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5.7 Prepayment; Acceleration <br />(a) Prepayment. Developer shall have the right to prepay the City Loan at any <br />time and from time to time, without penalty or premium, provided that any prepayment of <br />principal must be accompanied by interest accrued but unpaid to the date of prepayment. <br />Prepayments shall be applied first to accrued but unpaid interest and then to principal. Any such <br />prepayment shall have no effect upon Developer’s obligations under the Regulatory Agreement <br />which shall survive for the full term of the Regulatory Agreement. <br />(b) Due On Sale or Encumbrance. Unless City agrees otherwise in writing, <br />the entire unpaid principal balance and all interest and other sums accrued under the City Note <br />shall be due and payable upon the Transfer (as defined in Section 7.2) absent the prior written <br />consent of City of all or any part of or interest in the Property except as otherwise permitted <br />pursuant to this Agreement. <br />5.8 Nonrecourse. Except as expressly provided in this Section 5.8, Developer shall <br />have no personal liability for payment of the principal of, or interest on the City Note, and the <br />sole recourse of City with respect to the payment of the principal of, and interest on the City <br />Note shall be to the Project, as described in the City Note, and any other collateral held by City <br />as security for the City Note under the Security Agreement or Leasehold Deed of Trust, as <br />applicable; provided however, nothing contained in the foregoing limitation of liability shall: <br />(a) impair the enforcement against all such security for the City Loan of all <br />the rights and remedies of the City under the Leasehold Deed of Trust and any financing <br />statements City files in connection with the City Loan, as each of the foregoing may be amended, <br />modified, or restated from time to time; <br />(b) impair the right of City to bring a foreclosure action, action for specific <br />performance or other appropriate action or proceeding to enable City to enforce and realize upon <br />the Leasehold Deed of Trust, the interest in the Property and the Improvements created thereby <br />and any other collateral given to City in connection with the indebtedness evidenced by the City <br />Note, and to name the Developer as party defendant in any such action; <br />(c) be deemed in any way to impair the right of the City to assert the unpaid <br />principal amount of the City Loan as a demand for money within the meaning of Section 431.70 <br />of the California Code of Civil Procedure or any successor provision thereto; <br />(d) constitute a waiver of any right which City may have under any <br />bankruptcy law to file a claim for the full amount of the indebtedness owed to City under the <br />City Note or to require that the Property and the Improvements shall continue to secure all of the <br />indebtedness owed to City in accordance with the City Note and the Leasehold Deed of Trust; or <br />(e) limit or restrict the ability of City to seek or obtain a judgment against <br />Developer to enforce against Developer to: <br />(i) recover under Sections 3.14, 3.17, 9.1, 9.2, 11.1 and 12.2 hereof <br />(pertaining to Developer’s indemnification obligations), or <br />144\259\1892880.4 <br />18