<p>I think you’re going to be ok, but this is just speculation. My reasoning is that the 14 semester unit rule counts if you are trying to apply with just 60 units. Another way of phrasing it, then is you must have no less than 46 units taken for a letter grade. You meet that.</p>
<p>But I’m not a UCSB adcom. I’m puzzled why you would ask here instead of contacting UCSB. You can call, set up an online advising appt, etc. so it isn’t like they aren’t available.</p>
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And anyone with any knowledge of contract law would know that at all included conditions are part of a contract. You seem to have overlooked this 
Right up above you posted from your contract “I understand I must submit my UC application for admission”. Therefore all conditions of applying to UCSB are included in the contract. Including the pass/fail restriction. Sorry.</p>