the Loan has been arranged by Park Place Partners, Inc., a licensed California real estate broker (License No. 01225173).

 

8.           Access to Records. Lender and Lender’s appointed representatives, upon forty-eight hours notice, shall have access at reasonable hours to the books, records and financial statements of Borrower related to the Property.

9.           Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective legal representatives, successors and assigns.

10.         Governing Law. The validity, interpretation and performance of this Agreement shall be controlled by and construed under the laws of the State of California.

11.         Attorneys Fees. Borrower shall be responsible for payment to Lender of the reasonable legal costs and attorney’s fees incurred by Lender in connection with the making of the Loan. Should any dispute arise between the parties hereto or their legal representatives, successors and assigns concerning any provision of this Agreement or any of the Loan Documents, or the rights and duties of any person in relation thereto, the party prevailing in such dispute shall be entitled, in addition to such other relief that may be granted, to a reasonable sum as and for their or his or its attorneys fees and legal costs in connection with such dispute.

12.         Amendment. This Agreement may only be amended by the written consent of all of the parties to this Agreement at the time of such amendment.

13.         Notices. Unless otherwise directed by Beneficiary in writing, any notices required to be delivered to Borrower hereunder shall be delivered to c/o Shopoff Advisors, L.P., 8951 Research Drive, Irvine, California 92618, Attention: William A. Shopoff. Unless otherwise directed by Borrower, any notices to be delivered to Lender hereunder shall be delivered c/o Cardinal Development, 375 Bristol Street, Suite 50, Costa Mesa, California 92626, Attention: David J. Seidner.

14.         Counterparts/Facsimile Signature. This Agreement maybe executed in counterparts, each of which shall be deemed to be an original of this Agreement, but such counterparts, when taken together, shall constitute but one agreement. If this Agreement is so executed by one (1) or more parties in counterpart, the pages bearing the signatures of such parties may be transmitted to the other parties by way of facsimile, which transmission shall be deemed the same as delivered hereunder of original signatures.

15.         Entire Agreement. This Agreement contains the entire agreement between the parties hereto and supersedes any prior or current written or oral agreement between said parties concerning the subject matter contained herein. There are no representations, agreements, arrangements or understandings, oral or written, between or among the parties hereto relating to the subject matter contained in this Agreement which have not been fully expressed herein.

16.         Further Assurances. Each of the parties hereto hereby agrees to execute such further documents or instruments as may be necessary or appropriate to carry out the intention of this Agreement.

17.         Unenforceable Provisions. In the event that any provision of this Agreement shall be unenforceable or inoperative as a matter of law, the remaining provisions shall remain in full force and effect.

[Balance of this page intentionally left blank]

IN WITNESS WHEREOF, Lender and Borrower have executed this Agreement as of the date first above written.

UNDERWOOD, L.P., a California limited

partnership

 

SPT-LAKE ELSINORE HOLDING CO., LLC, a Delaware limited liability company