HomeMy WebLinkAboutR38-Economic Development Agency
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM:
Gary Van Osdel
Executive Director
SUBJECT:
JOINT PUBLIC HEARING REGARDING
DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE
AGENCY AND ESSEX ORANGESHOW
COMMERCE CENTER, LLC - SUBJECT
PROPERTY LOCATED AT NORTH
EAST CORNER ORANGE SHOW ROAD
AND ARROWHEAD AVENUE
DATE:
January 22, 2004
ORIGINAL
Svnopsis of Previous Commission/Council/Committee Action(s):
On December 20, 2001, the Redevelopment Committee voted unanimously to recommend to the Community
Development Commission approval of an Exclusive Right to Negotiate for Property Acquisition and Redevelopment
Assistance Agreement between the Agency and Essex Realty Management, Inc.
On February 4, 2002, the Community Development Commission approved an Exclusive Right to Negotiate for Property
Acquisition and Redevelopment Assistance Agreement between the Agency and Essex Realty Management, Inc.
On September 9, 2002, the Community Development Commission approved Amendment No. I to the Exclusive Right
to Negotiate for Property Acquisition and Redevelopment Assistance Agreement between the Agency and Essex Realty
Management, Inc.
On May 22, 2003, the Redevelopment Committee voted to recommend that the Community Development Commission
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Recommended Motion(s):
OPEN/CLOSE PUBLIC HEARING
(Mavor and Common Council)
MOTION A: A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACKNOWLEDGING CERTAIN REPORT, MAKING FINDINGS AND
DETERMINATIONS AND GRANTING OTHER APPROVALS RELATING TO THAT CERTAIN
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE ESSEX
ORANGESHOW COMMERCE CENTER, LLC
(Communitv Development Commission)
MOTION B: A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF
SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN DISPOSITION AND
DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO AND THE ESSEX ORANGESHOW COMMERCE CENTER,
____________________.n______n!o-.!o-g.(2~~Q!'__~!iQ~_~Q_@__1\@n~Q~!'.@n1\y_~~y.!'J______n_________.____________.nn_____________n___n_________
Contact Person(s):
Project Area(s)
Gary Van Osdel
Central City South
Phone:
(909) 663-1044
Ward(s):
First
Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letters
FUNDING REQUIREMENTS Amount: $
None
Source:
SIGNATURE:
N/A
N/A
Commission/Council Notes:
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COMMISSION MEETING AGENDA
Meeting Date: 02/02/2004
Agenda Item Number: f(J g
P:\Agendas\Cornm Dev Commission\CDC 2004\04"{)2-02 Essex SR.doc
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
Joint Public Hearin!! Re!!ardin!! Disposition and Development A!!reement bv and between the
A!!encv and Essex Oran!!eshow Commerce Center. LLC - Subiect Property Located at
North East Corner Oran!!e Show Road and Arrowhead Avenue
BACKGROUND:
In 1991, the Redevelopment Agency (the "Agency") purchased the 15.26 acres of property located at
the northeast comer of Arrowhead and Orange Show Road (the "Site") from the City's Water
Department at a purchase price of $4,936,000 ($7.42/ sq. ft.) Subsequent to the downturn in the real
estate market in the early 1990s, the value of the Site declined, reaching a low of $1.60 per square
foot by 1998. From time to time over the next few years, the Agency was contacted by several
developers seeking to acquire the Site. However, all offers were rejected because of the large
disparity between the price being offered (market value) and the price the Agency originally paid for
the Site.
In June 2001, the Agency received an offer from Essex Realty Management, Inc., ("Essex") to
acquire the Site for $1.84 per square foot, which was subsequently rejected by the Community
Development Commission (the "Commission"). On September 4,2001, Essex returned to the Agency
with a suggestion that a joint venture approach to the development of the Site be considered in order
to give the Agency an opportunity to recoup a greater share of its original investment in the Site,
while at the same time helping to address the limited supply of small/medium size industrial buildings
in our City that seriously impedes economic growth.
At the Redevelopment Committee (the "Committee") meeting of December 6, 2001, Staff queried the
Committee Members if they would consider a joint venture concept as a means for disposing of and
developing the Site. The Committee requested that Staff provide information regarding such a
concept at their meeting of December 20, 2001. Consequently, during the Committee meeting of
December 20, 2001, Staff along with representatives of Essex gave a presentation of the proposed
joint venture concept for consideration. Subsequent to the presentation, the Committee recommended
that Staff prepare an exclusive right to negotiate agreement between the Agency and Essex for
consideration by the Commission. On February 4, 2002, the Commission approved an Exclusive
Right to Negotiate For Property Acquisition and Redevelopment Assistance Agreement (ERN) with
Essex for the possible disposition and development of the Site.
On August 15,2002, the Agency received an appraisal report prepared by James Smothers, offering
an opinion of market value for the Site of $1,495,632 ($2.25/sq. ft.). By September 9, 2002, Staff had
not concluded negotiations with Essex and therefore requested and received approval by the
Commission of Amendment No.1 to the ERN, effectively extending the negotiating period for
another 270 days.
At the May 22, 2003, Committee Meeting, Essex and Staff presented a new site plan calling for the
creation of 14 separate parcels and the development thereon of 14 concrete tilt-up industrial buildings
P:\Agendas\Comm Dev Commission\CDC 2004\04-02-02 Essex SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 02/02/2004
Agenda Item Number: /(3 f
Economic Development Agency Staff Report
Essex Group, LLC Disposition and Development Agreement
Page 2
ranging in size from approximately 5,400 to 24,000 square feet (the "Project"). Additionally, the
major deal points of a proposed Disposition and Development Agreement (DDA) between the
Agency and Essex were discussed. At that time, Essex indicated that the contracting entity for
purposes of the DDA would be The Essex Group, LLC (Developer). Prior to adjourning the meeting,
the Committee recommended that a public hearing be scheduled for the Commission Meeting of June
16,2003 to consider the proposed DDA. However, it was determined by Agency Special Counsel that
a public hearing on the proposed DDA should not proceed until the City's planning/environmental
review process had been concluded.
On November 18, 2003, the Planning Commission adopted a Mitigated Negative Declaration and a
Mitigation Monitoring/Reporting Program for the Project and approved Tentative Parcel Map No.
16222 (Subdivision No. 03-12) and Development Permit II No. 03-16 for the Project.
On November 20,2003, because of the length of time that had passed since the Site was appraised, an
updated appraisal was solicited. On December 11,2003, an updated appraisal of the Site was received
from Smothers Appraisal Services offering an opinion of value for the Site of $2,227,000
($3.35/sq.ft.). Subsequent to receipt of the updated appraisal, the deal points of the proposed DDA
were revised to reflect the increase in Site valuation. In addition, Essex Orangeshow Commerce
Center LLC was substituted for The Essex Group, LLC as Developer.
CURRENT ISSUE:
The Common Council and Commission are being requested to approve a DDA between the Agency
and the Developer that includes the following major provisions:
. The Agency to sell the Site to the Developer for the fair market value of $2,227,000
($3.35/sq.ft.) at an interest rate of 8% per annum. The purchase price, together with accrued
interest will be paid to the Agency on or before December 31, 2009. As security for the
purchase price, the Developer will execute a deed of trust in favor of the Agency encumbering
the Site. The Agency will subordinate its interest in the Site only to construction financing
necessary for development of the Site.
. The Developer will be responsible for obtaining a construction loan of approximately
$13,150,000 to develop, in two phases, an industrial park consisting of 14 light industrial
buildings ranging in size from approximately 5,000 to 24,000 square feet for a total of
221,893 square feet of industrial space (the "Project"). Although the Developer will have
until 2009 to develop the Project and to sell or lease the buildings therein, according to the
Schedule of Performance attached to the DDA, the Developer proposes to begin construction
of Phase I (eight buildings) in April of 2004 and complete it by mid October of 2004, and to
begin construction of Phase II (six buildings) by January 2005 and to complete it by July of
that same year.
. In addition to the Agency receiving the purchase price of $2,227,000, plus accrued interest,
the Agency will also receive 46% of net profit, as the Project is sold. Although the intent of
___..............u.u.....u................._._..________...___._____________________..._._.____._._._....................__..________________________________________________.____.___.n_..___0_________.
P:\Agendas\Comm Dev Commission\CDC 2004\04-02-02 Essex SR.doc COMMISSION MEETING AGENDA
Meeting Date: 02/0212004
Agenda Item Nnmber: 1<31
Economic Development Agency Staff Report
Essex Group, LLC Disposition and Development Agreement
Page 3
the Project is to sell each of the 14 industrial buildings to individual users, if some of the.
buildings are leased, the Agency will participate financially in the positive net cash flow from
such leasing (after debt service and operating expenses are paid).
Pursuant to State Law, notice of the Public Hearing to consider the DDA was published twice in a
newspaper of general circulation, specifically The Sun on January 16th and 23rd of this year.
ENVIRONMENT AL IMPACT:
On November 18, 2003, the Planning Commission adopted a Mitigated Negative Declaration for the
proposed Project.
FISCAL IMPACT:
The Agency will receive $2,227,000 plus 8% per annum for the Site and will receive forty-six per
cent of net profit, estimated to be approximately $855,114. Moreover, the Project is expected to have
a valuation of $15 million upon completion, thus creating gross tax increment revenue of
approximately $150,000 yearly for the Agency's Central City South Redevelopment Project Area.
RECOMMENDATION:
That the Mayor and Common Council and the Community Development Commission conduct the
Joint Public Hearing, close said Hearing and adopt the respective Resolutions regarding the
Disposition and Development Agreement between the Redevelopment Agency and Essex
Orangeshow Commerce Center, LLC.
'/r
P:\Agendas\Comm Dev Commlssion\CDC 2004\04-02-02 Essex SR,doc
COMMISSION MEETING AGENDA
Meeting Date: 02102/2004
Agenda Item Number: f!.3 r
r
INTER OFFICE MEMORANDUM
OFFICE OF THE CITY ATTORNEY
CITY OF SAN BERNARDINO
TO:
James F. Penman
City Attorney
FROM:
Huston T. Carlyle, Jr.
Sr. Assistant City Attorne
DATE:
January 29, 2004
RE:
Agreement Between the Redevelopment Agency and Essex Orangeshow
Commerce Center (Real Property located at Northeast corner of Orange
Show Road and Arrowhead Avenue).
This memorandum contains a brief history of how (and why) the Redevelopment Agency
purchased the subject property at the northeast comer of Orange Show Road and Arrowhead Avenue.
In early 1990, then Mayor Bob Holcomb informed Mr. Bernie Kersey of the Water
Department that Cal Trans was very interested and in fact was going to buy the Water Department's
property at 2nd Street and D Street. Mr. Kersey was advised to find another suitable piece of property
for his operations ASAP.
Within a very short time, and without the benefit of an appraisal, the Water Department
purchased the subject real property located at the northeast comer of Orange Show Road and
Arrowhead Avenue from Plastiflex Corporation, International for $4,965,000. This money was
obtained by having the Agency loan $4,965,000 of tax increment revenues from Southeast Industrial
Park to the San Bernardino Joint Powers Finance Authority. The monies were then loaned to the
Board of Water Commissioners for the purchase of the property. Escrow closed on June 21, 1990.
Shortly after the close of escrow with Plastiflex, the Water Department was informed by
Mayor Bob Holcomb that Cal Trans had decided it was not going to purchase their property at 2nd
and D. The Water Department did not have the money to repay what it borrowed to purchase the
property at Orange Show Road and Arrowhead Avenue. Mayor Bob Holcomb asked the
Redevelopment Agency to purchase the property from the Water Department, which it did in 1991.
Tax exempt bond proceeds from a 1990 Southeast Industrial Park bond issue in the amount
NO-I(b?
:zl ~IDY
of$5,180,941 were used to "reverse the parties" out of the loan with the Agency purchasing the land
and holding title in the name of the Agency, and crediting the Water Department with $407,045 to
cover previously incurred architectural and engineering costs for the abandoned relocation and
expansion project.
.
SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433
IN CONNECTION WITH THE SALE OF CERTAIN REAL PROPERTY
(ASSESSOR PARCEL NUMBERS 0141-262-03,15 AND 0141-281-01)
1. Introduction
This Summary Report has been prepared by the Redevelopment Agency of the City of
San Bernardino (the" Agency") pursuant to Section 33433 of the California Health and Safety
rode. This Summary Report sets forth certain details of the proposed sale by the Agency for
those certain parcels of real property totaling approximately 15.26 acres of unimproved land,
described as Assessor Parcel Numbers 0141-262-03,15; 0141-281-01, located at the comer of
Arrowhead Avenue and Orange Show Road, San Bernardino, California (the "Property"). An
appraisal performed in or around December 2003 reported the appraised value to be
$2,227,000.00. The Agency intends to sell the Property to Essex Orangeshow Commerce
Center, LLC ("Essex").
The Agency purchased the Property in or around 1991 at the cost of $4,936,000. The
Property is currently unimproved. Essex will use the Property to develop commercial and light
industrial offices for future businesses. No capital improvements have been necessary or
performed by the Agency since obtaining ownership and it is estimated that the Agency has
spent approximately $18,000 maintainiflg the Property for the past 12 years, which averages
approximately $1,500 annually. The Property has never been developed
2. Cost of the Transaction to the Agency
Pursuant to the terms of the Disposition and Development Agreement to be entered into
by the Agency and Essex, Essex will purchase the Property for the appraised value of
$2,227,000.00. Essex will deposit $10,000.00 cash into escrow to be credited towards the
purchase price at the close of escrow. Payment of the balance of the purchase price will be in the
form of a promissory note secured by a first trust deed encumbering the PropertY, executed by
Essex in favor of the Agency. The note shall be interest at a rate of eight percent (8%) annually,
with an all-due and payable provision in 5 years. It is anticipated that Essex will pay
approximately $358,447.00 in interest over the term of the Note. The Agency is responsible for
the standard owner sale costs for the Property. Specifically at closing the escrow the Agency
shall pay: County and City transfer tax; costs of the Owner's Policy of Title Insurance; and \i2 of
escrow fees. Essex shall be responsible for any sales commission, its share of escrow fees as
well as any transfer tax, title insurance or other standard owner's fees for the propertY being
transferred as payment towards the purchase price of the Property.
Based upon the foregoing it is estimated that closing costs to the Agency will be approximately
$6,000.00. .
4830-4654-1568.1
i R3 'i
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<
3 . Value of the Interest Being Conveyed by the Agency
Highest and Best Use. Commercial and light industrial office uses represent the highest
and best use of the Property.
4. Reason Sale will Assist in the Elimination of Blight
The sale of this Property will help eliminate blighting conditions in the Central City
South Project Area, by putting fallow land into productive use, by putting the Property back on
the tax rolls, by eliminating an annual expense to the Agency, by increasing property values and
by creating additional employment opportunities.
5. Conformance with Implementation Plan
The Five- Year Implementation Plan adopted by the Agency contains several broad goals
and objectives. The proposed sale of the Property will assist the Agency in meeting some of the
objectives and goals of its implementation plan in the following ways:
a. The sale encourages a re-investment and re-vitalization in the geographical area.
b. The provision of commercial and light industrial buildings and their occupancy
will increase employment in the project area, providing a catalyst for additional
re-investment by private enterprise in the surrounding area.
6. Attachments
a. Approving Resolutions
b. Disposition and Development Agreement
4830-4654-1568.1
#R~~
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
201 North "E" Street
Suite 301
San Bernardino, California 92401
(Space Above Line for Use By Recorder)
2004
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
ESSEX ORANGESHOW COMMERCE CENTER LLC
4831-9195-6480.7
f
Section 1.01.
Section 1.02.
Section 1.03.
Section 1.04.
Section 1.05.
TABLE OF CONTENTS
Page
Purpose of Agreement......................................................................1
The Property and the Project............................................................1
Parties to the Agreement..................................................................1
Restrictions Against Change in Ownership, Management
and Control of Developer and Assignment of Agreement...............2
Benefit to Project Area.....................................................................3
ARTICLE II DISPOSITION OF THE PROPERTY.......................................................................3
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.0?
Section 2.08.
Section 2.09.
Section 2.10.
Section 2.11.
Section 2.12.
Section 2.13.
Section 2.14.
4831-9195-6480.8 []
Purchase and Sale of the Property; Purchase Price; Agency
Financing......................................................................................... .3
Deposit .. ... ... .... ...... ...... ........ ..... .... ..... ........ ..... .... .................. ......... ...5
Opening and Closing of Escrow ......................................................5
Escrow Instructions..........................................................................6
Conveyance of Title ..... ..... .............. ........ ..... ...... ... ... ........... ..... ........6
Additional Closing Obligations of Agency......................................?
Closing Obligations of Developer ...................................................8
Inspections and Review ...................................................................8
Due Diligence Investigation of the Property By the
Developer.... ............. .............. ...... ............. .............. ............. ..........10
Due Diligence Certificate ..............................................................11
Books and Records ........................................................................11
Condition ofthe Property-Developer's Release ............................11
Review and Approval of Condition of Title by the
Developer ............ ......... ..... ...... ... ... ...... ....... ..... ......... ..... ... ........ ......13
Survey......... .... ......... ............ ........... ...... ..... ...... ............... ..... ..........13
f
Section 2.15.
Section 2.16.
Section 2.17.
Section 2.18.
Section 2.19.
Section 2.20.
Section 2.21.
Section 2.22.
Section 2.23.
Section 2.24.
Section 2.25.
Extension of Due Diligence Period................................................ 14
Developer's Conditions Precedent to Close Escrow .....................14
Agency's Conditions Precedent to Close Escrow..........................15
Distribution of Documents to Developer After Closing
Date by Escrow Holder..................................................................16
Satisfaction of Conditions.................... ............ ......... ..... ...... ........ ..16
[RESERVED -- NO TEXT)....................................,......................16
Prorations, Closing Costs, Possession ...........................................16
BREACH OF ARTICLE II BY THE AGENCY;
PROVABLE OUT -OF-POCKET EXPENSES PAYABLE
AS DAMAGES BY THE AGENCY TO THE
DEVELOPER ................................................................................17
BREACH BY THE DEVELOPER OF ARTICLE II;
LIQUIDATED DAMAGES PAYABLE BY THE
DEVELOPER TO THE AGENCY ...............................................18
Representations and Warranties..................................................... I 8
Damage, Destruction and Condemnation ......................................21
ARTICLE III DEVELOPMENT OF THE PROJECT ..................................................................22
Section 3.01.
Section 3.04.
Section 3.05.
Section 3.06.
Section 3.07.
Development of the Project by Developer.....................................22
Change in Ownership Management and Control of the
Developer -- Assignment and Transfer..........................................26
Security Financing; Right of Holders ............................................28
Right of the Agency to Satisfy Other Liens on the Property
after Conveyance of Title....... ......... ................ ........ ....... ...... ..........31
Certificate of Completion ..............................................................31
ARTICLE IV USE OF THE SiTE.................................................................................................32
Section 4.01.
Section 4.02.
4831-9195-6480.8 []
Uses............................................................................................... .32
Maintenance of the Property ..........................................................33
ii
f
Section 4.03.
Section 4.04.
Obligation to Refrain from Discrimination....................................33
Form of Nondiscrimination and Nonsegregation Clauses .............33
ARTICLE V PAYMENT OF PURCHASE PRICE OF THE PROPERTY; PAYMENT
OF ADDITIONAL AMOUNTS ........................................................................................34
Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04
Developer Obligation to Pay Purchase Price of the
Property; Obligation of Developer to Pay Certain
Additional Amounts............. ..................... .......... ........... ........... .....34
Payments to Agency Upon Leasing of the Project ........................35
Payments to Agency Upon Refinancing and Upon Sale of
the Project. ........................................................ ........ ........... ..........36
Release Provisions ....... .... ........ ...... ... ... .......... ........ ... ........... ....... ...38
ARTICLE VI DEFAULTS, REMEDIES AND TERMINATION................................................39
Section 6.0 I.
Section 6.02.
Section 6.03.
Section 6.04.
Section 6.05.
Section 6.06.
Section 6.07.
Defaults - General..........................................................................39
Legal Actions .... ... ........ ... .... ... ............. ... ...... .... ............. ................ .40
Rights and Remedies are Cumulative............................................40
Damages........ ... ............ ... ...... ........ ...... ....... ..... ...... ...... ........ ...........40
Specific Performance Prior to Close of Escrow ............................41
Agency Rights of Termination Following Close ofEscrow..........41
Right to Reenter, Repossess and Revest........................................42
ARTICLE VII GENERAL PROVISIONS ....................................................................................44
Section 7.01.
Section 7.02.
Section 7.03.
Section 7.04.
Section 7.05.
4831-9195-6480.8 []
Notices, Demands and Communications Between the
Parties............................................................................................. 44
Conflict of Interest ........... ................. ............. ........ ........... ..... ..... ...45
Warranty Against Payment of Consideration for Agreement........45
Nonliability of Agency Officials and Employees..........................45
Enforced Delay: Extension of Time ofPerformance.....................46
iii
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Section 7.06.
Section 7.07.
Section 7.08.
Section 7.09.
Section 7.10.
Section 7.11.
Section 7.12.
~
Inspection of Books and Records ..................................................47
Approvals ......... ..... .... ..... .... ... ....... ..... ........ ................ ........ .............47
Real Estate Commissions......................... ................ ......................47
Indemnification ..... .... ... .,. ... ....... ...... ........ ... ......... ........ ........... ..... ...47
Release of Developer from Liability..............................................48
Attorneys ' Fees................................ ........ ............. ............... ........ ..48
Effect............................................................................................. .48
ARTICLE VIII ENTIRE AGREEMENT, W ANERS AND AMENDMENT .............................48
Section 8.01.
Entire Agreement. ... ..... ....... .... ......... ... ..... ... .... ... ... ......... ...... ..........48
ARTICLE IX TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND
RECORDATION ...............................................................................................................49
Section 9.01.
EXHillIT "A"
EXHillIT "B"
EXHillIT "c"
EXHillIT "D"
EXHillIT "E"
EXHillIT "F"
EXHillIT "G"
EXHmIT "H"
EXHillIT "I"
4831-9195-6480.8 []
Execution and Recordation............................................................49
- LEGAL DESCRIPTION
- DESCRIPTION OF PROJECT AND SCOPE OF DEVELOPMENT
- DEED OF TRUST
- FORM OF PAYMENT GUARANTY
- AGENCY GRANT DEED
- SCHEDULE OF PERFORMANCE
- CERTIFICATE OF COMPLETION
- PROMISSORY NOTE
- FORM OF PERFORMANCE GUARANTY
IV
2004
DISPOSITION AND DEVELOPMENT AGREEMENT
(Essex Orangeshow Commerce Center LLC)
THIS 2004 DISPOSITION AND DEVELOPMENT AGREEMENT (Essex
Orangeshow Commerce Center LLC) (this "Agreement") is entered into as of ,
2004, by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO, a public body corporate and politic (the "Agency") and ESSEX
ORANGES HOW COMMERCE CENTER LLC, a California limited liability company (the
"Developer"). The Agency and Developer hereby agree as follows:
Section 1.01. Pumose of Agreement. The purpose of this Agreement is to
implement the Redevelopment Plan for the Central City South Redevelopment Project by
providing for the purchase and redevelopment by the Developer of certain unimproved lands
consisting of approximately 15.26 acres generally located at the intersection of Orange Show
Road and Arrowhead Avenue in the City of San Bernardino (the "City") and more specifically
described in the legal description attached as Exhibit "A" hereto (the "Property"). The
redevelopment of the Property pursuant to this Agreement is in the vital and best interests of the
City and the health, safety and welfare of its residents, and in accord with the public purposes
and provisions of applicable state and local laws. The Agency has determined that the
development and use of the Property contemplated by this Agreement is consistent with the
Redevelopment Implementation Plan for the Central City South Redevelopment Project.
Section 1.02. The PropertY and the Proiect. The Property is presently owned by
the Agency and is situated in the Central City South Redevelopment Project Area of the Agency
(the "Project Area"). Promptly following the purchase of the Property from the Agency, the
Developer shall undertake the redevelopment and improvement of the Property for light
industrial, office, warehouse, light manufacturing, retail and restaurant and other commercial
uses by constructing up to fourteen (14) separate buildings, each constructed on separate legal
parcels, all as more particularly described in Exhibit "B" attached hereto (Description of Project
and Scope of Development) (the "Project"). The Developer may subdivide the Property into
separate legal parcels for sale, lease or financing. For purposes of this Agreement "Parcel" shall
mean any portion of the Property, less than the entire Property, legally subdivided in accordance
with the requirements of the City of San Bernardino and the California Subdivision Map Act. A
"Completed Parcel" shall mean any Parcel where construction of a Project building has been
completed by the Developer and Developer has obtained a Certificate of Occupancy from the
City of San Bernardino and a Certificate of Completion from the Agency, as defined herein.
Section 1.03. Parties to the Agreement.
(a) The Agency is a public body, corporate and politic, exercIsing
governmental functions and powers and organized and existing under Chapter 2 of the
Community Redevelopment Law of the State of California (Health and Safety Code
Section 33020, et sea.). The principal office of the Agency is located at 201 North "E" Street,
Suite 301, San Bernardino, California 92401.
4831.9195-6480.8
1
(b) The Developer is a California limited liability company. The principal
office and mailing address of the Developer for purposes of this Agreement is:
Essex Orangeshow Commerce Center LLC
3141 Redhill Avenue, Suite 150
Costa Mesa, California 92626
Attn: Burrell Magnusson
Telephone: (714) 540-5188
Fax: (714) 540-3741
( c) The City of San Bernardino is not a party to this Agreement.
Section 1.04. Restrictions Against Change in Ownership. Management and
Control of Developer and Assignment of Agreement. The qualifications and identity of the
Developer are of particular concern to the Agency. It is because of those qualifications and
identity that the Agency has entered into this Agreement with the Developer. Prior to the
issuance of a Certificate of Completion as set forth in Section 3.07, no voluntary or involuntary
successor in interest of the Developer shall acquire any rights or powers under this Agreement;
provided, however, that the parties hereto acknowledge and agree that prior to the
commencement of construction of the Project, the Developer may assign all of its right, title and
interest in this Agreement to an entity (the "Approved Assignee") (i) at least twenty five percent
(25%) of which is owned directly or indirectly by the Developer or an entity that owns or is in
common ownership with the Developer (the "Developer Member"), with the remaining equity
interest in such entity held by one or more equity investors (the "Investors") and (ii) the
managing member or manager of which is the Developer Member. Any Approved Assignee
shall expressly assume the obligations of the Developer under this Agreement and agree to be
subject to the conditions and restrictions to which the Developer is subject under this Agreement
and, upon such assumption, the Approved Assignee shall become the Developer hereunder for
all purposes.
The Developer shall not, except as set forth above or in Section 3.04 hereof,
assign all or any part of this Agreement or any rights hereunder following commencement of
construction of the Project and, without the prior written approval of the Executive Director of
the Agency, which approval shall not be unreasonably withheld.
The Developer shall promptly notify the Agency in writing of any and all changes
whatsoever in the identity of the business entities and individuals either comprising or in control
of the Developer, as well as any and all changes in the interest or the degree of control of the
Developer by any such party, of which information the Developer or any of its officers have
been notified or may otherwise have knowledge or information. This Agreement may be
terminated by the Agency prior to the Close of the Escrow as set forth in Section 2.03, if there is
any significant or material change, whether voluntary or involuntary, in membership, ownership,
management or control of the Developer (other than such changes occasioned by the death or
incapacity of any individual) that has not been approved by the Agency prior to the time of such
change or the Agency may seek other appropriate relief in the event that at any time following
the Close of Escrow and prior to issuance of the Certificate of Completion such a change in the
membership, ownership, management or control of the Developer occurs with respect to the
4831-9195-6480.8 2
Property; provided, however, that (i) the Agency shall first notify the Developer in writing of its
intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer
shall have twenty (20) calendar days following receipt of such written notice to commence and
thereafter diligently and continuously proceed with the cure of the default of the Developer and
submit evidence of the initiation and satisfactory completion of such cure to the Agency in a
form and substance deemed satisfactory to the Agency, in its reasonable discretion.
Section 1.05. Benefit to Proiect Area. The Agency has determined that the
development of the Property in accordance with this Agreement will materially assist in the
elimination of blight and the implementation of the Redevelopment Plan for the Project Area.
ARTICLE II
DISPOSITION OF THE PROPERTY
Section 2.01. Purchase and Sale of the Property; Purchase Price; Agency
Financing.
(a) Purchase and Sale. Subject to all of the terms, conditions and provisions
of this Agreement, and for the consideration of the promises and agreements of the Developer
herein set forth, the Agency hereby agrees to sell to the Developer merchantable lien free title to
the Developer and the Developer hereby agrees to purchase all of the right, title and interest of
the Agency in the Property, pursuant to the terms ofthis Agreement.
(b) Purchase Price. As the purchase price for the Property, the Developer
shall pay to the Agency Two Million Two Hundred Twenty-Seven Thousand and 00/100 Dollars
($2,227,000.00) (the "Purchase Price"), as provided in Section 2.0l(c) and Section 2.02. The
Purchase Price is based upon an appraisal of the Property dated December II, 2003 by Smothers
Appraisal.
(c) Agency Purchase Money Financing; Subordination. The Purchase Price
shall accrue simple interest on the unpaid principal amount thereof at the rate of eight percent
(8%) per annum (the "Base Interest"). The Purchase Price, together with all accrued and unpaid
Base Interest outstanding thereon, shall be paid to the Agency on or before December 31, 2009
(the "Maturity Date"). Developer shall execute a promissory note evidencing the obligation of
the Developer to pay to the Agency on or before the Maturity Date the Purchase Price, plus Base
Interest (the "Note"). The Note shall be in the form attached hereto as Exhibit "H". A deed of
trust covering the Property (the "Deed of Trust") shall secure the obligation of the Developer
under this Agreement and the Note to pay to the Agency the Purchase Price and Base Interest.
The deed of trust shall be in the form attached hereto as Exhibit "C". The Agency shall, at the
request of the Developer, subject to the following sentence, agree to subordinate the Deed of
Trust to (i) a deed of trust securing repayment of a construction loan to the Developer in an
amount which, when added to the Purchase Price, shall result in a loan to value ratio not to
exceed ninety percent (90%) of the fair market value of the Property as improved through the
application of such construction loan proceeds to development of the Project on the Property, as
determined by the lender of such construction loan. The proceeds of any construction loan to the
Developer for the Project which the Agency agrees to subordinate the Deed of Trust shall be
4831.9195-6480.8 3
used and applied by the Developer solely for the improvement and development of the Project
and (ii) in the event the Developer does not sell the Project to a third party upon completion of
the improvement and development of the Project, deeds of trust securing repayment of one or
more permanent loans (subject to the right of the Agency to receive a share of Refinancing
Proceeds (as defined below) pursuant to Section 5.03 hereof). Notwithstanding the foregoing,
the obligation of the Agency to subordinate the lien of the Deed of Trust to any such construction
loan or permanent loan shall be conditioned upon (x) Developer's delivery to the Agency of a
duly executed guaranty of payment of the Purchase Price and Base Interest pursuant to Section
2.01(d) and in the form attached hereto as Exhibit "D" (the "Payment Guaranty") and (y) such
financing being provided by a responsible financial or lending institution reasonably acceptable
to the Agency. The subordination of the Deed of Trust to a construction loan and the
subordination of the Deed of Trust to one or more permanent loans shall be evidenced by
commercially reasonable subordination agreements by and among the applicable lender, the
Developer and the Agency which contain the provisions required under Section 3.05 and the
covenant of the Developer and the applicable lender that the applicable loan documentation shall
not be amended or modified in any material respect without the approval of the Agency.
(d) The Payment Guarantv. The Payment Guaranty to be delivered in the
event of a subordination of the Deed of Trust to any construction loan or permanent loan shall be
executed by one or more guarantors (collectively, the "Guarantors") (i) reasonably acceptable to
the Agency; (ii) having a combined net worth of not less than Five Million Dollars ($5,000,000),
as shown on financial statements prepared no sooner that 60 calendar days before the
Guarantors' execution of the Payment Guaranty and certified in writing by each Guarantor (with
respect to his or its own fmancial statement) to be correct and accurate as of the date made; and
(iii) possessing, in the reasonable judgment of the Agency, a good business reputation. The
Payment Guaranty shall be the joint and several unconditional obligation of the Guarantors to
pay to the Agency, on the Maturity Date, the Purchase Price plus all Base Interest accrued as of
the Maturity Date. Notwithstanding a sale prior to the Maturity Date of all or a portion of the
Project or the Property that results in the Developer's retaining no interest in the Project or the
Property, the Payment Guaranty shall remain in full force and effect.
(e) Additional Caoital Contribution Obligation. Upon subordination of the
lien of the Deed of Trust to a lien securing any permanent loan, the Developer shall be obligated
to, and shall, fund any and all deficits in cash flow from the Project so that operating costs of the
Project, including debt service, are timely paid (the "Additional Capital Contribution
Obligation"). The Deed of Trust shall also secure the obligation of the Developer to pay and
perform the Additional Capital Contribution Obligation.
(f) Performance Guarantv. One or more Guarantors (as defined in Section
2.01(d) shall deliver a guaranty of performance of Developer under this Agreement (the
"Performance Guaranty") a form of which is attached as Exhibit "f' hereto. The Performance
Guaranty shall be the joint and several unconditional obligations of the Guarantors to perform
the obligations of the Developer in accordance with this Agreement, including but not limited to
the indemnification of the Agency and City as set forth in Section 7.09.
4831-9195-6480.8
4
f
Section 2.02. Deposit.
(a) Within five (5) days following the execution of this Agreement by both
parties, the Developer shall deliver to the Escrow Holder (as hereinafter defined) Ten Thousand
Dollars ($10,000.00). This sum upon its receipt by the Escrow Holder, is referred to in this
Agreement as the "Deposit." Upon receipt of the Deposit together with a fully executed copy of
this Agreement, the Escrow Holder shall cause the Escrow (as hereinafter defined) to be opened
as provided in Section 2.03, and the Escrow Holder shall place the Deposit into an interest-
bearing escrow account with any interest thereon to accrue to the benefit of the Developer.
At the Close of Escrow (as hereinafter defined), the Deposit shall be applied as a
credit to the Purchase Price of the Property.
(b) The Deposit (less an amount equal to the customary and reasonable
escrow cancellation charges of the Escrow Holder) shall be returned to the Developer in the
event that:
(i) the Agency or the Developer terminates this Agreement pursuant to
Section 2.03(a); or
(ii) the Developer does not deliver its Due Diligence Certificate (as hereinafter
defined) to the Escrow Holder pursuant to Section 2.03(b) and this
Agreement is terminated; or
(iii) the Developer's conditions precedent to the Close of Escrow described in
Section 2.16(1), (2), (3), (5), (6) or (7) are not satisfied (unless satisfaction
has been waived by the Developer) and this Agreement is terminated; or
(iv) the Property is materially damaged prior to the Close of Escrow, or an
action of eminent domain is commenced by a governmental entity with
respect to the Property prior to the Close of Escrow, and the Developer
elects to terminate this Agreement pursuant to Section 2.25.
Section 2.03. Opening and Closing of Escrow .
(a) The transfer and sale of the Property shall take place through an Escrow
(the "Escrow") to be administered by First American Title Company, 3625 14th Street, Riverside,
California, Attention: Tricia Cowan (909-684-1600) or such other escrow or title insurance
company mutually agreed upon by the Seller and the Agency (the "Escrow Holder"). The
Escrow shall be deemed open ("Opening of Escrow") upon the receipt by the Escrow Holder of a
fully executed copy of this Agreement and the Deposit. The Escrow Holder shall promptly
confirm to the parties the escrow number, the date of the Opening of Escrow and the title
insurance order number assigned to the Escrow.
(b) Subject to any extensions of time granted pursuant to Section 2.15 hereof,
in the event that the Developer has not delivered its Due Diligence Certificate to the Agency and
the Escrow Holder within one hundred eighty (180) calendar days from the Opening of Escrow
4831.9195-6480.8 5
,
for any reason, then in such event this Agreement shall terminate upon written notice to the
Escrow Holder from either the Agency or the Developer, whereupon the Deposit shall be
returned by the Escrow Holder to the Developer (less an amount equal to the customary and
reasonable escrow cancellation charges payable to the Escrow Holder) without further or
separate instruction to the Escrow Holder, and the parties shall each be relieved and discharged
from all further responsibility or liability under this Agreement.
(c) The Close of Escrow shall occur upon the satisfaction of the
Commencement of Construction Requirements (as hereinafter defined), subject to the provisions
of Section 2.16 and Section 2.17 hereof. The words "Commencement of Construction
Requirements" shall mean the taking of all necessary action and the obtaining of all required
permits and approvals by the Developer so that construction of the Project may commence. The
Developer shall deliver into Escrow a written certificate signed by the Developer stating that all
Commencement of Construction Requirements have been satisfied (the "Construction Readiness
Certificate"). The words "Close of Escrow", "Closing Date" and "Closing" shall mean and refer
to the date when the Escrow Holder is in receipt of the Construction Readiness Certificate and all
funds and documents to be deposited into the Escrow by each of the parties and is in a position to
comply with the final written escrow closing instructions of the parties and cause the Agency
Grant Deed for the Property to be recorded and the Title Policy (as defined in Section 2.05) to be
issued by the Title Company (as defined in Section 2.05) and delivered to the Developer.
Section 2.04. Escrow Instructions. This Agreement also constitutes escrow
instructions of the parties to the Escrow Holder. Additionally, the Developer and the Agency
each agree to execute the customary supplemental escrow instructions of the Escrow Holder in
the form provided by the Escrow Holder to its clients in real property escrow transactions
administered by it. In the event of a conflict between the additional terms of such customary
supplemental escrow instructions of the Escrow Holder and the provisions of this Agreement,
this Agreement shall supersede and be controlling. Upon any termination of this Agreement or
cancellation of the Escrow, the Developer shall be solely responsible for the payment of the
escrow cancellation costs of the Escrow Holder, the Escrow Holder shall forthwith return all
monies (as provided in this Agreement) and documents, less only the Escrow Holder's
customary and reasonable escrow cancellation fees and expenses, as set forth herein.
Section 2.05. Convevance of Title. On or before 12:00 noon on the business
day preceding the Closing Date, the Agency shall deliver to the Escrow Holder a grant deed in
the form attached hereto as Exhibit "E" (the "Agency Grant Deed") duly executed and
acknowledged by the Agency, which Agency Grant Deed shall convey all of its merchantable
lien free right, title and interest of the Agency in the Property to the Developer upon the Close of
Escrow. The Escrow Holder shall be instructed to record the Agency Grant Deed in the Official
Records of San Bernardino County, California, if and when Escrow Holder holds the various
instruments of the parties as set forth herein and can obtain for the Developer an ALTA owner's
extended coverage policy of title insurance ("Title Policy") issued by First American Title
Insurance Company or such other title insurance company mutually agreed upon by the parties
("Title Company") with coverage in an amount equal to the Purchase Price together with such
endorsements to the policy as may be reasonably requested by the Developer, insuring fee title to
the Property vested in the Developer is free and clear of options, rights of first refusal or other
4831-9195-6480.8
6
f'
purchase rights, leases or other possessory interests, lis pendens and monetary liens and/or
encumbrances and subject only to:
(1) non-delinquent real property taxes;
(2) non-monetary title exceptions approved by the Developer pursuant to
Section 2.13 below;
(3) applicable provisions of any parcel map/subdivision map for the Property;
(4) the effect of the Redevelopment Plan for the Central City South
Redevelopment Project;
(5) the effect of any conditions imposed by the City as part of the
development plan approvals for the Project;
(6) the provisions ofthe Agency Grant Deed;
(7) the effect of this Agreement; and
(8) such other title exceptions, if any, resulting from documents being
recorded or delivered through Escrow.
Section 2.06. Additional Closing Obligations of Agencv. On or before 12:00
noon on the business day preceding the Closing Date (unless indicated otherwise), the Agency
shall deliver to the Escrow Holder (unless indicated to be delivered directly to the Developer)
copies of the following documents and other items:
(1)
(2)
(3)
(4)
4831-9195-6480.8
a certificate of non-foreign status executed by the Agency, in the
customary form provided by the Escrow Holder, and a California
Franchise Tax Board Form 590-RE executed by the Agency;
all soils, seismic, geologic, drainage, and environmental reports, and
surveys, with respect to the Property, if any, which the Agency has in its
possession and/or control to the extent that originals of such items have
not been delivered previously by the Agency to the Developer pursuant to
Section 2.08 below;
two (2) duplicate original copies of the Closing Statement described in
Section 2.21, duly executed by the Agency;
evidence of the existence, organization and authority of the Agency and
of the authority of persons executing documents on behalf of the Agency
reasonably satisfactory to the Escrow Holder and Title Company; and
7
f
(5) any other documents, instruments, funds and records required to be
delivered to the Developer under the terms of this Agreement which have
not been previously delivered.
Section 2.07. Closing Obligations of DeveloDer. On or before 12:00 noon on
the business day preceding the Closing Date, the Developer shall deliver to the Escrow Holder
copies of the following documents and other items:
(I) an acknowledgment and acceptance of the Agency Grant Deed, duly
executed and acknowledged by the Developer.
(2) two (2) duplicate original copies of the Closing Statement, duly executed
by the Developer.
(3) an original and duly executed Note and the Deed of Trust, the latter in
recordable form.
(4) evidence of the existence, organization and authority of the Developer and
of the authority of persons executing documents on behalf of the
Developer reasonably satisfactory to the Escrow Holder and the Title
Company.
(5) an original and duly executed Performance Guaranty.
(6) any other documents, instruments or funds required to be delivered by the
Developer under the terms of this Agreement or as otherwise required by
Escrow Holder or Title Company in order to close Escrow which have not
previously been delivered.
Section 2.08. InsDections and Review.
(a) Due Diligence Items. Within five (5) days after the execution of this
Agreement, the Agency shall deliver true, correct and complete copies or originals of the
following documents and items (collectively, "Due Diligence Items") to the Developer:
(1)
copies of all soils, seismic, geologic, drainage, engineering, enviromnental
and similar type reports and surveys (including, but not limited to, any
Property Environmental Site Assessments), surveys, relating to the
Property, if any, in the possession or control ofthe Agency.
(2)
notices of violations, including, but not limited to, zoning ordinances,
development or building codes affecting the Property within the Agency's
possession or control.
(3)
disclosure of any legal matters affecting the use or condition of the
Property to the knowledge of the Agency.
4831-9195-6480.8
8
r
(4) a copy of the Redevelopment Plan for the Central City South
Redevelopment Project.
(b) Certain Definitions. For the purpose of this Agreement, the terms set forth
below shall have the following meaning:
4831-9195-6480.8
(i)
"environmental laws" means all federal, state, local, or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, or
requirements of any government authority regulating, relating to, or
imposing liability of standards of conduct concerning any hazardous
substance (as later defined), or pertaining to occupational health or
industrial hygiene (and only to the extent that the occupational health or
industrial hygiene laws, ordinances, or regulations relate to hazardous
substances on, under, or about the Property), occupational or
environmental conditions on, under, or about the Property, as now or may
at any later time be in effect, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA") [42 USC Section 9601 et sea.]; the Resource
Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901
et sea.]; the Clean Water Act, also known as the Federal Water Pollution
Control Act ("FWPCA") [33 USC Section 1251 et seq.]; the Toxic
Substances Control Act ("TSCA") [15 USC Section 2601 et sea.]; the
Hazardous Materials Transportation Act ("HMTA") [49 USC Section
1801 et sea.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section
6901 et sea.] the Clean Air Act [42 USC Section 7401 et sea.]; the Safe
Drinking Water Act [42 USC Section 300f et ~.]; the Solid Waste
Disposal Act [42 USC Section 6901 et sea.]; the Surface Mining Control
and Reclamation Act [30 USC Section 101 et sea.] the Emergency
Planning and Community Right to Know Act [42 USC Section 11001 et
sea.]; the Occupational Safety and Health Act [29 USC Section 655 and
657]; the California Underground Storage of Hazardous Substances Act
[H & S C Section 25288 et sea.]; the California Hazardous Substances
Account Act [H & S C Section 25300 et sea.]; the California Safe
Drinking Water and Toxic Enforcement Act [H & S C Section 24249.5 et
sea.] the Porter-Cologne Water Quality Act [Water Code Section 13000 et
sea.] together with any amendments of or regulations promulgated under
the statutes cited above and any other federal, state, or local law, statute,
ordinance, or regulation now in effect or later enacted that pertains to
occupational health or industrial hygiene, and only to the extent the
occupational health or industrial hygiene laws, ordinances, or regulations
relate to hazardous substances on, under, or about the Property, or the
regulation or protection of the environment, including ambient air, soil,
soil vapor, groundwater, surface water, or land use.
9
J
(ii) "hazardous substances" includes without limitation:
those substances included within the definitions of "hazardous substance,"
"hazardous waste," "hazardous material," "toxic substance," "solid
waste," or "pollutant or contaminate" in CERCLA, RCRA, TSCA,
HMT A, or under any other environmental law; and
those substances listed in the United States Department of Transportation
(DOT)Table [49 CFR 172.101], or by the EPA, or any successor agency,
as hazardous substances [40 CFR Part 302]; and
other substances, materials, and wastes that are or become regulated or
classified as hazardous or toxic under federal, state, or local laws or
regulations; and
any material, waste, or substance that is:
(I) a petroleum or refined petroleum product,
(2) asbestos,
(3) polychlorinated biphenyl,
(4) designated as a hazardous substance pursuant to 33 USC
Section 1321 or listed pursuant to 33 USC Section 1317,
(5) a flammable explosive, or
(6) a radioactive material.
Section 2.09. Due Diligence Investigation of the Prooertv Bv the Develooer .
(a) Within one hundred and eighty (180) days from and after the Opening of
Escrow, and subject to the extensions of time set forth below in Section 2.15, the Developer shall
have the right to examine, inspect and investigate the Property (the "Due Diligence Period") to
determine whether the condition of the Property is acceptable to the Developer and to obtain
such development project approvals from the City for the improvement of the Project as the
Developer may require in its sole and absolute discretion.
(b) During the Due Diligence Period, the Agency shall permit the Developer,
its engineers, analysts, contractors and agents to conduct such physical inspections and testing of
the Property as the Buyer deems prudent with respect to the physical condition of the Property,
including the inspection or investigation of soil and subsurface soil geotechnical condition,
drainage, seismic and other geological and topographical matters, surveys the potential presence
of any hazardous substances, if any.
4831.9195.6480.8
10
(c) Any such investigation work on the Property may be conducted by the
Developer and/or its agents during any normal business hours upon seventy-two (72) hours prior
notice to the Agency, which notice will include a description of any investigation work or tests to
be conducted by the Developer on the Property. Upon the Agency's request, the Developer will
provide the Agency with copies of any test results.
(d) During the Due Diligence Period, the Developer shall also have the right
to investigate all matters relating to the zoning, use and compliance with other applicable laws
which relate to the use and development and improvement of the Property. The Developer may
submit an application to the City and any other regulatory agency with jurisdiction for any and
all necessary development project approvals for the improvement of the Project. The Agency
hereby consents to the submission of such development project approval applications by the
Developer.
(e) The Agency shall cooperate fully to assist the Developer in completing
such inspections and investigations of the condition of the Property. The Agency shall have the
right, but not the obligation, to accompany the Developer during such investigations and/or
inspections. The Developer shall pay for all costs and expenses associated with the conduct of
all such Due Diligence investigation including the cost of submitting any development project
approval application as relates to the Project to any regulatory jurisdiction.
Section 2.10. Due Diligence Certificate. Within one hundred eighty (180) days
following the Opening of Escrow, the Developer shall complete its investigation of the Property
(subject to the extensions of time set forth in Section 2.15) and deliver a due diligence certificate
signed by the Developer (the "Due Diligence Certificate") to the Escrow Holder which either:
(i) indicates that the Developer accepts the condition of the Property or;
(ii) contains a description ofthe matters or exceptions relating to the condition
of the Property which the Developer was not able to accept or resolve to
its satisfaction during the Due Diligence Period.
Section 2.11. Books and Records. As part of the Developer's due investigations
during the Due Diligence Period, the Developer shall be afforded full opportunity by the Agency
to examine all books and records which relate to the Property in the possession of the Agency
and/or the Agency's agents or employees, including the reasonable right to make copies of such
books and records. During the Due Diligence Period, the Agency will make sufficient staff
available to assist the Developer with obtaining access to information relating to the Property
which is in the possession or control of Agency.
Section 2.12. Condition of the Propertv-Developer's Release. The Developer
acknowledges and agrees that it shall be given a full opportunity under this Agreement to inspect
and investigate every aspect of the Property during the Due Diligence Period. The Developer
shall accept the delivery of possession to the Property on the Close of Escrow in an "AS IS",
"WHERE IS" and "SUBJECT TO ALL FAULTS" condition. The Developer further agrees and
represents to the Agency that by a date no later than the end of the Due Diligence Period, the
Developer shall have conducted and completed (or waived the completion) of all of its
4831-9195-6480.8 11
independent investigation of the condition of the Property which the Developer may believe to
be indicated. The Developer hereby acknowledges that it shall rely solely upon its own
investigation of the Property and its own review of such information and documentation as it
deems appropriate for the purpose of accepting the condition and possession of the Property.
The Developer is not relying on any statement or representation by the Agency relating to the
condition of the Property unless such statement or representation is specifically contained in this
Agreement. Without limiting the foregoing, the Agency makes no representations or warranties
as to whether the Property presently complies with environmental laws or whether the Property
contains any hazardous substance, as these terms are defined in Section 2.08(b) hereof.
Furthermore, to the extent that the Agency has provided the Developer with information relating
to the condition of the Property, including information and reports prepared by or on behalf of
the City of San Bernardino, the Agency makes no representation or warranty with respect to the
accuracy, completeness or methodology or content of such reports or information.
Without limiting the above, except to the extent covered by an express
representation or warranty of the Agency set forth in this Agreement, the Developer, on behalf of
itself and its successors and assigns, waives and release the Agency and its successors and
assigns from any and all costs or expenses whatsoever (including, without limitation, attorneys'
fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, arising
from or relating to the physical condition of the Property, the condition of the soils, the
suitability of the soils for the improvement of the Project as proposed, or any law or regulation
applicable thereto, including the presence or alleged presence of harmful or hazardous
substances in, under or about the Property including, without limitation, any claims under or on
account of (i) CERCLA and similar statutes and any regulations promulgated thereunder or (ii)
any other environmental laws.
The Developer expressly waives any rights or benefits available to it with respect
to the foregoing release under any provision of applicable law which generally provides that a
general release does not extend to claims which the creditor does not know or suspect to exist in
his or her favor at the time the release is agreed to, which, if known to such creditor, would
materially affect a settlement. By execution of this Agreement, the Developer acknowledges that
it fully understands the foregoing, and with this understanding, nonetheless elects to and does
assume all risk for claims known or unknown, described in this Section 2.12 without limiting the
generality of the foregoing:
The undersigned acknowledges that it has been advised by legal counsel and is
familiar with the provisions of California Civil Code Section 1542, which
provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOWN OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM, MUST
HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
4831-9195-6480.8
12
The undersigned, being aware of this code section, hereby expressly waives any
rights it may have thereunder, as well as under any other statutes or common law principles
of similar effect.
Initials of Developer:_
The provisions of this Section 2.12 shall survive the Close of Escrow.
Section 2.13. Review and Approval of Condition of Title bv the Developer.
(a) Within fifteen (15) days following the Opening of Escrow, Agency shall
cause to be delivered to the Developer a preliminary title report or title commitment for an
AL T A extended coverage policy of title insurance issued by the Title Company, describing the
state of title of the Property, together with copies of all exceptions specified therein and with all
easements plotted, but excluding matters that may be disclosed on the Survey (as defined in
Section 2.14) (the "Preliminary Title Report"). The Developer shall notify the Agency in writing
of any objections the Developer may have to the title exceptions contained in the Preliminary
Title Report ("Developer's Title Objection Notice") prior to the expiration of the Due Diligence
Period. The Agency shall have a period of five (5) days after receipt of the Developer's Title
Objection Notice in which to deliver written notice to the Developer ("Agency's Title Notice")
of the Agency's election to either (i) agree to remove the objectionable items prior to the Close
of Escrow, or (ii) decline to remove any such title exceptions; provided, however, that the
Agency shall be required to remove all monetary liens and encumbrances created by or as a
result of the Agency's activities. If the Agency notifies the Developer of its election to terminate
Escrow rather than remove the objectionable items, the Developer shall have the right, by written
notice delivered to the Agency within five (5) days after the Developer's receipt of the Agency's
Title Notice, to agree to accept the Property subject to the objectionable items, in which event the
Agency's election to terminate the Escrow shall be of no effect, and the Developer shall take title
at the Close of Escrow subject to such objectionable title items.
(b) Except for the permitted exceptions set forth in Section 2.05, the Agency
covenants not to further encumber and not to place any further liens or encumbrances on the
Property, including, but not limited to, covenants, conditions, restrictions, easements, liens,
options to purchase, options to lease, leases, tenancies, or other possessory interests without the
prior written consent of the Developer. Upon the issuance of any amendment or supplement to
the Preliminary Title Report which adds additional exceptions (including, but not limited to,
adding additional exceptions for matters shown on the Survey as hereinafter defined), the
foregoing right of review and approval shall also apply to said amendment or supplement
(provided that the period for the Developer to review such amendment or supplement shall be the
later of the expiration of the Due Diligence Period or ten (10) days from receipt of the
amendment or supplement) and Escrow shall be deemed extended by the amount of time
necessary to allow such review and approval in the time and manner set forth above.
Section 2.14. Survev. The Developer shall at its sole cost and separate expense
obtain a survey of the Property prepared by a land surveyor duly licensed by the State of
California and in compliance with ALTA/ASCM standards ("Survey"). The Survey shall be in a
form acceptable to the Title Company for the issuance of the Title Policy, without the addition of
4831-9195-6480.8 13
r
further exceptions, unless the same are acceptable to the Developer in its sole and absolute
discretion. Upon receipt of the completed Survey, the Developer shall provide copies of the
Survey, certified by the surveyor or engineer who prepared the Survey, to both the Agency and
Title Company. The Developer shall have until the end of the Due Diligence Period to complete
and examine the Survey and to notify Agency in writing of any objections the Developer has to
title exceptions regarding the Property disclosed in the Survey ("Developer's Survey Objection
Notice"). The Agency shall have a period of five (5) days after receipt of the Developer's
Survey Objection Notice in which to deliver written notice to the Developer ("Agency's Survey
Notice") of the Agency's election to either (i) agree to remove the objectionable items prior to
the Close of Escrow or (ii) decline to remove such items. If the Agency notifies the Developer
of its intention to not remove the objectionable items, the Developer shall have the right, by
written notice delivered to the Agency within five (5) days after the Developer's receipt of
Agency's Survey Notice, to agree to accept the Property subject to the objectionable items, in
which event, the Agency's election to terminate the Escrow shall be of no effect, and the
Developer shall accept the Property at the Close of Escrow subject to such objectionable items.
Prior to the Closing, the Survey shall be recertified to the Developer, Title Company and the
Developer's lender, if any. The Survey will be performed at the Developer's sole cost and
expense.
Section 2.15. Extension of Due Diligence Period.
(a) In the event Agency fails to provide to the Developer the documents and
other information required by Sections 2.08 and 2.11 by the date(s) set forth therein, the Due
Diligence Period for such information shall be extended by one (1) day for each day of the delay
by the Agency to permit the Developer to perform an adequate due diligence review (but not to
exceed a total of sixty (60) such days). The Developer will use its best efforts to notify Agency
of any documents the Agency has failed to deliver to the Developer within the time periods
provided in Sections 2.08 and 2.11.
(b) In the event that the Executive Director makes a finding that the
Developer has undertaken substantial work to complete its investigation of the Property, the
Executive Director shall upon the written request of the Developer, authorize an extension of the
Due Diligence Period for up to four (4) additional periods of thirty (30) days each.
Section 2.16. Developer's Conditions Precedent to Close Escrow The
Developer's obligation to complete the purchase of the Property and Close the Escrow shall be
conditioned upon the fulfillment of the following conditions precedent, all of which shall be
satisfied (or waived in writing pursuant to Section 2.19) prior to the Close of Escrow:
(1)
The Agency shall not have defaulted on any material term of this
Agreement to be performed by the Agency hereunder, and each
representation and warranty made by the Agency in this Agreement shall
remain true and correct. For purposes of this subsection (1) only, a
representation that is limited to the Agency's knowledge or notice shall be
false if the factual matter that is subject to the representation is false,
notwithstanding any lack of knowledge or notice to the Agency;
4831.9195-6480.8
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(2) the Developer's approval of the Preliminary Title Report and the Survey,
if applicable, within the time periods specified in Sections 2.13 and 2.14;
(3) the Developer's approval of the contents of all Due Diligence Items, and
the other investigations of the Property made by the Developer and/or its
designees pursuant to Sections 2.08 and 2.09 herein on or before the
expiration of the Due Diligence Period, or such later date if the Due
Diligence Period is extended pursuant to Section 2.15. The Developer
shall be deemed to have disapproved such Due Diligence Items unless
they are approved on or before 5:00 p.m. on the day of the Due Diligence
Period, or such later date if the Due Diligence Period is extended pursuant
to Section 2.15 herein;
(4) the Developer's approval of any notice of change in representation or
warranty given by the Agency pursuant to Section 2.24(a)hereof; and
(5) the Title Company has committed to issue the Title Policy, in favor of the
Developer in the form described in Section 2.05.
Section 2.17. Agency's Conditions Precedent to Close Escrow. The Agency's
obligation to convey the Property to the Developer shall be conditioned upon the fulfillment of
the following conditions precedent, all of which shall be satisfied (or waived in writing pursuant
to Section 2.19) prior to the Close of Escrow:
(I) the Developer has accepted the condition of the Property and submitted its
Due Diligence Approval Certification to the Escrow Holder within the
time period set forth in Section 2.03 of this Agreement, as such time
period may be extended pursuant to Section 2.15 hereof;
(2) the Developer has accepted the condition of title of the Property on or
before the date set forth in Section 2.13;
(3) the Developer has satisfied the Commencement of Construction
Requirements and submitted its Construction Readiness Certificate to the
Escrow Holder;
(4) the Developer and the Agency shall have agreed upon a Schedule of
Performance pursuant to Section 3.01(f) hereof;
(5) the Developer shall not be in default of any material term of this
Agreement to be performed by the Developer hereunder and each
representation and warranty of the Developer made in this Agreement
shall remain true and correct; and
(6)
the Developer shall be satisfied (or waive satisfaction) of each of the
conditions precedent set forth in Section 2.16 and the Escrow is in a
condition to close within sixty (60) days following the expiration of the
15
4831-9195-6480.8
I'
Due Diligence Period (as the same may be extended pursuant to Section
2.15).
Section 2.18. Distribution of Documents to Develooer After Closing Date bv
Escrow Holder. The Escrow Holder shall deliver to the Developer within the (3) business days
following the Closing Date a conformed copy of the Agency Grant Deed, as recorded and the
policy of title insurance issued by the Title Company in favor of the Developer.
Section 2.19. Satisfaction of Conditions. Where satisfaction of any of the
foregoing conditions requires action by the Developer or by the Agency, each party shall use its
diligent best efforts, in good faith, and at its own cost, to satisfy such condition. Where
satisfaction of any of the foregoing conditions requires the approval of a party, such approval
shall be in such party's sole and absolute discretion.
Either party may waive any of the conditions set forth in the Agreement, but any
such waiver shall be effective only if contained in a writing signed by the applicable party and
delivered to the Escrow Holder.
Section 2.20. [RESERVED -- NO TEXT]
Section 2.21. Prorations. Closing Costs. Possession.
(a) Real and personal property taxes for the Property shall be prorated by the
parties to the Closing Date on the basis of a three hundred sixty-five (365) day year on the basis
that the Agency is responsible for (i) all such taxes (if any) for the fiscal year of the applicable
taxing authority occurring prior to the Current Tax Period (as defined below) and (ii) that portion
of such taxes for the Current Tax Period to 11:59 p.m. on the Closing Date, whether or not the
same shall be payable prior to the Closing Date. The phrase "Current Tax Period" refers to the
fiscal year of the applicable taxing authority in which the Closing occurs. All tax prorations
shall be based upon the latest available tax statement. Ifthe tax statements for the fiscal tax year
during which Escrow closes do not become available until after the Closing Date, then the rates
and assessed values of the previous year, with known changes, shall be used, and the parties shall
re-prorate said taxes outside of Escrow following the Closing Date when such tax statements
become available. The Agency shall be responsible for and shall payor reimburse the Developer
upon demand for any real or personal property taxes payable following the Closing Date
applicable to any period of time prior to the Closing Date as a result of any change in the tax
assessment by reason of reassessment, changes in use of the Property, changes in ownership,
errors by the Assessor or otherwise.
(b) The Developer shall be entitled to exclusive possession of the Property
immediately upon the Close of Escrow.
(c) The Agency shall pay the cost of the premium for a CLTA owner's
standard coverage policy of title insurance on the Property in the amount of the Purchase Price,
together with all title charges (including CLTA endorsements reasonably requested by the
Developer and agreed to by the Agency to remove disapproved items shown on the Preliminary
Title Report or Survey, pursuant to Sections 2.13 and 2.14 above). The Agency shall pay one-
half (y,) of the customary and reasonable escrow fees which may be charged by the Escrow
Holder in connection with the close of Escrow.
The Developer shall pay the additional cost of the Survey and requested ALTA
survey policy endorsements (to the extent such endorsements are unrelated to removal of any
disapproved items shown on the Preliminary Title Report or Survey pursuant to Sections 2.13
and 2.14 above) which exceeds the premium for a CLTA owner's standard coverage policy of
title insurance on the Property, plus the cost of recording the Agency Grant Deed, together with
one-half (Y2) of the cost of the customary and reasonable escrow fees charged by Escrow Holder
in connection with the Close of Escrow. The Developer shall pay any documentary or other
transfer taxes payable on account of the conveyance of the Property to the Developer.
Any other Escrow-related transaction expenses or escrow closing costs incurred
by the Escrow Holder in connection with this transaction shall be apportioned and paid for by the
parties to this Agreement in the manner customary in San Bernardino County, California.
No later than three (3) business days prior to the Closing Date, the Escrow Holder
shall prepare for approval by the Developer and the Agency a closing statement ("Closing
Statement") on the Escrow Holder's standard form indicating, among other things, the Escrow
Holder's estimate of all closing costs, pay-off amounts for the release and reconveyance of all
liens secured by the Property and prorations made pursuant to this Agreement. The Developer
and the Agency shall assist the Escrow Holder in determining the amount of all prorations.
Section 2.22. BREACH OF ARTICLE II BY THE AGENCY: PROVABLE
OUT-OF-POCKET EXPENSES PAYABLE AS DAMAGES BY THE AGENCY TO THE
DEVELOPER. IN THE EVENT THAT THE AGENCY WRONGFULLY FAILS TO
CONVEY THE PROPERTY TO THE DEVELOPER UPON THE SATISFACTION OF
THE CONDITIONS PRECEDENT SET FORTH IN SECTION 2.17 OF THIS
AGREEMENT, THE DEVELOPER, AS ITS SOLE AND EXCLUSIVE REMEDY AT
LAW OR IN EQUITY FOR SUCH BREACH, SHALL BE ENTITLED TO (A) THE
RETURN OF THE DEPOSIT FROM THE ESCROW HOLDER AND (B) DAMAGES IN
THE AMOUNT OF DEVELOPER'S PROVABLE OUT-OF-POCKET EXPENSES IN
CONNECTION WITH (i) NEGOTIATION OF THIS AGREEMENT, (ii) DUE
DILIGENCE WITH RESPECT TO THE PROPERTY AND (iii) DESIGN (INCLUDING,
WITHOUT LIMITATION, ARCHITECTURAL, ENGINEERING AND CONSULTANT
FEES AND COSTS); DEVELOPMENT (INCLUDING, WITHOUT LIMITATION,
LEGAL AND CONSULTANT FEES AND COSTS); ENTITLEMENTS (INCLUDING,
WITHOUT LIMITATION, APPLICATION, PLAN CHECK AND PERMIT FEES); AND
FINANCING (INCLUDING, WITHOUT LIMITATION, APPRAISAL REPORTS, LOAN
COMMITMENT FEES, REIMBURSEMENT OF LENDER'S REASONABLE
TRANSACTION COSTS); PROVIDED, HOWEVER, THAT DAMAGES PAYABLE
PURSUANT TO THIS SUBSECTION (B) SHALL IN NO EVENT EXCEED ONE
HUNDRED THOUSAND DOLLARS ($100,000.00). WITHOUT LIMITING THE
FOREGOING PROVISIONS OF THIS PARAGRAPH, THE DEVELOPER WAIVES
ANY AND ALL RIGHTS WHICH THE DEVELOPER OTHERWISE WOULD HAVE
HAD UNDER CIVIL CODE SECTION 3389 TO SPECIFICALLY ENFORCE THIS
AGREEMENT. THE DEVELOPER AND THE AGENCY ACKNOWLEDGE AND
4831-9195-6480.8 17
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AGREE THAT EACH OF THEM HAS READ AND UNDERSTANDS THE
PROVISIONS OF THIS SECTION AND EACH AGREES TO BE BOUND BY ITS
TERMS.
Initials of Developer
Initials of Agency
Section 2.23. BREACH BY THE DEVELOPER OF ARTICLE II;
LIOUIDA TED DAMAGES PAYABLE BY THE DEVELOPER TO THE AGENCY. IN THE
EVENT THAT THE DEVELOPER COMMITS A MATERIAL BREACH OF ITS
OBLIGATIONS UNDER THIS ARTICLE II PRIOR TO THE CLOSE OF ESCROW,
THE DAMAGES THAT THE AGENCY WILL INCUR BY REASON THEREOF ARE
AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH.
THE DEVELOPER AND THE AGENCY, IN A REASONABLE EFFORT TO ASCER-
TAIN WHAT THE AGENCY'S DAMAGES WOULD BE IN THE EVENT OF SUCH A
DEFAULT BY THE DEVELOPER, HAVE AGREED THAT SUCH DAMAGES SHALL
BE IN THE AMOUNT OF TEN THOUSAND DOLLARS ($10,000.00) AS LIQUIDATED
DAMAGES. SUCH SUM SHALL BE PAID TO THE AGENCY IN THE EVENT OF
SUCH DEFAULT BY THE DEVELOPER AS LIQUIDATED DAMAGES, WHICH
DAMAGES SHALL BE THE AGENCY'S SOLE AND EXCLUSIVE REMEDY AT LAW
OR IN EQUITY IN THE EVENT OF AND FOR SUCH DEFAULT BY THE
DEVELOPER. WITHOUT LIMITING THE FOREGOING PROVISIONS OF THIS
PARAGRAPH, THE AGENCY WAIVES ANY AND ALL RIGHTS WHICH THE
AGENCY OTHERWISE WOULD HAVE HAD UNDER CIVIL CODE SECTION 3389
TO SPECIFICALLY ENFORCE THIS AGREEMENT. THE AGENCY AND THE
DEVELOPER ACKNOWLEDGE AND AGREE THAT EACH OF THEM HAS READ
AND UNDERSTANDS THE PROVISIONS OF THIS SECTION AND EACH AGREES
TO BE BOUND BY ITS TERMS.
Initials of Developer
Initials of Agency
Section 2.24. Representations and Warranties.
(a) Warranties and Representations bv the Agencv. The Agency hereby
makes the following representations, covenants and warranties and acknowledges that the
execution of this Agreement by the Developer has been made and the acquisition by the
Developer of the Property will have been made in material reliance by the Developer on such
covenants, representations and warranties:
(1) Warranties True. Each and every undertaking and obligation of the
Agency under this Agreement shall be performed by the Agency timely
when due; and that all representations and warranties of the Agency under
this Agreement shall be true in all material respects at the Closing as
though they were made at the time of Closing, unless otherwise disclosed
by the Agency.
4831-9195-6480.8 18
4831-9195-6480.8
w
(2)
(3)
(4)
(5)
Due Organization. The Agency is a community redevelopment agency,
existing and operating under the laws of California.. The Agency has the
legal power, right and authority to enter into this Agreement and to
execute the instruments and documents referenced herein, and to
consummate the transactions contemplated hereby.
Enforceability of Agreement. The persons executing any instruments for
or on behalf of the Agency have been authorized to act on behalf of the
Agency.
Validity of Agreement. This Agreement is valid and enforceable against
the Agency in accordance with its terms and each instrument to be
executed by the Agency pursuant hereto or in connection therewith will,
when executed be valid and enforceable against the Agency in accordance
with its terms. No approval, consent, order or authorization of, or
designation or declaration of any other person, is required in connection
with the valid execution and delivery of and compliance with this
Agreement by the Agency.
Title. Prior to the Closing, the Agency will be the owner of (and the
Developer will acquire hereunder) the entire right, title and interest in the
Property to effectively vest in the Developer good and marketable fee
simple title to the Property, that the Developer will acquire the Property
free and clear of all liens, encumbrances, claims, rights, demands,
easements, leases or other possessory interests, agreements, covenants,
conditions, and restrictions of any kind or character (including, without
limiting the generality of the foregoing, liens or claims for taxes,
mortgages, conditional sales contracts, or other title retention agreement,
deeds of trust, security agreements and pledges and mechanics lien)
except: (i)the matters described in Section 2.05, and (ii) the exceptions to
title approved by the Developer pursuant to Section 2.13.
(6)
No Litigation. To the best of the Agency's knowledge, there are no
pending or threatened claims, actions, allegations or lawsuits of any kind,
whether for personal injury, property damage, property taxes or otherwise,
that could materially and adversely affect the value or use of the Property
or prohibit the sale thereof, nor to the best of the Agency's knowledge, is
there any governmental investigation of any type or nature pending or
threatened against or relating to the Property or the transactions
contemplated hereby.
(7)
Operation and Condition Pending Closing. Between the date of this
Agreement and the Close of Escrow, the Agency will continue to manage,
operate and maintain the Property in the same manner as existed prior to
the execution of this Agreement.
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(8) Contracts. There are no contracts or agreements to which the Agency is a
party relating to the operation, maintenance, development, improvement
or ownership of either of the Property which will survive the Close of
Escrow except as may be set forth in the Agency Grant Deed or in the
Deed of Trust.
(9) Special Studies Zone. The Property is not located within a designated
earthquake fault zone pursuant to California Public Resources Code
Section 2621.9 and a designated area that is particularly susceptible to
ground shaking, liquefaction, landslides or other ground failure during an
earthquake pursuant to California Public Resources Code Section 2694.
(10) The Agencv's Knowledge. For purposes of this Section 2.24(a), the terms
"to the best of the Agency's Knowledge" or "to the Agency's Knowledge"
shall mean the actual knowledge of Gary Van Osdel.
The Agency shall give the Developer notice of any changes in circumstances that
would render any of the representations and warranties set forth in this Section 2.24(a) untrue or
misleading that come to the Agency's knowledge prior to the Closing Date, but such notice shall
not release the Agency of its liabilities or obligations with respect thereto.
All representations and warranties contained in this Section 2.24(a) are true and
correct to the best of the Agency's Knowledge on the date hereof and on the Closing Date and
the Agency's liability for misrepresentation or breach of warranty, representation or covenant, of
the warranties and representations set forth in this Section 2.24(a), shall survive the execution
and delivery of this Agreement and the Close of Escrow.
(b) Warranties and Representations bv the Developer. The Developer hereby
makes the following representations, covenants and warranties and acknowledges that the
execution of this Agreement by the Agency has been made in material reliance by the Agency on
such covenants, representations and warranties:
(1)
(2)
4831-9195-6480.8
The Developer is a duly organized and validly existing California limited
liability company. The Developer has the legal right, power and authority
to enter into this Agreement and the instruments and documents
referenced herein and to consummate the transactions contemplated
hereby. The persons executing this Agreement and the instruments
referenced herein on behalf of the Developer hereby represent and warrant
that such persons have the power, right and authority to bind the
Developer.
The Developer has taken all requisite action and obtained all requisite
consents in connection with entering into this Agreement and the
instruments and documents referenced herein and the consummation of
the transactions contemplated hereby, and no consent of any other party is
required.
20
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(3) This Agreement is, and all agreements, instruments and documents to be
executed by the Developer pursuant to this Agreement shall be, duly
executed by and are or shall be valid and legally binding upon the
Developer and enforceable in accordance with their respective terms.
(4) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby shall result in a breach of or constitute a
default under any other agreement, document, instrument or other
obligation to which the Developer is a party or by which the Developer
may be bound, or under law, statute, ordinance, rule, governmental
regulation or any writ, injunction, order or decree of any court or
governmental body applicable to the Developer or to the Property.
(5) Each and every undertaking and obligation of the Developer under this
Agreement shall be performed by the Developer timely when due; and that
all representations and warranties of the Developer under this Agreement
shall be true in all material respects at the Closing as though they were
made at the time of Closing, unless otherwise disclosed by the Developer.
All representations and warranties contained in this Section 2.24(b) are true and
correct on the date hereof and on the Closing Date and Developer's liability for
misrepresentation or breach of warranty, representation or covenant, wherever contained in this
Agreement, shall survive the execution and delivery of this Agreement and the Closing.
Section 2.25. Damage. Destruction and Condemnation. Prior to the Agency's
delivery of possession of the Property to Developer at the Close of Escrow, the risk of loss or
damage to the Property shall remain upon the Agency. If the Property suffers damages as a
result of any casualty prior to the Close of Escrow which may materially diminish its value, then
the Agency shall give written notice thereof to Developer promptly after the occurrence of the
casualty. The Developer can elect to either: (i) accept the Property in its damaged condition or
(ii) the Developer may terminate the Agreement and recover the Deposit as set forth in Section
2.02. The Developer shall confirm the exercise of its election under subparagraph (i) or (ii) of
the preceding sentence within thirty (30) days of its receipt of notice from the Agency.
In the event that, prior to the Close of Escrow, any governmental entity shall
commence any actions of eminent domain or similar type proceedings to take any portion of the
Property, the Agency shall give prompt written notice thereof to Developer, and Developer shall
have the option either: (i) to elect not to acquire the Property, terminate the Agreement and
recover the Deposit as set forth in Section 2.02; or (ii) the Developer may complete the
acquisition of the Property under this Agreement, in which case Developer shall be entitled to all
the proceeds of such taking; provided however, that the Agency agrees that it shall not settle or
compromise the proceedings before the Close of Escrow without the Developer's prior written
consent, which consent will not be unreasonably withheld or delayed). The Developer shall
confirm the exercise of its election under subparagraph (i) or (ii) of the preceding sentence
within thirty (30) days of its receipt of notice from the Agency.
4831-9195-6480.8
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ARTICLE III
DEVELOPMENT OF THE PROJECT
Section 3.01. Development ofthe Proiect bv Developer.
(a) Scope of Development. It is the intent of the parties that promptly
following the Close of the Escrow the Developer shall develop the Project on the Property. The
Project consists of the elements set forth in Exhibit "B" (Description of Project and Scope of
Development) (the "Scope of Development").
(b) The City's zoning ordinance and the City's building requirements will be
applicable to the use and development of the Property. The Developer acknowledges that any
change in the plans for development of the Property as set forth in the Scope of Development
shall be subject to the City's zoning ordinance and building requirements. No action by the
Agency or the City with reference to this Agreement or related documents shall be deemed to
constitute a waiver of any City requirements which are applicable to the Property or to the
Developer, any successor in interest of the Developer or any successor in interest pertaining to
the Property, except by modification or variance approved by the City consistent with this
Agreement.
(c) The Scope of Development is hereby approved by the Agency upon its
execution of this Agreement. The Project shall be developed and completed in conformance
with the approved Scope of Development and any and all other plans, specifications and similar
development documents required by this Agreement, except for such changes as may be
mutually agreed upon in writing by and between the Developer and the Agency.
(d) The approval of the Scope of Development by the Agency hereunder shall
not be binding upon the City Councilor the Planning Commission of the City with respect to any
approvals of the Project required by such other bodies. If any revisions of the Scope of
Development as approved by the Agency shall be required by another government official,
agency, department or bureau having jurisdiction over the development of the Property, the
Developer and the Agency shall cooperate in efforts to obtain waivers of such revisions, or to
obtain approvals of any such revisions which have been made by the Developer and have
thereafter been approved by the Agency. The Agency shall not unreasonably withhold approval
of such revisions.
(e) Notwithstanding any provision to the contrary in this Agreement, the
Developer agrees to accept and comply fully with any and all reasonable conditions of approval
applicable to all permits and other governmental actions affecting the development of the
Property and consistent with this Agreement.
(f) The Developer shall cause landscaping plans in connection with
development of the Property to be prepared by a licensed landscape architect. The Developer
shall prepare and submit to the City for its approval, preliminary landscaping plans for the
Property which are consistent with City Code requirements. These plans shall be prepared,
submitted and approved within the times respectively established therefor in the schedule of
4831-9195-6480.8
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performance to be agreed upon by the parties prior to the Close of Escrow (the "Schedule of
Performance") and shall be consistent with the Scope of Development.
(g) The Developer shall prepare and submit development plans, construction
drawings and related documents for the development of the Property consistent with the Scope of
Development to the City. The development plans, construction drawings and related documents
shall be in the form of drawings, plans and specifications. Drawings, plans and specifications are
hereby defined as those which contain sufficient detail necessary to obtain a building permit
from the City.
(h) During the preparation of all drawings and plans in connection with the
development of the Property, the Developer shall provide to the Agency regular progress reports
to advise the Agency of the status of the preparation by the Developer, and the submission to and
review by the City of construction plans and related documents. The Developer shall
communicate and consult with the Agency as frequently as is necessary to ensure that any such
plans and related documents submitted by the Developer to the City are being processed in a
timely fashion.
(i) The Agency shall have the right of reasonable architectural review and
approval of building exteriors and design ofthe structures to be constructed on the Property. The
Agency shall also have the right to review all plans, drawings and related documents pertinent to
the development of the Property in order to ensure that they are consistent with this Agreement
and with the Scope of Development. If the Agency shall determine that plans, drawings or
related documents are not consistent with this Agreement and with the Scope of Development, it
shall notify the Developer in writing of such determination. The Developer, upon receipt of such
notice from the Agency, shall promptly revise the applicable plans, drawings or related
documents in a manner that addresses the inconsistency with the Scope of Development and
shall resubmit such revised plans, drawings or related documents to the Agency no later than
thirty (30) calendar days after its receipt of such notice from the Agency.
(j) The Developer shall timely submit to the City for its review and approval
any and all plans, drawings and related documents pertinent to the development of the Property,
as required by the City. Any failure by the City to approve any of such plans or to issue
necessary permits for the development of the Property within thirty (30) calendar days of receipt
thereof shall constitute an enforced delay hereunder, and the Schedule of Performance shall be
extended by that period of time beyond said thirty (30) calendar day period in which the City
approves said plans; provided, however, that in the event that the City disapproves of any of such
plans, the Developer shall within thirty (30) calendar days after receipt of such disapproval
revise and resubmit such plans in accordance with the City's requirements and in such form and
substance so as to obtain the City's approval thereof.
(k) The Agency shall in good faith use its best efforts to cause the City to
approve in a timely fashion any and all plans, drawings and documents submitted by the
Developer which are consistent with the Scope of Development.
(I)
related documents
4831-9195-6480.8
If the Developer desires to make any change in the plans, drawings and
after their review by the Agency for consistency with the Scope of
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Development, the Developer shall submit the proposed change in writing to the Agency for its
review for consistency with the Scope of Development. The Agency shall notify the Developer
in writing of any determination that the change is not consistent with the Scope of Development
within thirty (30) calendar days after submission to the Agency. If the Developer desires to
make any change in the plans, drawings and related documents after their approval by the City,
the Developer shall submit the proposed change to the City for approval. The Agency shall use
its best efforts to cause the City to review and approve or disapprove any such change as
provided in Section 3.01(b) hereof.
(m) The Developer shall have the right during the course of construction to
make changes in construction of structures and "minor field changes" without seeking the
approval of the Agency; provided, however, that such changes do not affect the type of use to be
conducted within all or any portion of a structure. Said "minor field changes" shall be defined as
those changes from the approved construction drawings, plans and specifications which have no
substantial effect on the improvements and are made in order to expedite the work of
construction in response to field conditions. Nothing contained in this Section shall be deemed
to constitute a waiver of or change in the City's Building Code requirements governing such
"minor field changes" or in any and all approvals by the City otherwise required for such "minor
field changes."
(n) The cost of constructing the Project, including all off-site public
improvements shall be borne by the Developer.
(0) The Developer shall at its expense cause to be prepared, and shall pay any
and all fees pertaining to the review and approval of the development project approvals by the
City, including the cost and preparation of all required construction, planning and other
documents reasonably required by governmental bodies pertinent to the development of the
Property hereunder including, but not limited to, specifications, drawings, plans, maps, permit
applications, land use applications, zoning applications and design review documents.
(P) The Developer shall pay for any and all costs, including but not limited to
the costs of design, construction, relocation and securing of permits for utility improvements and
connections, which may be required in developing the Property. The Developer shall obtain any
and all necessary approvals prior to the commencement of applicable portions of said
construction, and the Developer shall take reasonable precautions to ensure the safety and
stability of surrounding properties during said construction.
(q) All construction and development obligations and responsibilities of the
Developer as related to the Project shall be initiated and completed within the times specified in
the Schedule of Performance, or within such reasonable extensions of such times as may be
granted by the Agency or as otherwise provided for in this Agreement. The Schedule of
Performance shall be subject to revision from time to time as mutually agreed upon in writing by
and between the Developer and the Agency. Any and all deadlines for performance by the
parties shall be extended for any times attributable to delays which are not the fault of the
performing party and are caused by the other party, other than periods for review and approval or
reasonable disapprovals of plans, drawings and related documents, specifications or applications
for permits as provided in this Agreement.
4831-9195-6480.8 24
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(r) During the period of construction of the Project, the Developer shall
submit to the Agency written progress reports when and as reasonably requested by the Agency
but in no event more frequently than every four (4) weeks. The reports shall be in such form and
detail as may reasonably be required by the Agency, and shall include a reasonable number of
construction photographs taken since the last such report submitted by the Developer. In
addition, the Developer will attend Agency meetings when requested to do so by Agency Staff.
(s) Prior to the commencement of any construction, the Developer shall
furnish, or shall cause to be furnished, to the Agency duplicate originals or appropriate
certificates of public indemnity and liability insurance in the amount of One Million Dollars
($1,000,000.00) combined single limit, naming the Agency and the City and their employees,
officers and officials as additional insureds. Said insurance shall cover comprehensive general
liability including, but not limited to, contractual liability; acts of subcontractors; premises-
operations; explosion, collapse and underground hazards, if applicable; broad form property
damage, and personal injury including libel, slander and false arrest. In addition, the Developer
shall provide to the Agency adequate proof of comprehensive automobile liability insurance
covering owned, non-owned and hired vehicles, combined single limit in the amount of One
Million Dollars ($1,000,000.00) each occurrence; and proof of workers' compensation insurance.
Any and all insurance policies required hereunder shall be obtained from insurance companies
admitted in the State of California and rated at least B+: XII in Best's Insurance Guide. All said
insurance policies shall provide that they may not be canceled unless the Agency and the City
receive written notice of cancellation at least thirty (30) calendar days prior to the effective date
of cancellation. Any and all insurance obtained by the Developer hereunder shall be primary to
any and all insurance which the Agency and/or City may otherwise carry, including self
insurance, which for all purposes of this Agreement shall be separate and apart from the
requirements of this Agreement. Any insurance policies governing the Property as obtained by
the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance
means those insurance policies approved by Agency Counsel consistent with the foregoing. Any
and all insurance required hereunder shall be maintained and kept in force until the Agency has
issued a Certificate of Completion in substantially the form set forth in Exhibit "G" hereof (the
"Certificate of Completion") in connection with the development of the Property.
(t) The Developer for itself and its successors and assigns agrees that in the
construction of the Project, the Developer will not discriminate against any employee or
applicant for employment because of sex, marital status, race, color, religion, creed, national
origin, or ancestry. Notwithstanding the foregoing, the Developer will use best efforts to offer
employment opportunities to local residents and will seek to acquire goods and services from
local vendors.
(u) The Developer shall carry out its construction of the Project in conformity
with all applicable laws, including California Labor Code provisions requiring payment of
general prevailing rate of per diem wages and other applicable state labor standards and
requirements.
(v) The Developer shall, at its own expense, secure or shall cause to be
secured, any and all permits which may be required for such construction, development or work
4831-9195-6480.8 25
,.\.
by the City or any other governmental agency having jurisdiction thereof. The Agency shall
cooperate in good faith with the Developer in the Developer's efforts to obtain from the City or
any other appropriate governmental agency any and all such permits applicable to the
development of the Property.
(w) Officers, employees, agents or representatives of the Agency shall have
the right of reasonable access to the Property, without the payment of charges or fees, during
normal construction hours during the period of construction of the Project for the purpose of
verifying compliance by the Developer within the terms of this Agreement. Such officers,
employees, agents or representatives of the Agency shall be those persons who are so identified
by the Executive Director. Any and all officers, employees, agents or representatives of the
Agency who enter the Property pursuant hereto shall identify themselves at the job site office
upon their entrance on to the Property and shall at all times be accompanied by a representative
of the Developer while on the Property; provided, however, that the Developer shall make a
representative of the Developer available for this purpose at all times during normal construction
hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the
Developer harmless from injury, property damage or liability arising out of the exercise by the
Agency and/or the City of this right of access, other than injury, property damage or liability
relating to the negligence and/or willful misconduct of the Developer or its officers, agents or
employees.
(x) The Agency shall inspect relevant portions of the construction site prior to
issuing any written statements reflecting adversely on the Developer's compliance with the terms
and conditions ofthis Agreement pertaining to development of the Property.
Section 3.04. Change in Ownership Management and Control of the Developer-
- Assignment and Transfer.
(a)
(1)
(2)
(3)
4831-9195-6480.8
As used in this Section 3.04, the term "Transfer" means:
Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, by the Developer of more than
a 49% interest (or series of such sales, assignments and the like which in
the aggregate exceed a disposition of more than a 49% interest) with
respect to its interest in this Agreement, the Property, or the Project, or any
part thereof or any interest therein or of the improvements constructed
thereon, or any contract or agreement to do any of the same other than to
an Approved Assignee; or
Any merger, consolidation, sale or lease of all or substantially all of the
assets of the Developer (or series of such sales, assignments and the like
which in the aggregate exceeded a disposition of more than a 49%
interest) other than to an Approved Assignee; or
The leasing of part or all of the Property or the Project except for the
leasing of part or all of the Project for the uses contemplated by this
26
J
Article ill and in accordance with the provisions of this Agreement upon
completion of construction of the Project by the Developer.
(b) This Agreement is entered into solely for the purpose of the
redevelopment of the Property and the improvement of the Project and the subsequent operation
and use of the Property by the Developer in accordance with the terms hereof. The Developer
recognizes that the qualifications and identity of the Developer are of particular concem to the
Agency, in view of:
(I) the importance of the redevelopment of the Site to the general welfare of
the community; and
(2) the fact that a Transfer is for all practical purposes a transfer or disposition
of the responsibilities of the Developer, as applicable, with respect to the
redevelopment of the Property and the Project.
The Developer further recognizes and acknowledges that it is because of the
qualifications and identity of the Developer that the Agency is entering into this Agreement with
the Developer, and, as a consequence, Transfers are permitted only as provided in this
Agreement.
(c) The limitations on a Transfer as set forth in this Section 3.04 shall apply
until such time as a Certificate of Completion is approved by the Agency and filed for
recordation as provided in Section 3.07. Except as expressly permitted in this Agreement, the
Developer represents and agrees that it has not made nor shall it create or suffer to be made or
created, any Transfer, either voluntarily or by operation of law without the prior written approval
of the Agency until such time as a Certificate of Completion has been recorded; provided,
however, that, as provided in Section 1.04 hereof, the Developer may assign its right, title and
interest in and to this Agreement to an Approved Assignee. After the date of recordation of a
Certificate of Completion, certain other provisions of this Agreement shall nonetheless be
applicable to subsequent conveyances of interest in the Property, or portions thereof, as provided
in Article IV of this Agreement. Any Transfer made in contravention of this Section 3.04 shall
be voidable at the election of the Agency and shall then be deemed to be a default under this
Agreement.
(d) The following types of a Transfer shall be permitted and approved by the
Agency and are referred to herein as a "Permitted Transfer":
(1)
The Transfer by the Developer of all its right, title and interest in this
Agreement to an entity (i) twenty percent (20%) of which is directly or
indirectly owned by the Developer and (ii) the managing member of
which is the Developer or an affiliate ofthe Developer.
(2)
Any Transfer by the Developer creating a "Security Financing Interest" in
the Property which conforms to the provisions of Section 3.05;
4831-9195-6480.8
27
,
(3) Any Transfer directly resulting from the foreclosure of a Security
Financing Interest created by the Developer in the Property or the granting
of a deed in lieu of foreclosure of a Security Financing Interest;
(4) Any Transfer of stock or equity of the Developer which does not change
management or operational control of the Property or the Project;
(5) Any Transfer of any interest in the Developer irrespective of the
percentage of ownership to any affiliate of or other entity controlled by the
Developer or in which the Developer directly or indirectly owns a
controlling interest.
(e) No Permitted Transfer of this Agreement or any interest in the Property or
the Project, by the Developer (other than a Permitted Transfer created pursuant to a Security
Financing Interest) shall be effective unless, at the time of the Permitted Transfer, the person or
entity to which such Transfer is made shall expressly assume the obligations of the Developer
under this Agreement and such person also agrees to be subject to the conditions and restrictions
to which the Developer is subject under this Agreement. Such an assumption of obligation shall
be evidenced by a written instrument delivered to the Agency in a recordable form which is
satisfactory to the Agency.
(f) Provided the particular transaction satisfies the applicable provisions of
Section 3.04(d), the Developer is not required to give the Agency advance notice of such a
Permitted Transfer. The Agency may, in its reasonable discretion, approve in writing any other
Transfer as requested by the Developer, provided such proposed transferee can demonstrate
successful and satisfactory experience in the ownership, operation, and management of an
operation similar to the Project. Any such transferee for itself and its successors and assigns, and
for the benefit of the Agency shall expressly assume all of the obligations of the Developer to the
Agency under this Agreement. There shall be submitted to the Agency for review all
instruments and other legal documents proposed to effect any such other Transfer; and the
approval or disapproval of the Agency shall be provided to the Developer, in writing within
thirty (30) days of receipt by the Agency of the request therefor, and the Agency approval of a
transfer and shall not be unreasonably withheld or delayed.
(g) Following the issuance of a Certificate of Completion, the Developer shall
be released by the Agency from any liability under this Agreement which may arise from a
default of a successor in interest occurring after the date of such a Transfer; provided, however
that the covenants of the Developer as set forth in Article IV of this Agreement shall run with the
land for the term as provided in Article IV.
Section 3.05. Security Financing; Right of Holders .
(a) Notwithstanding any provision of Section 3.04 to the contrary, mortgages,
deeds of trust, or any other form of lien required for any reasonable method of financing the
construction and improvement of the Property ("Construction Financing") are permitted before
the recordation of the Certificate of Completion (referred to in Section 3.07 of this Agreement)
and, in the event the Project is not sold by the Developer upon recordation of the Certificate of
4831-9195-6480.8 28
Completion, one or more mortgages, deeds of trust, or other forms of lien required for any
reasonable financing that takes out the construction financing (collectively, the "Permanent
Financing") is permitted following recordation of the Certificate of Completion. The Developer
shall notify the Agency in writing in advance of any mortgage, deed of trust, or other form of
lien for Construction Financing or for Permanent Financing. The Developer shall not enter into
any such conveyance for Permanent Financing without the prior written approval of the Agency,
which approval the Agency shall grant if any such conveyance is given to a responsible fmancial
or lending institution including, without limitation, banks, savings and loan institutions,
insurance companies, real estate investment trusts, pension programs and the like and subject to
agreement by such lender and the Agency on a form of subordination agreement (as provided in
Section 2.01(c) hereof).
(b) The Developer shall promptly notify the Agency of any mortgage, deed of
trust or other refinancing, encumbrance or lien that has been created with respect to the Property
whether by voluntary act of the Developer or otherwise; provided, however, that no notice of
filing of preliminary notices or mechanic's liens need be given by the Developer to the Agency
prior to suit being filed to foreclose such mechanic's lien.
(c) The words "mortgage" and "deed of trust" as used herein shall be deemed
to include all other customary and appropriate modes of financing real estate construction and
land development.
(d) The holder of any mortgage, deed of trust or other security interest
authorized by this Agreement shall in no manner be obligated by the provisions of this
Agreement to construct or complete the improvement of the Property or to guarantee such
construction or completion.
(e) Whenever the Agency shall deliver any notice or demand to the Developer
with respect to any breach or default by the Developer in the completion of construction of the
improvements, or any breach or default of any other obligations which, if not cured by the
Developer, entitle the Agency to terminate this Agreement or exercise its right to re-enter the
Property, or a portion thereof under Section 6.07, the Agency shall at the same time deliver to
each holder of record of any mortgage, deed of trust or other security interest authorized by this
Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the
Agency are concerned) have the right, at its option, to commence the cure or remedy of any such
default and to diligently and continuously proceed with such cure or remedy, within one hundred
twenty (120) calendar days after the receipt of the notice; and to add the cost thereof to the
security interest debt and the lien of its security interest. If such default shall be a default which
can only be remedied or cured by such holder upon obtaining possession, such holder shall seek
to obtain possession with diligence and continuity through a receiver or otherwise, and shall
remedy or cure such default within one hundred twenty (120) calendar days after obtaining
possession; provided that in the case of a default which cannot with diligence be remedied or
cured, or the remedy or cure of which cannot be commenced, within such one hundred twenty
(120) calendar day period, such holder shall have such additional time as is reasonably necessary
to remedy or cure such default of the Developer. Nothing contained in this Agreement shall be
deemed to permit or authorize such holder to undertake or continue the construction or
completion of the improvements (beyond the extent necessary to conserve or protect the
4831-9195-6480.8 29
J
improvements or construction already made) or to operate the Project without first having
expressly assumed the Developer's obligations by written agreement satisfactory to the Agency.
The holder in that event must submit evidence satisfactory to the Agency that it has the
qualifications and financial responsibility necessary to perform such obligations. Any such
holder that undertakes and completes construction of the improvements on the Property in
accordance herewith shall be entitled, upon written request made to the Agency, to be issued the
Certificate of Completion by the Agency.
(f) In any case where, one hundred eighty (180) calendar days after default by
the Developer the holder of any mortgage, deed of trust or other security interest creating a lien
or encumbrance upon the Property or any portion thereof has not exercised the option to
construct the applicable portions of the Project or to operate the Project following completion of
construction, or has exercised the option but has not proceeded diligently and continuously with
construction or operation of the Project, as the case may be, the Agency may purchase the
mortgage, deed of trust or other security interest by payment to the holder of the amount of the
unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and
other amounts payable to the holder by the Developer under the loan documents between holder
and the Developer. If the ownership of the Property has vested in the holder, the Agency may at
its option (but does not have an obligation to) seek a conveyance from the holder to the Agency
upon payment to the holder of an amount equal to the sum of the following:
(I) The unpaid mortgage, deed of trust or other security interest debt,
including principal, accrued and unpaid interest, late charges, costs,
expenses and other amounts payable to the holder by the Developer under
the loan documents between the holder and the Developer, at the time title
became vested in the holder (less all appropriate credits, including those
resulting from collection and application of rentals and other income
received during foreclosure proceedings.)
(2) All expenses, if any, incurred by the holder with respect to foreclosure.
(3) The net expenses, if any (exclusive of general overhead), incurred by the
holder as a direct result of the subsequent ownership or management of the
Property or the Property, such as insurance premiums and real estate taxes.
(4) The cost of any improvements made by such holder.
(5) An amount equivalent to the interest that would have accrued on the
aggregate on such amounts had all such amounts become part of the
mortgage or deed of trust debt and such debt had continued in existence to
the date of payment by the Agency.
(6)
After expiration of the aforesaid one hundred eighty (180) calendar day
period, the holder of any mortgage, deed of trust or other security affected
by the option created by this Section, may demand, in writing, that the
Agency act pursuant to the option granted hereby. If the Agency fails to
exercise the right herein granted within sixty (60) calendar days from the
30
4831-9195-6480.8
.
date of such written demand, the Agency shall be conclusively deemed to
have waived such right of purchase of the or the mortgage, deed of trust or
other security interest.
(g) In the event of a default or breach by the Developer of a mortgage, deed of
trust or other security interest with respect to the Property (or any portion thereof), where the
holder has not exercised its option to complete the development or to operate the Project, the
Agency may cure the default but is under no obligation to do so prior to completion of any
foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of
all costs and expenses incurred by the Agency in curing the default. The Agency shall also be
deemed to have a lien of the Agency as may arise under this Section 3.05(g) upon the Property
(or any portion thereof) to the extent of such costs and disbursements. Any such lien shall be
subordinate and subject to mortgages, deeds of trust or other security instruments executed by
the Developer for the purpose of obtaining the funds to construct and improve the Property or for
the purpose of obtaining the Permanent Financing as authorized herein.
Section 3.06. Right of the Agencv to Satisfy Other Liens on the ProoertY after
Conveyance of Title. After the conveyance of title to the Property by the Agency to the
Developer and after the Developer has had a reasonable time to challenge, cure or satisfy any
unauthorized liens or encumbrances on the Property, the Agency shall after one hundred twenty
(120) calendar days prior written notice to the Developer have the right to satisfy any such liens
or encumbrances; provided, however, that nothing in this Agreement shall require the Developer
to payor make provisions for the payment of any tax, assessment, lien or charge so long as the
Developer in good faith shall contest the validity or amount thereof, and so long as such delay in
payment shall not subject the Property, or any portion thereof, to forfeiture or sale.
Section 3.07. Certificate of Como let ion .
(a) Following (i) the written request therefor by the Developer; (ii) the
completion of construction of any Completed Parcel thereof, excluding any normal and minor
building "punch-list" items to be completed by the Developer; and, (iii) the recordation of a
notice of completion in compliance with Section 3093 of the California Civil Code, the Agency
shall furnish the Developer with a Certificate of Completion for the Completed Parcel, in the
form set forth in Exhibit "G" with respect to the Completed Parcel. The release of any
obligations, responsibilities, and/or duties of the Developer set forth in this Agreement, which
are triggered by the delivery of a Certificate of Completion from the Agency to the Developer
shall only apply to the portion of the Project particularly described in such Certificate of
Completion.
(b) The Agency shall not unreasonably withhold the issuance of a Certificate
of Completion. A Certificate of Completion shall be, and shall so state, that it is a conclusive
determination of satisfactory completion of construction of the Completed Parcel. After the
recordation of the Certificate of Completion, any party then owning or thereafter purchasing,
leasing or otherwise acquiring any interest in the Property shall not (because of such ownership,
purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that
such party shall be bound by any covenants contained in the grant deed or other instrument of
4831-9195-6480.8
31
,-~
,
transfer which grant deed or other instrument of transfer shall include the provisions of Section
4.01 through 4.04, inclusive, ofthis Agreement.
(c) Any Certificate of Completion shall be in such form as to permit it to be
recorded in the Recorder's Office of the County where the Property is located.
(d) If the Agency refuses or fails to furnish a Certificate of Completion after
written request from the Developer, the Agency shall, within fifteen (15) calendar days of the
written request or within three (3) calendar days after the next regular meeting of the Agency,
whichever date occurs later, provide to the Developer a written statement setting forth the
reasons with respect to the Agency's refusal or failure to furnish a Certificate of Completion.
The statement shall also contain the Agency's opinion of the action the Developer must take to
obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate
unavailability of specific items or materials for construction or landscaping at a price reasonably
acceptable to the Developer or other minor building "punch-list" items, the Agency may issue its
Certificate of Completion upon the posting of a bond or irrevocable letter of credit, reasonably
approved as to form and substance by the Agency Counsel and obtained by the Developer in an
amount representing a fair value of the work not yet completed as reasonably determined by the
Agency. If the Agency shall have failed to provide such written statement within the foregoing
period, the Developer shall be deemed conclusively and without further action of the Agency to
have satisfied the requirements of this Agreement with respect to the Completed Parcel, as if a
Certificate of Completion had been issued therefor.
(e) A Certificate of Completion shall not constitute evidence of compliance
with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any
insurer of a mortgage securing money loaned to finance the improvements described herein, or
any part thereof. A Certificate of Completion shall not be deemed to constitute a notice of
completion as referred to in Section 3093 of the California Civil Code, nor shall it act to
terminate the continuing covenants or conditions subsequent contained in the Agency Grant
Deed attached hereto as Exhibit "E".
ARTICLE N
USE OF THE SITE
Section 4.01. Uses.
(a) The Developer covenants and agrees for itself, its successors, and assigns
that upon completion of construction, the Developer shall cause to be opened on the Property a
facility or facilities suitable for light industrial, office, warehouse, light manufacturing, retail,
restaurant or other commercial uses. The covenant of this Section 4.01(a) shall run with the land
for the terms as set forth in the Agency Grant Deed.
(b) The Developer further covenants and agrees for itself, its successors and
assigns that the Property shall be improved and developed in accordance with the Scope of
Development. Developer covenants to develop the Property in conformity with all applicable
laws. The covenants of this Section 4.01(b) shall also run with the land until the earlier date on
4831-9195-6480.8
32
r
which the Certificate of Completion is recorded or the fifth (5th) anniversary date of recordation
of the Agency Grant Deed.
(c) It is understood and agreed by the Developer that neither the Developer,
nor its assigns or successors shall use or otherwise sell, transfer, convey, assign, lease, leaseback
or hypothecate the Property or any portion thereof to any entity or party, or for any use of the
Property, that is partially or wholly exempt from the payment of real property taxes pertinent to
the Property, or any portion thereof, or which would cause the exemption of the payment of all
or any portion of such real property taxes. The covenant of this Section 4.01(c) shall run with
the land for the term as set forth in the Agency Grant Deed.
Section 4.02. Maintenance of the Property The Developer covenants and
agrees for itself, its successors, and assigns to maintain the Property in a good condition free
from any accumulation of debris or waste material, subject to normal construction job-site
conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping
required to be planted in accordance with the Scope of Development. In the event the
Developer, or its successors or assigns, fails to perform the maintenance as required herein, the
Agency shall have the right, but not the obligation, to enter the Property and undertake, such
maintenance activities. In such event, the Developer shall reimburse the Agency for all
reasonable sums incurred by it for such maintenance activities as set forth in the Agency Grant
Deed. The covenant of this Section 4.02 shall run with the land for the term as set forth in the
Agency Grant Deed.
Section 4.03. Obligation to Refrain from Discrimination. The Developer
covenants and agrees for itself, its successors, its assigns and every successor in interest to the
Property or any part thereof, that there shall be no discrimination against or segregation of any
person, or group of persons, on account of sex, marital status, race, color, religion, creed,
national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property; nor shall the Developer, itself or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessee or vendees of the Property. The covenant of this Section 4.03 shall run
with the land for the term as set forth in the Agency Grant Deed.
Section 4.04. Form of Nondiscrimination and Nonsegregation Clauses. The
Developer covenants and agrees for itself, its successors, its assigns, and every successor in
interest to the Property, or any part thereof, that the Developer, such successors and such assigns
shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or
enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color,
religion, creed, ancestry or national origin of any person. All deeds, leases or contracts
pertaining thereto shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
(I)
In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of, any person or group
of persons on account of race, color, creed, religion, sex, marital status,
33
4831-9195-6480.8
national ongm, or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises herein conveyed, nor
shall the grantee or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessee, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land."
(2) In leases: "The Lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease
is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the leasing, subleasing, transferring,
use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee itself, or any person claiming under or through it, establish
or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy, of
tenants lessees, sublessee, subtenants, or vendees in the premises herein
leased."
(3) In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color, creed, religion,
sex, marital status, national origin, or ancestry, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed or leased, nor shall the transferee or any person claiming under
or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees of the premises herein transferred." The foregoing provision shall
be binding upon and shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the instrument.
The covenant of this Section 4.04 shall run with the land in perpetuity.
ARTICLE V
PAYMENT OF PURCHASE PRICE OF THE PROPERTY;
PAYMENT OF ADDITIONAL AMOUNTS
Section 5.01. Developer Obligation to Pav Purchase Price of the Prooertv;
Obligation of Developer to Pav Certain Additional Amounts. Other than the Developer's
unconditional obligation to pay the Purchase Price and any accrued and unpaid Base Interest, on
or before the Maturity Date, payments under sections 5.02 and 5.03 shall be due and payable
from the Developer to the Agency commencing upon the earlier to occur of (i) the Developer's
receipt of any Positive Net Cash Flow (as defined below) from the Project or (ii) a Refinancing
(as hereinafter defined) and/or a sale of the Project or the Property or any portion thereof. Such
payments shall be made by the Developer from Positive Net Cash Flow, Refinancing Proceeds
and Net Sale Proceeds (as such terms are hereinafter defined) and shall continue to be made
4831-9195-6480.8 34
,
notwithstanding that the Purchase Price and Base Interest have been paid in full, so long as the
Developer owns any interest in the Project or the Property. Upon the release of the lien of the
Deed of Trust with respect to any Completed Parcel under Section 5.04, such payments shall no
longer be required with respect to such Completed Parcel, and such Completed Parcel shall not
thereafter be included in the calculation of any Positive Net Cash Flow, Operating Revenues,
Refinancing Proceeds and Net Sale Proceeds. The amount by which such payments exceed the
Purchase Price and Base Interest is referred to herein as "Additional Interest".
Section 5.02. Payments to Agencv Upon Leasing of the Proiect. Upon the
leasing of any Completed Parcel or portion thereof, within the Project, following the issuance
and recordation of the Certificate of Completion with respect to such Completed Parcel, the
Developer shall allocate and distribute each month revenues received by the Developer under all
leases within the Project ("Operating Revenues") as follows:
(a) Debt Service and Operating Expenses. The Developer shall retain
sufficient funds from Operating Revenues for payment of (i) debt service on any and all
indebtedness secured by liens on the Property that are senior to the Deed of Trust, (ii) Operating
Expenses (as defined below) and (iii) reasonable capital reserves.
(b) Monthlv Management Fee. The Developer shall retain a monthly
management fee with respect to the Project equal to three percent (3%) of Operating Revenues.
(c) Distribution of Remainder of Operating Revenues. The Developer shall
distribute the remainder of Operating Revenues as follows:
(i) first eight percent (8%) to the Investors and ninety-two percent (92%) to
the Agency until the Investors have received any "preferred return" to
which they are entitled as of such date and the Agency has received all
Base Interest accrued as of such date; and
(ii) second fifty percent (50%) collectively to the Developer and/or Developer
Member, four percent (4%) to the Investors and forty six percent (46%) to
the Agency.
Notwithstanding the foregoing, no payment shall be required to be made to the
Investors or to the Agency until the calendar month following the first calendar month in which
Operating Revenues are greater than the amounts described in subsections 5.02(a) and (b)
("Positive Net Cash Flow"). Payments under this Section 5.02 shall be made on or before the
tenth (J Oth) day of each month following a month where the Project has Positive Net Cash Flow.
Within ninety (90) days after the end of each calendar year, the Developer shall provide the
Agency with an income and expenses statement for the preceding calendar year, certified by an
officer of the Developer. If the sum of the monthly payments received by the Agency is less
than the Agency's share of Positive Net Cash Flow for such calendar year pursuant to subsection
5.02(c) above, such statement shall be accompanied by a payment to the Agency equal to such
shortfall. If the sum of the monthly payments received by the Agency is greater than the
Agency's share of Positive Net Cash Flow for such calendar year, any overpayment to the
4831.9195.6480.8
35
Agency shaH be deducted from future payments required to be made to the Agency under this
Section 5.02.
Section 5.03. Payments to Agencv Upon Refinancing and Upon Sale of the
Proiect .
(a) Refinancing: Distribution of Refinancing Proceeds. As contemplated by
the provisions of Section 3.05(a) hereof, the Construction Financing obtained by the Developer
in order to construct the improvements on the Property and complete the Project may be taken
out by Permanent Financing. For the purposes of this Section 5.03, "Refinancing" shaH mean
any term loan obtained by the Developer after the issuance of a Certificate of Completion with
respect to any Completed Parcel of the Project and secured by a mortgage, deed of trust or other
lien on such Completed Parcel. Developer shaH cause the Refinancing Proceeds (as hereinafter
defined) to be applied as foHows:
(i) first, the Developer, or a designated affiliate of Developer holding a valid
California real estate broker license, shaH retain a financing fee equal to
one percent (1 %) of the Refinancing Proceeds (the "Loan Fee");
(ii) second, the Developer shaH distribute eight percent (8%) of the remaining
Refinancing Proceeds to the Investors and ninety two percent (92%) of
said remaining Refinancing Proceeds to the Agency until the Investors are
current on the "preferred return" to which they are entitled as of such date
and their entire capital investment has been returned and the Agency has
received aH Base Interest accrued as of such date and the entire Purchase
Price;
(iii) third, the Developer shaH distribute fifty percent (50%) of the remaining
Refinancing Proceeds coHectively to the Developer and/or the Developer
Member, four percent (4%) to the Investors and forty six percent (46%) to
the Agency.
(b) Sale. Upon the sale of the Project or any portion thereof by the Developer
to a third party foHowing recordation of the Certificate of Completion, the Developer shaH cause
the Net Sale Proceeds (as hereinafter defined) of any such sale to be applied as foHows:
(i)
first, the Developer, or a designated affiliate of Developer holding a valid
California real estate broker license, shaH retain a brokerage fee equal to
(A) one percent (1%) of the sale price of the Project or any portion thereof
sold in a sale transaction to an existing tenant or owner occupant or (B)
two and one half percent (2.5%) of the sale price of the Project or any
portion thereof sold in a sale transaction to a third party owner (as
applicable, the "Developer Brokerage Commission");
(ii)
second, the Developer shaH distribute eight percent (8%) of the remaining
Net Sale Proceeds to the Investors and ninety-two percent (92%) of the
remaining Net Sale Proceeds to the Agency until the Investors are current
36
4831-9195-6480.8
on the "preferred return" to which they are entitled as of such date and
their entire capital investment has been returned and the Agency has
received all Base Interest accrued as of such date and the entire Purchase
Price;
(iii) third, the Developer shall distribute fifty percent (50%) of the remaining
Net Sales Proceeds collectively to the Developer and/or Developer
Member, four percent (4%) to the Investors and forty six percent (46%) to
the Agency.
(c) Certain Definitions. As used herein:
(i) "Operating Expenses" means all expenses which the Developer pays or
incurs in connection with the ownership, leasing, management, maintenance, repair, restoration
or operation of the Project, including, without limitation, any amounts paid for: (A) operating,
maintaining, repairing, renovating and managing utility systems, mechanical systems, sanitary
sewer and storm drainage systems, elevator systems and all other systems and equipment; (B)
licenses, certificates, permits and inspections and costs of contesting the validity or applicability
of any governmental enactments which may affect operating expenses; (C) insurance carried by
the Developer on the Project; (D) landscaping, relamping, supplies, tools, equipment and
materials, and all fees, charges and other costs (including consulting fees, accounting fees and
legal fees, except legal fees incurred by the Developer in any action or proceeding arising under
this Agreement and with respect to which the Agency is a party adverse to the Developer)
incurred in connection with the management, operation, repair and maintenance of the Project;
(E) parking area repair, restoration and maintenance; (F) equipment rental agreements; (G)
wages, salaries and other compensation and benefits of all persons engaged in the operation,
management, maintenance or security of the project and employer's Social Security taxes,
unemployment taxes or insurance, and any other taxes which may be levied on such wages,
salaries, compensation and benefits; (H) janitorial service, alarm and security service, window
cleaning, trash removal, replacement of wall and floor coverings, ceiling tiles and fixtures in
lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and
replacement of curbs and walkways, repair to roofs and re-roofing; (I) amortization (including
interest on the unamortized cost) of the cost of acquiring or the rental expense of personal
property used in the maintenance, operation and repair of the Project; (J) owner's association
fees or charges; (K) leasing commissions, leasing incentives, advertising and all other reasonable
costs associated with marketing the Project for lease or sale; and (L) any capital improvements or
other costs (I) which are made to the Project after the of construction that are required under any
governmental law or regulation or (II) which are reasonably determined by the Developer to be
in the best interests of the Project; provided, however, that if any such cost described in (I) or (II)
above is a capital expenditure, such cost shall be amortized (including interest on the
unamortized cost) over its useful life as the Developer shall reasonably determine.
(ii) "Refinancing Proceeds" means the gross proceeds from the new loan after
deducting the following amounts: loan fees (other than the Loan Fee), points or commissions,
title policy charges, recording fees, all escrow fees and charges (but not including insurance and
property tax prorations), and all liens of record encumbering the Property, or any portion thereof,
as security for the repayment of a Construction Loan or Permanent Loan to which the Agency
4831-9195-6480.8 37
consented and subordinated its lien against the Property or any portion thereof. There shall be no
reduction for any fees charged or paid to any party to this Agreement (other than the Loan Fee)
without the express written consent of all parties to this Agreement.
(iii) "Net Sale Proceeds" means the gross proceeds from the sale of the
Property or any portion thereof, reduced by broker fees or commissions (other than the
Developer Brokerage Commission), loan fees, title policy charges, recording charges, escrow
charges (but not including insurance and property tax prorations), and all those liens of record
encumbering the Property, or any portion thereof, as security for the repayment of a Construction
Loan or Permanent Loan to which the Agency consented and subordinated its lien against the
Property. There shall be no reduction for any fees charged or paid to any party to this
Agreement, without the express written consent of all parties to this Agreement.
Section 5.04 Release Provisions.
(a) No Release. Except as provided in Section 5.04(b) or 5.04(c) below, or
unless the Agency otherwise consents in writing, neither the Project or any part thereof shall be
released from the lien of the Deed of Trust until the Purchase Price, Base Interest and all
Additional Interest to which the Agency is entitled hereunder has been paid in full.
(b) Partial Releases. At the written request of the Developer, which request
may be delivered on behalf of the Developer by the holder of the escrow through which the sale
of any portion of the Property is to occur the Agency shall release a Completed Parcel from the
lien of the Deed of Trust in connection with an all cash sale of such Completed Parcel to a bona
fide, non-affiliated third-party purchaser upon the satisfaction of the following conditions
precedent with respect to each Completed Parcel being released:
(i) No default, or event which, with the giving of notice and/or the passage of
time or both, would constitute a default, shall have occurred hereunder and
be continuing;
(ii) The sales agreement entered into with the third-party purchaser with
respect to such Completed Parcel shall comply with all applicable laws,
statutes, rules and regulations imposed by governmental authorities having
jurisdiction over the Property and all other laws, rules and regulations
requiring disclosures to actual or prospective purchasers;
(iii) The Completed Parcel constitutes a legally subdivided interest in real
property, and the release of such Completed Parcel will not violate any
requirements of any document of record covering the Property or any
applicable law regarding subdivisions, parcel maps, the division of land
into lots or parcels and/or the sale of property to the public;
(iv) All improvements on the applicable Completed Parcel shall have been
completed in accordance with this Agreement and all applicable permits,
laws, ordinances, regulations and other requirements of all governmental
agencies and public utility companies, and all necessary inspections and
4831-9195-6480.8 38
consents and approvals for the sale and occupancy thereof have been
completed or obtained, and a Certificate of Completion recorded in
connection therewith;
(v) All payments required to have been made under any Construction
Financing or Permanent Financing secured by the Completed Parcel and
all payments, fees and costs in connection with the partial release of the
lien of the Deed of Trust, including recording and reconveyance fees and
costs and any fees and costs reasonably incurred by the Agency shall have
been paid or will be paid upon the close of the escrow for the sale of the
Completed Parcel by the Developer or the Completed Parcel buyer.
(vi) Developer shall have paid to the Agency, or caused to be paid to the
Agency out of the escrow relating to the sale of such Completed Parcel,
the Agency's share of Net Sale Proceeds attributable to the sale of such
Completed Parcel pursuant to Section 5.03(b).
Requests for partial reconveyance and/or appropriate releases in connection with
Completed Parcel sales shall be delivered by the Agency in accordance with escrow instructions
in a form approved by the Agency in the Agency's reasonable discretion. Upon request by the
Agency, the Developer shall deliver to the Agency a true and complete copy of the estimated or
final escrow settlement statement for any proposed Completed Parcel sale, prepared by the
escrow holder.
(c) Special Circumstances. At the written request of the Developer, and
upon(i) satisfaction of the conditions of Sections 5.04(b )(i) and (v) above, and (ii) approval by
the Agency of any improvement agreement, development agreement or other agreement or
instrument imposing conditions on the subdivision of the Property, the Agency shall (x) release
the lien of the Deed of Trust from any portion of the Property required to be dedicated for public
roads or for common area in connection with the development thereof and (y) consent to the
granting of any easement or the making of any map or plot of the Property necessary for the
development ofthe Property in accordance herewith.
ARTICLE VI
DEFAULTS. REMEDIES AND TERMINATION
Section 6.01. Defaults - General.
(a) In the event that a breach or default may occur prior to the Close of
Escrow, the remedies ofthe parties shall be as set forth in Article II of this Agreement.
(b) From and after the Close of Escrow and subject to the extensions oftime
set forth in Section 6.05 hereof, failure or delay by either party to perform any term or provision
of this Agreement shall constitute a default under this Agreement; provided, however, that if a
party otherwise in default commences to cure, correct or remedy such default within thirty (30)
calendar days after receipt of written notice specifying such default and shall diligently and
4831-9195-6480.8 39
continuously prosecute such cure, correction or remedy to completion (and where any time limits
for the completion of such cure, correction or remedy are specifically set forth in this Agreement,
then within said time limits), such party shall not be deemed to be in default hereunder.
( c) The injured party shall give written notice of default to the party in
default, specifying the default complained of by the nondefaulting party. Delay in giving such
notice shall not constitute a waiver of any default nor shall it change the time of default.
(d) Any failure or delays by either party in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by either party in asserting any of its rights and remedies shall not deprive
either party of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect, assert or enforce any such rights or remedies.
Section 6.02. Legal Actions.
(a) In addition to any other rights or remedies, either party may institute legal
action to cure, correct or remedy any default, to recover damages for any default, or to obtain any
other remedy consistent with the purposes of this Agreement. Such legal actions must be
instituted in the Superior Court of the County of San Bernardino, San Bernardino District, State
of California, or in the Federal District Court in the Central District of California.
(b) The laws of the State of California shall govern the interpretation and
enforcement of this Agreement.
(c) In the event that any legal action is commenced by the Developer
against the Agency, service of process on the Agency shall be made by personal service upon
the Executive Director or Chair of the Agency, or in such other manner as may be provided by
law.
(d) In the event that any legal action is commenced by the Agency against the
Developer, service of process on the Developer shall be made by personal service on Mr. Burrell
Magnusson at the address set forth in Section 1.03(b ) (or such other Agent for service of process
and at such address as may be specified in written notice to the Agency), or in such other manner
as may be provided by law, and shall be valid whether made within or without the State of
California.
Section 6.03. Rights and Remedies are Cumulative. Except with respect to any
rights and remedies expressly declared to be exclusive in Article II of this Agreement as relates
to a default or breach occurring before the Close of Escrow, the rights and remedies of the parties
as set forth in this Article VI following the Close of Escrow are cumulative and the exercise by
either party of one or more of such rights or remedies shall not preclude the exercise by it, at the
same or different times, of any other rights or remedies for the same default or any other default
by the other party.
Section 6.04. Damages. If either party defaults with regard to any provision of
this Agreement, the nondefaulting party shall serve written notice of such default upon the
4831-9195-6480.8 40
defaulting party. If the defaulting party does not diligently commence to cure such default after
service of the notice of default and promptly complete the cure of such default within a
reasonable time, not to exceed ninety (90) calendar days (or such shorter period as may
otherwise be specified in this Agreement for default), after the service of written notice of such a
default. In the event that a default relates to a matter arising after the Close of Escrow the
defaulting party shall be liable to the other party for damages caused by such default. In the
event that a default relates to a matter arising before the Close of Escrow, the remedies of the
parties shall be limited to the liquidated damage sums as set forth in Article II of this Agreement.
Section 6.05. Soecific Performance Prior to Close of Escrow . Prior to the Close
of Escrow neither party shall have or assert the equitable remedy of specific performance in the
event of a default or breach, and the remedies of the parties with respect to such a breach or
default prior to the Close of Escrow shall be limited to the termination rights and liquidated
damage amounts as set forth in Article II of this Agreement. After the Close of Escrow if either
party defaults under any of the provisions of this Agreement, the nondefaulting party shall serve
written notice of such default upon such defaulting party. If the defaulting party does not
commence to cure the default and diligently and continuously proceed with such cure within
thirty (30) calendar days after service of the notice of default, and such default is not cured
within a reasonable time thereafter (and where any time limits for the completion of such cure,
correction or remedy are specifically set forth in this Agreement, then within said time limits),
the nondefaulting party, at its option, may institute an action for specific performance of the
terms of this Agreement, except as otherwise provided in Section 6.04 hereof.
Section 6.06. Agencv Rights of Termination Following Close of Escrow .
(a) Subject to written notice of default which shall specify the Developer's
default and the action required to commence cure of same and upon thirty (30) calendar days
notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this
Section, the Agency at its option may terminate this Agreement if the Developer in breach of this
Agreement assigns or attempts to assign this Agreement, or any right therein, or attempts to
make any total or partial sale, lease or leaseback, transfer or conveyance of the whole or any part
of the Property or the improvements to be developed thereon in violation of the terms of this
Agreement, and the Developer does not correct such violation within thirty (30) calendar days
from the date of receipt of such notice.
(b) Subject to written notice of default, which shall specify the Developer's
default and the action required to commence cure of same and upon thirty (30) calendar days
notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this
Section, the Agency at its option may terminate this Agreement if the Developer: (a) does not
within the time limits set forth in this Agreement or as specifically provided in the Schedule of
Performance, subject to extensions authorized by this Agreement due to force majeure or
otherwise, submit development plans, construction drawings and related documents acceptable to
the Planning Department and Building Division of the City for plan check purposes and in order
to obtain building permits for the Project, together with applicable fees therefor, all prepared to
the minimum acceptable standards as required by the Planning Department and Building
Division of the City for commencement of formal review of such documents and as required by
this Agreement, or (b) does not carry out its other responsibilities under this Agreement or in
4831-9195-6480.8 41
r
accordance with any modification or variance, precise plan, design review and other
environmental or governmental approvals and such default is not cured or the Developer does
not commence and diligently and continuously proceed with such cure within thirty (30)
calendar days after the date of receipt of written demand therefor from the Agency.
(c) Subject to written notice of default which shall specify the Developer's
default and the action required to commence cure of same and upon thirty (30) calendar days
notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this
Section, the Agency at its option may terminate this Agreement if upon satisfaction of all
conditions precedent and concurrent therefor under this Agreement, the Developer does not take
title to the Property under tender of conveyance by the Agency, and such breach is not cured
within thirty (30) calendar days after the date of receipt by the Developer of written demand
therefor from the Agency.
Section 6.07. Right to Reenter. Repossess and Revest.
(a) The Agency shall, upon thirty (30) calendar days notice to the Developer
which notice shall specify this Section 6.07, have the right, at its option, to re-enter and take
possession of all or any portion of the Property, together with all improvements thereon, and to
terminate and revest in the Agency the estate conveyed to the Developer hereunder, if after
conveyance of title, the Developer (or its successors in interest) shall:
(I) Fail to commence construction of all or any portion of the improvements
as required by this Agreement for a period of ninety (90) calendar days
after written notice to proceed from the Agency; provided that the
Developer shall not have obtained an extension or postponement to which
the Developer may be entitled pursuant to Section 7.05 hereof; or
(2) Abandon or substantially suspend construction of all or any portion of the
improvements for a period of ninety (90) calendar days after written notice
of such abandonment or suspension from the Agency; provided that the
Developer shall not have obtained an extension or postponement to which
the Developer may be entitled to pursuant to Section 7.05 hereof; or
(3) Assign or attempt to assign this Agreement, or any rights herein, or
transfer, or suffer any involuntary transfer, of the Property or any part
thereof, in violation of this Agreement, and such violation shall not have
been cured within thirty (30) calendar days after the date of receipt of
written notice thereof from the Agency to the Developer.
(b) The thirty (30) calendar day written notice specified in this Section shall
specify that the Agency proposes to take action pursuant to this Section and shall specify which
of the Developer's obligations set forth in Subsections (I) through (3) herein have been
breached. The Agency shall proceed with its remedy set forth herein only in the event that the
Developer continues in default of said obligation(s) for a period of thirty (30) calendar days
following such notice or, upon commencing to cure such default, fails to diligently and
continuously prosecute said cure to satisfactory conclusion.
4831-9195-6480.8 42
(c) The right of the Agency to reenter, repossess, terminate, and revest shall
be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit:
(1) Any mortgage, deed of trust or other security interest permitted by this
Agreement;
(2) Any rights or interests provided in this Agreement for the protection of the
holders of such mortgages, deeds of trust or other security interests;
(3) Any leases, declarations of covenants, conditions and restrictions,
easement agreements or other recorded documents applicable to the
Property.
(d) The grant deed to the Property or to any portion thereof conveyed by the
Developer to another party shall contain appropriate references and provisions to give effect to
the Agency's right, as set forth in this Section under specified circumstances prior to the
recordation of a Certificate of Completion with respect to such portion, to reenter and take
possession of such portion, or any part thereof, with all improvements thereon, and to terminate
and revest in the Agency the estate conveyed to the Developer.
(e) Upon the revesting in the Agency of title to the Property, or any part
thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State
law, use its best efforts to resell the Property, or any part thereof, at fair market value as soon and
in such marmer as the Agency shall find feasible and consistent with the objectives of such law,
to a qualified and responsible party or parties (as determined by the Agency) who will assume
the obligations of making or completing the improvements, or such other improvements in their
stead as shall be satisfactory to the Agency and in accordance with the uses specified for the
Property, or any part thereof. Upon such resale of the Property, or any part thereof, the proceeds
thereof shall be applied:
(I)
4831-9195-6480.8
First, to make any payment made or necessary to be made to discharge or
prevent from attaching or being made any subsequent encumbrances or
liens due to obligations incurred with respect to the making or completion
of the agreed improvements or any part thereof on the Property or any
portion thereof; next to reimburse the Agency on its own behalf or on
behalf of the City for all actual costs and expenses incurred by the Agency
and the City, including but not limited to customary and reasonable fees or
salaries to third party personnel engaged in such action (but excluding the
Agency's or the City's general overhead expense), in connection with the
recapture, management and resale of the Property or any portion thereof;
all taxes, assessments and water and sewer charges paid by the City and/or
the Agency with respect to the Property or any portion thereof; any
amounts otherwise owing to the Agency by the Developer and its
successor transferee; and
43
(2) Second, to the extent that any and all funds which are proceeds from such
resale are thereafter available, to reimburse the Developer, or its successor
transferee, up to the amount equal to the costs incurred for the
development of the Property, or applicable part thereof, or for the
construction of the improvements thereon including, but not limited to,
costs of carry, taxes and items set forth in the Developer's cost statement
which shall be submitted to and approved by the Agency.
(3) Any balance remaining after the foregoing application of proceeds shall be
retained by the Agency.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01. Notices. Demands and Communications Between the Parties.
(a) Any and all notices, demands or communications submitted by any party
to another party pursuant to or as required by this Agreement shall be proper if in writing and
dispatched by messenger for immediate personal delivery, or by registered or certified United
States mail, postage prepaid, return receipt requested, to the principal office of the Agency and
the Developer, as applicable, as designated in Section 1.04(a) and Section 1.04(b) hereof. Such
written notices, demands and communications may be sent in the same manner to such other
addresses as either party may from time to time designate as provided in this Section. Any such
notice, demand or communication shall be deemed to be received by the addressee, regardless of
whether or when any return receipt is received by the sender or the date set forth on such return
receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2)
calendar days after it is placed in the United States mail as heretofore provided.
(b) In addition to the submission of notices, demands or communications to
the parties as set forth above, copies of all notices shall also be delivered by facsimile as follows:
to the Developer:
Essex Orangeshow Commerce Center LLC
3141 Redhill Avenue, Suite 150
Costa Mesa, California 92626
Attn: Burrell Magnusson
Telephone: (714) 540-5188
Fax: (714) 540-3741
with copy to:
Robert A. Greer Law Corporation
500 Newport Center Drive, Suite 920
Newport Beach, CA 92660
Attn: Robert A. Greer, Esq.
Telephone: (949) 720-4999
Fax: (949) 720-4990
4831-9195-6480.8
44
the Agency:
Redevelopment Agency of the City
of San Bernardino
20 I North "E" Street, Suite 30 I
San Bernardino, California 92401
Attn: Gary Van Osdel
Telephone: (909) 663-1044
Fax: (909) 384-5135
with copy to:
Lewis Brisbois Bisgaard & Smith LLP
650 E. Hospitality Lane, Suite 600
San Bernardino, California 92408
Attn: , Esq.
Fax: (909) 387-1138
Section 7.02. Conflict of Interest. No member, official or employee of the
Agency having any conflict of interest, direct or indirect, related to this Agreement and the
development of the Property shall participate in any decision relating to the Agreement. The
parties represent and warrant that they do not have knowledge of any such conflict of interest.
Section 7.03. Warranty Against Payment of Consideration for Agreement. The
Developer warrants that it has not paid or given, and will not payor give, any third party any
money or other consideration for obtaining this Agreement. Third parties, for the purposes of
this Section, shall not include persons to whom fees are paid for professional services if rendered
by attorneys, financial consultants, accountants, engineers, architects and the like when such fees
are considered necessary by the Developer. The Agency acknowledges that the Developer has
paid or agreed, pursuant to separate written agreements, to pay to (a) CB Richard Ellis,
brokerage commissions for services rendered in connection with the Developer's due diligence
investigation of the Property, including exploration of potential leasing of the Project and (b) Lee
& Associates, for listing and brokerage services in connection with the potential leasing and sale
by the Developer of the Project. The Developer agrees to indemnify and defend, with counsel
reasonably satisfactory to the Agency, the Agency against claims for listing, sales, brokerage,
finder's or other commissions or fees arising out of Developer's actions relating to this
Agreement or the activities or transactions contemplated in this Agreement, including without
limitation, those commissions disclosed and acknowledged in this Section 7.03.
Section 7.04. Nonliabilitv of Agencv Officials and Emplovees .
(a) No member, official or employee of the Agency shall be personally liable
to the Developer, or any successor in interest, in the event of any default or breach by the
Agency or for any amount which may become due to the Developer or to its successor, or on any
obligations under the terms of this Agreement, except for gross negligence or willful acts of such
member, officer or employee.
(b) Developer Covenant to Defend Proiect. The Developer acknowledges that
the Agency is a "public entity" and/or a "public agency" as defined under applicable California
and federal law. Therefore, the Agency must satisfy the requirements of certain California and
federal statutes relating to the actions of public entities, including, without limitation, the
4831-9195-6480.8 45
California Environmental Quality Act, Public Resources Code Sections 21000, et seq.
("CEQA"). Also, as a public body, the Agency's action in approving this Agreement may be
subject to proceedings to invalidate this Agreement. The Developer assumes the risk of delays
and damages that may result to the Developer from any such third-party legal actions related to
the Agency's approval of this Agreement or the pursuit of the activities contemplated by this
Agreement even in the event that an error, omission or abuse of discretion by the Agency is
determined to have occurred. If a third-party files a legal action regarding the Agency's approval
of this Agreement or the pursuit of the activities contemplated by this Agreement, the Agency
may terminate this Agreement on thirty (30) days written notice to the Developer of the
Agency's intent to terminate this Agreement, referencing this Section 7.04(b), without any
further obligation to perform the terms of this Agreement and without any liability to the
Developer resulting from such termination, unless the Developer unconditionally agrees to
indemnify and defend the Agency against such third-party legal action, as provided hereinafter in
this Section 7.04(b). Within 30 days of receipt of the Agency's notice of intent to terminate this
Agreement, as provided in the preceding sentence, the Developer may offer to defend the
Agency in the third-party legal action and pay all of the court costs, attorney fees, monetary
awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of
any and all financial or performance obligations resulting from the disposition of the legal action.
Any such offer from the Developer must be in writing and in a form reasonably acceptable to the
Agency. Nothing contained in this section shall be deemed an express or implied admission that
the Agency is liable to the Developer or any other person or entity for damages alleged from any
alleged or established failure of the Agency to comply with any statute, including without
limitation CEQA.
Section 7.05. Enforced Delav: Extension of Time of Performance. In addition
to specific provisions of this Agreement, performance by either party hereunder shall not be
deemed to be in default, or considered to be a default, where delays or defaults are due to the
force majeure events of war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires,
casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight
embargoes or lack of transportation, weather-caused delays, inability to secure necessary labor,
materials or tools, delays of any contractors, subcontractor or supplier, which are not attributable
to the fault of the party claiming an extension of time to prepare or acts or failure to act of any
public or governmental agency or entity (provided that acts or failure to act of the City or
Agency shall not extend the time for the Agency to act hereunder except for delays associated
with lawsuit or injunction including but without limitation to lawsuits pertaining to the approval
of the Agreement, and the like). An extension of time for any such force majeure cause shall be
for the period of the enforced delay and shall commence to run from the date of occurrence of
the delay; provided however, that the party which claims the existence of the delay has first
provided the other party with written notice of the occurrence of the delay within ten (10) days of
the commencement of such occurrence of delay.
The inability of the Developer to obtain a satisfactory commitment from a
construction lender for the improvement of the Property or to satisfy any other condition of this
Agreement relating to the redevelopment of the Property shall not be deemed to be a force
majeure event or otherwise provide grounds for the assertion of the existence of a delay under
this Section 6.05. The parties hereto expressly acknowledge and agree that changes in either
general economic conditions or changes in the economic assumptions of any of them which may
4831-9195-6480.8 46
T
have provided a basis for entering into this Agreement and which occur at any time after the
execution of this Agreement, are not force majeure events and do not provide any party with
grounds for asserting the existence of a delay in the performance of any covenant or undertaking
which may arise under this Agreement. Each party expressly assumes the risk that changes in
general economic conditions or changes in such economic assumptions relating to the terms and
covenants of this Agreement could impose an inconvenience or hardship on the continued
performance of such party under this Agreement, but that such inconvenience or hardship is not a
force majeure event and does not excuse the performance by such party of its obligations under
this Agreement.
Section 7.06. Inspection of Books and Records. The Agency shall have the
right at all reasonable times at the Agency's cost and expense to inspect the books and records of
the Developer pertaining to the Property and/or the development thereof as necessary for the
Agency, in its reasonable discretion, to enforce its rights under this Agreement. Matters
discovered by the Agency shall not be disclosed to third parties unless required by law or unless
otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of
the Agency hereunder. The Developer shall also have the right at all reasonable times to inspect
the books and records of the Agency pertaining to the Property and/or the development thereof
as pertinent to the purposes of this Agreement.
Section 7.07. Approvals.
(a) Approvals required of the Agency or the Developer, or any officers,
agents or employees of either the Agency or the Developer, shall not be unreasonably withheld
and approval or disapproval shall be given within the time set forth in the Schedule of
Performance or, if no time is given, within a reasonable time.
(b) The Executive Director of the Agency is authorized to sign on his or her
own authority amendments to this Agreement which are of routine or technical nature, including
minor adjustments to the Schedule of Performance.
Section 7.08. Real Estate Commissions. The Agency shall not be liable for any
real estate commissions, brokerage fees or finder fees which may arise from or related to this
Agreement.
Section 7.09. Indemnification.
(a) The Developer agrees to indemnify and hold the City and the Agency, and
their officers, employees and agents, harmless from and against all damages, judgments, costs,
expenses and fees arising from or related to any act or omission of the Developer in performing
its obligations hereunder. The Developer further agrees to indemnify and hold the Agency and
the City, and their officers, employees and agents harmless from and against all damages,
judgments, costs, fees, and expenses (including, without limitation, attorneys' fees as defined in
Section 7.11) arising from or related to any action, claim, assertion or allegation based upon
compliance with the provisions of the California Labor Code, as it may be amended from time to
time.
4831-9195-6480.8
47
(b) The Agency agrees to indemnify and hold the Developer and its officers,
employees and agents, harmless from and against all damages, judgments, costs, expenses and
fees arising from or related to any act or omission of the Agency in performing its obligations
hereunder.
Section 7.10. Release of Developer from Liability. Notwithstanding any
provision herein to the contrary, the Developer shall be relieved of any and all liability for the
obligations of the Developer hereunder with regard to any Parcel or Completed Parcel of the
Project, other than any covenants and obligations contained in the grant deed by which the
Property is conveyed to the Developer, upon the sale of such Parcel or Completed Parcel to a
third-party that is not affiliated with the Developer and the payment of Net Sale Proceeds arising
from the sale of such Parcel or Completed Parcel as set forth in Section 5.03 of this Agreement.
Section 7.11. Attornevs' Fees. If either party hereto files any action or brings
any action or proceeding against the other arising out of this Agreement, seeks the resolution of
disputes pursuant to Section 6.02 hereof, or is made a party to any action or proceeding brought
by the Escrow Holder, then as between the Developer and the Agency, the prevailing party shall
be entitled to recover as an element of its costs of suit or resolution of disputes pursuant to
Section 6.02 hereof, and not as damages, its reasonable attorneys' fees as fixed by the Court or
other forum for resolution in such action or proceeding or in a separate action or proceeding
brought to recover such attorneys' fees. The costs, salary and expenses of the City Attorney and
members of his office in enforcing this Agreement shall be considered as "attorneys' fees" for
purposes of this Section.
Section 7.12. Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
ARTICLE vrn
ENTIRE AGREEMENT. WAIVERS AND AMENDMENT
Section 8.0 I. Entire Agreement.
(a) This Agreement shall be executed in four (4) duplicate originals each of
which is deemed to be an original.
(b) This Agreement integrates all of the terms and conditions mentioned
herein or incidental hereto, and supersedes all negotiations or previous agreements between the
parties with respect to all or any portion of the Property and the development thereof.
(c) None of the terms, covenants, agreements or conditions set forth in this
Agreement shall be deemed to be merged with the grant deed conveying title to the Property, and
this Agreement shall continue in full force and effect before and after such conveyance.
(d) All waivers of the provisions of this Agreement and all amendments
hereto must be in writing and signed by the appropriate authorities of the Agency and the
Developer.
4831-9195-6480.8
48
ARTICLE IX
TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION
Section 9.01. Execution and Recordation.
(a) Following its execution by the Developer and prompt delivery thereafter
to the Agency, this Agreement shall be subject to the review and approval by the governing
board of the Agency in its sole and absolute discretion within forty-five (45) calendar days after
the date of signature by the Developer. In the event that the Agency has not approved, executed
and delivered the Agreement to the Developer within the foregoing period, then no provision of
this Agreement shall be of any force or effect for any purpose. The date of this Agreement shall
be the date when the Agreement shall have been approved by the Agency.
(b) The Developer and the Agency agree to permit recordation of this
Agreement, or a notice of agreement in customary form, concurrently upon the Close of Escrow
in the Office ofthe County Recorder for the County where the Property is located.
4831-9195-6480.8
49
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as ofthe dates set forth below.
AGENCY
Redevelopment Agency of the
City of San Bernardino
Date:
By:
Gary Van Osdel
Executive Director
D AS TO FORM:
DEVELOPER
ESSEX ORANGESHOW COMMERCE
CENTER LLC, a California limited liability
company
By:
Burrel D. Magnusson
Manager
[ALL SIGNATURES MUST BE NOTARIZED]
4831-9195-6480.8
50
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
.15 C(JC(;x>:tf-~
'd \d\U~
Exh. "A"
9O-2fJ6462
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')e{;cription: San Bemat'dit1o. CA Document-Year.DaclD 1990.256462 Page: 2 of 5
:Jrr1er: 01-22-2004 09-.51-04 AM Comment ASDF
EXHffiIT "B"
DESCRIPTION OF PROJECT
AND
SCOPE OF DEVELOPMENT
Project description: Construction of fourteen (14) buildings, each on a separate legal parcel,
ranging in size from approximately 5,000 square feet to 27,000 square
feet. The Project will accommodate light industrial, office, warehouse,
light manufacturing, retail, restaurant and other commercial uses.
Each of the buildings in the Project will be of concrete tilt up construction
with twenty four (24) feet clear height under beam for the larger buildings
and eighteen (18) feet clear height under beam for the smaller buildings.
Each building will be designed with both dock high and ground level
loading doors. Eight of the buildings will have mezzanines. The parking
ratio will average approximately 2.16 cars per thousand square feet of
building area.
Exh. "B"
EXHIBIT "C"
DEED OF TRUST
[TO COME]
Exh. "C"
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency for the
City San Bernardino
Attention: Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
FIXTURE FILING AND SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE
FILING AND SECURITY AGREEMENT ("Deed of Trust") is made as of ,2003,
by the ESSEX ORANGESHOW COMMERCE CENTER LLC, a California limited liability
company ("Trustor"), whose address is 3141 Redhill Avenue, Suite 150 Costa Mesa, California
92626, to FIRST AMERICAN TITLE COMPANY ("Trustee"), whose address is 3625 14'h
Street, Riverside, California 92501, for the benefit of the REDEVELOPMENT AGENCY FOR
THE CITY OF SAN BERNARDINO, a public body corporate and politic, its successors and
assigns ("Beneficiary"), whose address is 201 North "E" Street, Suite 30 I, San Bernardino,
California 92401.
WITNESSETH
That Trustor, for valuable consideration, grants, bargains, sells, conveys and warrants to
Trustee, in trust with power of sale, that property in the City of San Bernardino, County of San
Bernardino, State of California, more particularly described in Exhibit "A" attached hereto and
made a part hereof (the "Land"), together with the following described estate, property and rights
of Trustor in the Land and/or in any improvements now or hereafter constructed thereon
(severally and collectively, the "Property") as security for the performance of each covenant and
agreement of Trustor contained herein and in all other instruments executed in connection
herewith, and for the payment of all sums of money secured hereby.
A. All the fee and leasehold estates and rights of Trustor now held and hereafter
acquired in and to the Property and in and to land lying in streets and roads adjoining the
Property, and all access rights and easements appertaining thereto; and
B. All buildings, structures, improvements, furnishings, fixtures and equipment, real,
personal and mixed, now or hereafter attached to, or used or adapted for use in the operation of
the Property and any and all replacements and additions thereto, including without limitation, all
heating apparatus and equipment whatsoever, all boilers, engines, motors, dynamos, generating
equipment, pumps, piping and plumbing fixtures, cooling, ventilating, sprinkling, fire-
4830-5243-0592.3
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extinguishing apparatus, gas and electric fixtures, elevators, escalators, partitions, and shrubbery
and plants; and including also all interest of any owner of the Property in any of such items
hereafter at any time acquired under conditional sales contract, chattel mortgage or other title-
retaining or security instrument, all of which property mentioned in this paragraph shall be
deemed part of the realty and not severable wholly or in part without material injury to the
freehold; and
C. All and singular the lands, tenements, privileges, water, water rights, water stock,
mineral, oil and gas rights, hereditaments and appurtenances thereto belonging or in anywise
appertaining, and the reversion and reversions, remainder and remainders, rents, royalties, issues
and profits thereof, and all the estate, rights, title, claim, interest and demand whatsoever of the
Trustor either in law or equity, of, in and to the Property, whether now held or hereafter
acquired; and
D. All of the right, title and interest of Trustor now or hereafter existing in and to the
following now or hereafter located in, upon, within or about or used in connection with the
construction, use, operation or occupancy of the Property and/or the improvements thereon and
any business or activity conducted thereon or therein, together with all accessories, additions,
accessions, renewals, replacements and substitutions thereto or therefor and the proceeds and
products thereof: (i) all materials, supplies, furniture, furnishings, appliances, office supplies.
equipment, construction materials, vehicles, machinery, computer hardware and software.
maintenance equipment, window washing equipment, repair equipment and other equipment and
tools, telephone and other communications equipment; (ii) all books, ledgers, records.
accounting records, files, tax records and returns, policy manuals, papers, correspondence, and
electronically recorded data; (iii) all "General Intangibles" (as such term is defined in the
California Commercial Code), instruments, money, "Accounts," (as such term is defined in the
California Commercial Code), accounts receivable, notes, certificates of deposit, chattel paper,
letters of credit, choses in action, good will, rights to payment of money, rents, rental fees,
equipment fees and other amounts payable by persons who utilize the Property or any of the
improvements or paid by persons in order to obtain the right to use the Property and any of the
improvements, whether or not so used; trademarks, service marks, trade dress, tradenames,
licenses, sales contracts, deposits, plans and specifications, drawings, working drawings, studies.
maps, surveys; soils, environmental, engineering or other reports, architectural and engineering
contracts, construction contracts, construction management contracts, surety bonds, feasibility
and market studies, management and operating agreements, service agreements and contracts,
landscape maintenance agreements, security service and other services agreements and vendors
agreements; (iv) all compensation, awards and other payments or relief (and claims therefor)
made for a taking by eminent domain, or by any event in lieu thereof (including, without
limitation, property and rights and interests in property received in lieu of any such taking), of all
or any part of the Property (including without limitation, awards for severance damages),
together with interest thereon, and any and all proceeds (or claims for proceeds) of casualty,
liability or other insurance pertaining to the Property, together with interest thereon; (v) any and
all claims or demands against any person with respect to damage or diminution in value to the
4830-5243-0592.1
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2
Property or damage or diminution in value to any business or other activity conducted on the
Property; (vi) any and all security deposits, deposits of security or advance payments made to
others with respect to: (1) insurance policies relating to the Property; (2) taxes or assessments of
any kind or nature affecting the Property; (3) utility services for the Property and/or the
improvements; (4) maintenance, repair or similar services for the Property or any other services
or goods to be used in any business or other activity conducted on the Property; (vii) any and all
authorizations, consents, licenses, permits and approvals of and from all persons required from
time to time in connection with the construction, use, occupancy or operation of the Property, the
improvements, or any business or activity conducted thereon or therein or in connection with the
operation, occupancy or use thereof, (viii) all warranties, guaranties, utility or street
improvement bonds, utility contracts, telephone exchange numbers, yellow page or other
directory advertising and the like; (ix) all goods, contract rights, and inventory; (x) all leases and
use agreements of machinery, equipment and other personal property; (xi) all insurance policies
covering all or any portion of the Property; (xii) all reserves (including those provided for in
Section 17 hereof) and funds held in escrow by Beneficiary or other person for Beneficiary*s
benefit and any funds deposited with Beneficiary, all accounts into which such funds are
deposited and all accounts, contract rights and general intangibles or other rights relating thereto:
(xiii) all names by which the Property is now or hereafter known; (xiv) all interests in the
security deposits of tenants; (xv) all management agreements, blueprints, plans, maps,
documents, books and records relating to the Property; (xvi) the proceeds from sale, assignment,
conveyance or transfer of all or, any portion of the Property or any interest therein, or from the
sale of any goods, inventory or services from, upon or within the Property and/or the
improvements (but nothing contained herein shall be deemed a consent by Beneficiary to such
sale, assignment, conveyance or transfer, except as expressly provided in this Deed of Trust);
(xvii) any property described in paragraph B, above, which are not fixtures under California law;
(xviii) all other property (other than fixtures) of any kind or character as defined in or subject to
the provisions of the California Uniform Commercial Code, Secured Transactions, as amended
and; (xix) all proceeds of the conversions, voluntarily or involuntarily, of any of the foregoing
into cash or liquidated claims.
TO HAVE AND TO HOLD the Property, together with all and singular the lands,
tenements, privileges, water, water rights, water stock, mineral, oil and gas rights, hereditaments
and appurtenances thereto belonging or in any wise appertaining, and the reversion and
reversions, remainder and remainders, rents, royalties, issues and profits thereot~ and all of the
estate, right, title, claims and demands whatsoever of the Trustor, either in law or in equity, ot~ in
and to the Property, forever as security for the faithful performance of the Obligations (as
defined below) secured hereby and as security for the faithful performance of each and all of the
covenants, agreements, terms and conditions of this Deed of Trust, and in all other instruments
executed in connection herewith, SUBJECT, HOWEVER, to the right, power and authority
given to and conferred upon Beneficiary to collect and apply such rents, issues and profits. This
Deed of Trust also constitutes a security agreement in all of the property above described or
referenced in which such interest may be created under the California Commercial Code and for
such purposes Trustor hereby grants to Beneficiary a security interest therein.
-tX30-5243-0592.3
SiX/03 Y:30 (;\
3
I. Agencv Loan Secured. This Deed of Trust is made for the purpose of securing (i)
the prompt payment of the Note (as defined below), together with all interest, premiums and
other amounts, if any, due in accordance with the terms of the Note and that certain Disposition
and Development Agreement by and between the Redevelopment Agency for the City of San
Bernardino and Essex Orangeshow Commerce Center, LLC, dated as of (the
"'Disposition and Development Agreement"), and all references therein, regarding the payment
of the principal sum of ONE MILLION FOUR HUNDRED NINETY-FIVE THOUSAND SIX
HUNDRED THIRTY-TWO DOLLARS ($1,495,632.00) (the "Loan") as evidenced by that
certain Purchase Money Promissory Note of even date herewith (which note, together with all
notes issued in substitution or exchange therefore and all amendments thereto, is referred to as
the "Note"), which amount constitutes the purchase price for Trustor's acquisition of the
Property from the Agency and all other instruments or agreements executed in connection
therewith, and all interest thereon and other amounts evidenced thereby; all future advances
made to Trustor by Beneficiary, its successors and assigns, under the Disposition and
Development Agreement or pursuant to the terms of this Deed of Trust or any other instruments
or agreements executed in connection with or to secure the covenants of the Trustor set forth in
the Disposition and Development Agreement (collectively, the "Transaction Documents"); (ii)
the prompt performance of each and every covenant, condition, and agreement contained in the
Transaction Documents; (iii) the payment of any and all other debts, claims, obligations,
demands, monies, liabilities and indebtedness of any kind or nature now or hereafter owing,
arising, due or payable from Trustor to Beneficiary, when the document evidencing the same
specifically refers to this Deed of Trust and that it is intended to be secured hereby; and (iv) the
obligations evidenced by all renewals, extensions, modifications, substitutions and conditions of
any of the Transaction Documents; and any and all other obligations of Trustor to Beneficiary.
its successors and assigns, now existing and hereafter arising and which are at any time
specifically declared by Beneficiary and Trustor in writing to be secured by this Deed of Trust or
which specifically indicate in the instruments which evidence the same that they are intended to
be so secured. All obligations of Trustor to Beneficiary pursuant to the Transaction Documents
are sometimes collectively referred to as the "Obligations".
2. Trustor's Covenant of Pavment. Trustor shall perform all of its obligations under
the Transaction Documents and under this Deed of Trust when due, without excuse or delay of
any kind whatsoever, except as expressly provided herein or therein, and Trustor shall pay the
Loan, and all other debts and monies secured by this Deed of Trust when due without set off or
deduction of any kind.
3. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is the sole
holder of fee simple absolute title to all of the Property and that said title is marketable and fi-ee
from any lien or encumbrance, except as otherwise provided in this section, or approved in
writing by Beneficiary, and the liens imposed by law for nondelinquent real property taxes and
assessments. Trustor further covenants and agrees as follows: that Trustor will keep the Property
free from all liens of any kind, including, without limitation, statutory and governmental liens:e
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4
that no lien superior or junior to this Deed of Trust will be created or suffered to be created by
Trustor during the life of this Deed of Trust without Beneficiary's prior written consent; that
Trustor has good right to make this Deed of Trust and the person or persons executing this Deed
of Trust on behalf of Trustor has or have the authority to do so; and that Trustor will forever
warrant and defend Beneficiary's interest in the Property against every person, whomsoever,
claiming any right or interest in the Property or any part thereof.
4. Trustor's Right to Contest Statutory Liens. As used herein the words "mechanic's
lien" and "materialmen's lien" mean and include a "stop notice" as this term is defined in
California Civil Code Sections 3179, et seq. The filing of a mechanic's or materialmen's lien
against the Property or a stop notice against the Trustor or the Beneficiary and/or funds held by
or owed to the Trustor for the improvement of the Property shall not constitute a default
hereunder, if and so long as (a) no defaults exist under the Disposition and Development
Agreement, this Deed of Trust, or any of the other Transaction Documents; (b) within fifteen
(15) days after filing of such lien, Trustor obtains and maintains in effect a bond issued by a
California admitted surety acceptable to Beneficiary in an amount not less than 125% of the
entire sum alleged to be owed to the lien claimant or such other amount as is required to obtain a
court order to release said lien of record; (c) Trustor immediately commences its contest of such
lien and continuously pursues the same in good faith and with due diligence; (d) such bond or
contest stays the foreclosure of the lien; and (e) Trustor pays in full any judgment rendered for
the lien claimant within ten (10) days following entry of any such judgment.
5. Maintenance and Inspection of Improvements. Trustor shall maintain the
buildings and other improvements now or hereafter located on the Property in good condition
and state of repair. Trustor shall not commit or suffer any waste on the Property, shall promptly
comply with all requirements of federal, state and municipal authorities and all other laws,
ordinances, regulations, covenants, conditions and restrictions respecting the Property or the use
thereof, and shall pay all fees or charges of any kind in connection therewith.
6. Construction and Repairs. This Deed of Trust is given to secure an obligation for
the repayment of the Loan for the purchase of the Property anticipated to be developed with the
Project (as defined in the Transaction Documents) and, without limiting the application of any
provision of the Disposition and Development Agreement or any other Transaction Document.
Trustor therefore further agrees:
(a) To promptly commence construction of the Project and promptly
complete the same, at the time required by and in accordance with the Transaction Documents
and all other agreements between Trustor and Beneficiary relating to construction of the Project;
and
(b) To allow Beneficiary to inspect said Property at all reasonable times.
4830-5243-0592.3
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5
1-- --
I
I
Trustor shall complete or restore promptly and in a good and workmanlike manner any
building or improvement that may be constructed, damaged or destroyed on the Property, and
pay when due all costs incurred therefor.
7. Alterations. No building or other improvement on the Property shall be
structurally altered, removed or demolished without the Beneficiary's prior written consent, nor
shall any fixture or chattel covered by this Deed of Trust and adapted to the proper use and
enjoyment of the Property be removed at any time without Beneficiary's prior written consent,
unless actually replaced by an article of equal suitability and value, owned by the Trustor, free
and clear of any lien or security interest, except such as may be approved in writing by the
Beneficiary.
8. Compliance With Laws. Trustor shall comply with all statutes, laws, ordinances
and regulations which now or hereafter pertain to the construction, repair, condition, use and
occupancy of the Property, including, without limitation, all environmental, subdivision, zoning.
building code, fire, occupational, health, safety, occupancy and other similar or dissimilar
statutes, and shall not permit any tenant or other occupant of any portion of the Property to
violate the same. If any statute or order of any court of competent jurisdiction requires any
correction, alteration or retrofitting of any improvements on or related to the Property, Trustor
shall promptly undertake the required repairs and restoration and complete the same with due
diligence at its sole cost and expense.
9. Environmental Covenants, Representations, Warranties and Indemnitv.
(a) Trustor will not use any Hazardous Materials (as defined herein below) in
the construction of the Project or other improvements on or about the Property.
(b) Trustor shall, at its sole expense, comply and cause each tenant occupying
or leasing space within the Property to comply with all applicable laws, regulations, codes and
ordinances relating to any Hazardous Materials or to any Environmental Activities (as defined
herein below), including, without limitation, obtaining, filing, serving or posting all applicable
notices, permits, licenses and similar authorizations. Trustor shall establish and maintain a
management and operating policy for the Property to assure and monitor continued compliance
by Trustor and each tenant occupying or leasing space in the Property with all such laws,
regulations, codes and ordinances.
(c) Trustor agrees to submit from time to time, if requested by Beneficiary, a
report reasonably satisfactory to Beneficiary, certifying that the Property is not now being used
for any Environmental Activities. Beneficiary reserves the right, in its reasonable discretion, to
retain an independent professional consultant to review any report prepared by Trustor and/or to
conduct its own investigation of the Property for Hazardous Materials. Trustor hereby grants to
Beneficiary, its agents, employees, consultants and contractors the right to enter upon the
4830-5243-0592.1
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6
Property to perform such tests, at Beneficiary's sole expense, as are reasonably necessary to
conduct a review and/or investigation.
(d) Upon the discovery by Trustor of any event or situation which would
render any of the representations or warranties contained in subparagraph 9(g) hereof inaccurate
in any respect, if made at the time of such discovery, Trustor shall promptly notify Beneficiary of
such event or situation and, within thirty (30) days after such discovery, submit to Beneficiary a
preliminary written environmental plan setting forth a general description of such event or
situation and the action that Trustor proposes to take with respect thereto. Within sixty (60) days
after such discovery, Trustor shall submit to Beneficiary a final written environmental report,
setting forth a detailed description of such event or situation and the action that Trustor proposes
to take with respect thereto, including, without limitation, any proposed corrective work, the
estimated cost and time of completion, the name of the contractor and a copy of the construction
contract, if any, and such additional data, instruments, documents, agreements or other materials
or information as Beneficiary may reasonably request. The plan shall be subject to Beneficiary's
prior written approval, which approval may be granted or withheld in Beneficiary's sole but
reasonable discretion. Beneficiary shall notify Trustor in writing of its approval or disapproval of
the final plan within fifteen (15) days after receipt thereof by Beneficiary. If Beneficiary
disapproves the plan, Beneficiary's notice to Trustor of such disapproval shall include a brief
explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written
environmental plan that remedies the defects identified by Beneficiary as reasons for
Beneficiary's disapproval of the previous plan. If Trustor fails to submit a revised plan to
Beneficiary within said thirty (30) day period, or if such revised plan is submitted to Beneficiary
and Beneficiary disapproves said plan, such failure or disapproval shall, at Beneficiary's option
and upon notice to Trustor, constitute an "Event of Default" hereunder. If Beneficiary does not
notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the
fifteen (15) day period described above, Trustor shall provide written notice to Beneficiary of
Beneficiary's failure to respond, at which time Beneficiary shall have an additional forty-live
(45) days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval
of the final plan within said additional forty-five (45) day period. If Beneficiary fails to notify
Trustor of its disapproval or approval of said plan within said forty-five (45) day period the plan
shall be deemed approved. Once any such plan is approved in writing or deemed approved by
Beneficiary, Trustor shall promptly commence all action necessary to implement such plan and
to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and
continuously pursue such action to completion in strict accordance with the terms of said plan.
The rights of Beneficiary with respect to the approval or disapproval of the environmental plan
set forth herein and the actions of Beneficiary pursuant to such rights are not intended to, and
shall not, in and of themselves, confer on Beneficiary a right to manage, operate or control the
Property on a continuing basis following the discovery of the event(s) or occurrence(s) described
in this subparagraph 9(d).
(e)
report, reasonably
Trustor agrees to submit from time to time, if requested by Beneficiary, a
satisfactory to Beneficiary, specifying any activities involving, directly or
4830-5243-0592.3
8/8/03 930 ct
7
indirectly, the use, generation, treatment, storage or disposal of any Hazardous Materials on the
Property. Beneficiary reserves the right, in its sole and reasonable discretion, to retain, at its own
expense, an independent professional consultant to review any report prepared by Trustor and/or
to conduct its own investigation of the Property. Trustor hereby grants to Beneficiary, its agent,
employees, consultants and contractors the right to enter upon the Property and to perform such
tests as Beneficiary deems are necessary to conduct such a review and/or investigation.
Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to
this Section 9, except for disclosure to (a) any consultant(s) hired by Beneficiary to review said
report, (b) legal counsel, accountants and other professional advisors to Beneficiary, (c)
regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as
required by any federal, state, county, regional or local authority or law, rule, regulation or
ordinance, and (e) as required in connection with any legal proceeding.
"Hazardous Materials" as used in this Deed of Trust shall mean any hazardous or
toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives,
chemicals known to cause cancer or reproductive toxicity, emissions or wastes and any other
chemical, material or substance, the handling, storage, release, transportation, or disposal of
which is or becomes prohibited, limited or regulated by any federal, state, county, regional or
local authority or which, even if not so regulated, is or becomes known to pose a hazard to the
health and safety of the occupants of the Property including, without limitation, (i) asbestos, (ii)
petroleum and petroleum by-products, (iii) urea formaldehyde foam insulation, (iv)
polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous
substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 CCERCLA"), 42 U.S.c.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of
1986 CSARA"), the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq. the
Clean Air Act, 42 U.S.C. Section 7401 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq.; (vi) all substances now or hereafter designated as "hazardous wastes" in Section
25117 of the California Health & Safety Code or as "hazardous substances" in Section 253 16 of
the California Health & Safety Code; (vii) all substances now or hereafter designated by the
Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement
Act of 1986 as being known to cause cancer or reproductive toxicity, or (viii) all substances now
or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances"
under any other federal, state or local laws or in any regulations adopted and publications
promulgated pursuant to said laws.
"Environmental Laws" as used herein shall mean all laws, rules, regulations and
ordinances relating to Hazardous Materials, including, but not limited to, those relating to soil
and groundwater conditions and those statutes referred to in the definition of Hazardous
Materials set forth hereinabove.
4830.5243.0592.1
81811J3 9:30 ct
8
"Environmental Activities" as used herein shall mean the use, generation,
transportation, treatment, storage or disposal of any Hazardous Materials at any time located on
or present on, under or about the Property,
(1) Trustor hereby agrees, at its sole cost and expense, to indemnify, protect,
hold harmless and defend (with counsel subject to Beneficiary's reasonable approval),
Beneficiary, its successors and assignees, and the officials, officers, agents, attorneys and
employees of each of them (individually, each an "Indemnitee", and collectively, the
"lndemnitees") from and against any and all claims, demands, damages, losses, liabilities,
obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs,
disbursements and expenses (including, without limitation, attorneys' and experts' reasonable
fees, disbursements and costs) of any kind or of any nature whatsoever (collectively, "Claims")
which may at any time be imposed upon, incurred or suffered by, or asserted or awarded against,
any Indemnitee directly or indirectly relating to or arising from any of the following
"Environmental Matters", but excluding any Claims arising solely from the gross negligence or
willful misconduct of Beneficiary:
(i) Any present or future presence of any Hazardous Materials on, in,
under or affecting all or any portion of the Property or on, in, under or affecting all or any
portion of any property adjacent or proximate to the Property, if such Hazardous
Materials originated or allegedly originated on or from the Property;
(ii) Any present or future storage, holding, handling, release,
threatened release, discharge, generation, leak, abatement, removal or transportation of
any Hazardous Materials on, in, under or from the Property or any portion thereof,
(iii) The failure of Trustor to comply with any and all laws, rules,
regulations, judgments, orders, permits, licenses, agreements, covenants, restrictions.
requirements or the like now or hereafter relating to or governing in any way the
environmental condition of the Property or the presence of Hazardous Materials on, in,
under or affecting all or any portion of the Property including, without limitation, all
Environmental Laws;
(iv) The failure of Trustor to properly complete, obtain, submit and/or
file any and all notices, permits, licenses, authorizations, covenants, and the like relative
to any of the Environmental Matters described herein in connection with the Property or
the ownership, use, operation or enjoyment thereof,
(v) The extraction, removal, containment, transportation or disposal
of any and all Hazardous Materials from any portion of the Property or any other
property adjacent or proximate to the Property, if such Hazardous Materials originated or
allegedly originated on or from the Property;
4!DO.5243-U592.3
8/8/03 9:30 ct
9
(vi) Any present or future presence, permlttmg, operation, closure.
abandonment or removal from the Property of any storage tank that at any time contains
or contained any Hazardous Materials and is or was located on, in or under the Property
or any portion thereof;
(vii) The implementation and enforcement of any monitoring,
notification or other precautionary measures that may at any time become necessary to
protect against the release or discharge of Hazardous Materials on. in, under or atTecting
the Property or into the air, any body of water, any other public domain or any property
adjacent or proximate to the Property;
(viii) Any failure of any Hazardous Materials generated or moved from
the Property to be removed, contained, transported or disposed of in compliance with all
applicable Environmental Laws; or
(ix) Any breach by Trustor of any of its covenants, representations or
warranties regarding Environmental Matters contained in this Deed of Trust or any of the
other Transaction Documents.
(g) Trustor hereby represents and warrants as follows:
(i) The Property is not and to the best of Trustor's actual knowledge,
has not been a site for the use, generation, manufacture, storage, treatment, release.
threatened release, discharge, disposal or transportation of any Hazardous Materials;
(ii) The Property is in compliance with all Environmental Laws;
(iii) Trustor has not received any written notice of claims or actions
(collectively, "Hazardous Materials Claims") pending or threatened against Trustor or
any previous owner or user of the Property (and relating to Trustor's and/or such previous
owner's or user's ownership of the Property), by any governmental entity or agency or
any other person or entity and relating to Hazardous Materials or pursuant to
Environmental Laws; and
(iv) Trustor has not received any written notice (i) pursuant to which
the Property has been designated as "border zone property" under the provisions of
California Health and Safety Code Sections 25220 et seq., or any other regulation
adopted in accordance therewith, (ii) of a hearing at which the Property will be
considered for designation as "border zone property", or (iii) of an occurrence or
condition on any real property adjoining or in the vicinity of the Property that could cause
the Property or any part thereof to be designated as "border zone property".
4830-5243-0592.1
8/8/03 930 ct
10
.--~
,
The foregoing shall constitute environmental provisions for purposes of
California Code of Civil Procedure Section 736.
10. Insurance.
(a) Casualtv Insurance. Trustor shall at all times keep the Property insured
for the benefit of Trustee and Beneficiary as follows, despite governmental requirements that
may detrimentally affect Trustor's ability to obtain or may materially increase the cost of such
ll1surance coverage:
(i) Against damage or loss by fire and such other hazards (including
lightning, windstorm, hail, explosion, riot, acts of striking employees, civil commotion,
vandalism, malicious mischief, aircraft, vehicle, and smoke) as are covered by the
broadest form of extended coverage endorsement available from time to time, in an
amount not less than the full insurable value (as defined in section 10.9) of the Property,
with a deductible amount not to exceed an amount satisfactory to Beneficiary;
(ii) Against rent, business, use or occupancy interruption on such
basis and in such amounts and with such deductibles as are reasonably satisfactory to
Beneficiary;
(iii) Against damage or loss by flood, if the Property is located in an
area identified by the Secretary of Housing and Urban Development or any successor or
other appropriate authority (governmental or private) as an area having special flood
hazards and in which flood insurance is available under the National Flood Insurance Act
of 1968 or the Flood Disaster Protection Act of 1973, as amended, modified,
supplemented, or replaced from time to time, on such basis and in such amounts as
Beneficiary may require;
(iv) Against damage or loss from (a) sprinkler system leakage and (b)
boilers, boiler tanks, heating and air conditioning equipment, pressure vessels, auxiliary
piping, and similar apparatus, on such basis and in such amounts as Beneficiary may
reqUIre;
(v) During any alteration, construction, or replacement of
improvements on the Property, or any substantial portion thereof, a Builder's All Risk
policy with extended coverage with course of construction and completed value
endorsements, for an amount at least equal to the full insurable value of the
improvements on the Property, and workers' compensation, in reasonable statutory
amounts, with provision for replacement with the coverage described in Section 4.1,
without gaps or lapsed coverage, for any completed portion of improvements on the
Property; and
4830.5243-0592.3
8/8103 9:30 ct
II
(vi) Against damage or loss by earthquake, with a deductible
reasonably satisfactory to Beneficiary, if such insurance is required by the senior deed of
trust beneficiary and provided it is available at commercially reasonable rates.
(b) Liabilitv Insurance. Trustor shall procure and maintain workers'
compensation insurance for Trustor's employees and comprehensive general liability insurance
covering Trustor, Trustee, and Beneficiary against claims for bodily injury or death or for
damage occurring in, on, about, or resulting from the Property, or any street, drive, sidewalk,
curb, or passageway adjacent to it, in standard form and with such insurance company or
companies and in an amount of at least $1,000,000 per claim, $2,000,000 aggregate single limit,
or such greater amount, as senior lender may require or is available at commercially reasonable
rates, which insurance shall include completed operations, product liability, and blanket
contractual liability coverage that insures contractual liability under the indemnifications set
forth in this Deed of Trust and the Transaction Documents (but such coverage or its amount shall
in no way limit such indemnification).
(c) Other Insurance. Trustor shall procure and maintain such other insurance
or such additional amounts of insurance, covering Trustor and the Property, as (a) may be
required by the terms of any construction contract for any improvements on the Property or by
any governmental authority, other than Beneficiary, or (b) may be specified in any other
Transaction Documents.
(d) Form of Policies. All insurance required under this Section 10 shall be
fully paid for and nonassessable. The policies shall contain such provisions, endorsements, and
expiration dates as Beneficiary from time to time reasonably requests and shall be in such form
and amounts, and be issued by such insurance companies doing business in the State of
California, as Beneficiary shall approve in Beneficiary's reasonable discretion. All policies shall
(a) contain a waiver of subrogation endorsement; (b) provide that the policy will not lapse or be
canceled, amended, or materially altered (including by reduction in the scope or limits of
coverage) without at least 30 days' prior written notice to Beneficiary; (c) with the exception of
the comprehensive general liability policy, contain a mortgagee's endorsement (438 BFU
Endorsement or equivalent), and name Beneficiary and Trustee as insureds; and (d) include such
deductibles as Beneficiary may approve. If a policy required under this paragraph contains a co-
insurance or overage clause, the policy shall include a stipulated value or agreed amount
endorsement acceptable to Beneficiary.
( e) Duplicate Originals or Certificates. Duplicate original policies evidencing
the insurance required under this Section 10 and any additional insurance that may be purchased
on the Property by or on behalf of Trustor shall be deposited with and held by Beneficiary and,
in addition, Trustor shall deliver to Beneficiary (a) receipts evidencing payment of all premiums
on the policies and (b) duplicate original renewal policies or a binder with evidence reasonably
satisfactory to Beneficiary of payment of all premiums at least 30 days before the policy expires.
In lieu of the duplicate original policies to be delivered to Beneficiary under this Section 10.5.
4830-5243-0592. [
X/g/OJ 9:30 ct
12
Trustor may deliver an underlier of any blanket policy, and Trustor may also deliver original
certificates from the issuing insurance company, evidencing that such policies are in full force
and effect and containing information that, in Beneficiary's reasonable judgment, is sufficient to
allow Beneficiary to ascertain whether such policies comply with the requirements of this
Section 10.
(I) No Separate Insurance. Trustor shall not carry separate or additional
insurance concurrent in form or contributing in the event of loss with that required under this
Section 10, unless endorsed in favor of Trustee and Beneficiary, as required by this Section 10
and otherwise approved by Beneficiary in all respects.
(g) Transfer of Title. In the event of foreclosure of this Deed of Trust or other
transfer of title or assignment of the Property in extinguishment, in whole or in part, of the Loan,
all right, title, and interest of Trustor in and to all insurance policies required under this Section
10 or otherwise then in force with respect to the Property and all proceeds payable under, and
unearned premiums on, such policies shall immediately vest in the purchaser or other transferee
of the Property.
(h) Replacement Cost. For purposes of this Section 10, the term "full
insurable value" means the actual cost of replacing the Property in question, without allowing for
depreciation, as calculated from time to time (but not more often than once every calendar year)
by the insurance company or companies holding such insurance or, at Beneficiary's request, by
appraisal made by an appraiser, engineer, architect, or contractor proposed by Trustor and
approved by said insurance company or companies and Beneficiary. Trustor shall pay the cost of
such appraisal.
(i) Approval Not Warrantv. No approval by Beneficiary of any insurer may
be construed to be a representation, certification, or warranty of its solvency and no approval by
Beneficiary as to the amount, type, or form of any insurance may be construed to be a
representation, certification, or warranty of its sufficiency.
(j) Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary
original policies or certificates evidencing such insurance at least 30 days before the existing
policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is
canceled, whether or not Beneficiary has the policy in its possession, and no reinstatement or
replacement policy is received before termination of insurance, Beneficiary, without notice to or
demand on Trustor, may (but is not obligated to) obtain such insurance insuring only Beneficiary
and Trustee with such company as Beneficiary may reasonably deem satisfactory, and pay the
premium for such policies, and the amount of any premium so paid shall be charged to and
promptly paid by Trustor or, at Beneficiary's option, may be added to the Loan. Trustor
acknowledges that, if Beneficiary obtains insurance, it is for the sole benefit of Beneficiary and
Trustee, and Trustor shall not rely on any insurance obtained by Beneficiary to protect Trustor in
any way.
4830-5243-0592.3
8/8/039:30 ct
I3
(k) Dutv To Restore After Casualtv. If any act or occurrence of any kind or
nature (including any casualty for which insurance was not obtained or obtainable) results in
damage to or loss or destruction of the Property, Trustor shall immediately give notice of such
loss or damage to Beneficiary and, if Beneficiary so instructs, shall promptly, at Trustor's sole
cost and expense, provided (a) any senior deed of trust beneficiary makes insurance proceeds
available and (b) all such insurance proceeds will be sufficient for the purpose, commence and
continue diligently to completion to restore, repair, replace, and rebuild the Property as nearly as
possible to its value, condition, and character immediately before the damage, loss or
destruction.
I I. Assignment of Insurance and Condemnation Proceeds. Subject to the rights of
any Senior deed of trust beneficiary should the Property or any part or appurtenance thereof or
right or interest therein be taken or damaged by reason of any public or private improvement,
condemnation proceeding (including change of grade), fire, earthquake or other casualty, or in
any other manner, Beneficiary or Trustee may, at its option, commence, appear in and prosecute,
in its own name, any action or proceeding, or make any reasonable compromise or settlement in
connection with such taking or damage, and obtain all compensation, awards or other relief
therefor. All compensation, awards, damages, rights of action and proceeds, including the
policies and the proceeds of any policies of insurance affecting the Property, are hereby assigned
to Beneficiary, subject to the rights of any Senior deed of trust beneficiary, but no such
assignments shall be effective to invalidate or impair any insurance policy. Trustor further
assigns to Beneficiary any return premiums or other repayments upon any insurance at any time
provided for the benefit of the Beneficiary and all refunds or rebates made of taxes or
assessments on the Property, and Beneficiary may at any time collect said return premiums,
repayments, refunds and rebates in the event of any default by Trustor under the Disposition and
Development Agreement, the Note or, this Deed of Trust or any other Transaction Documents.
Insurance proceeds or condemnation awards at any time assigned to or held by Beneficiary shall
be deemed to be held in trust and Beneficiary shall not commingle such proceeds with its general
assets. Trustor also agrees to execute such further assignments of any such policies,
compensation, award, damages, rebates, return of premiums, repayments, rights of action and
proceeds as Beneficiary or Trustee may require.
12. Use of Insurance Proceeds. After any damage by casualty to the Property,
whether or not required to be insured against under the policies to be provided by Trustor.
Trustor shall give prompt written notice thereof to Beneficiary generally describing the nature
and cause of such casualty and the extent of the damage to or destruction of the Property.
Trustor shall have the obligation to promptly repair the damage, provided (a) any senior deed of
trust beneficiary makes insurance proceeds available and (b) all such insurance proceeds will be
sufficient for the purpose. For these purposes, Beneficiary shall make available to Trustor
proceeds of any insurance policy covering the casualty and maintained by Trustor under and
subject to each of the following terms and conditions:
4830-5243-0592.1
8/8/03 9:30 ct
14
(a) Insurance proceeds which are directly attributable to the damage (herein
the "Proceeds") shall be released to Trustor upon and subject to satisfaction of each of the
following conditions:
(i) There exists no default under the Disposition and Development
Agreement, this Deed of Trust or any other Transaction Documents at any time prior to
or during the course of reconstruction;
(ii) Receipt by Beneficiary of satisfactory written evidence that any proposed
restorations by Trustor will comply with all statutes, ordinances, regulations, rules,
rulings, restrictive covenants, reciprocal easements, leases and contracts; that all
proposed plans and specifications are approved by all required governmental agencies;
and that Trustor has obtained all necessary building and other permits and approvals for
such reconstruction;
(iii) Receipt by Beneficiary of proof reasonably satisfactory to Beneficiary that
there exists and will continue to exist, until the Property is reasonably expected to be
restored and fully occupied, a source of funds sufficient to construct and install the
Project (as defined in the Transaction Documents) or, alternatively, to pay the Loan as
and when due. Such computation shall include Beneficiary's estimate of the amount
necessary to pay all of Trustor's operating expenses and construct and install all of the
Project improvements (as defined in the Transaction Documents) and pay all of the sums
due on the Note over the projected period of reconstruction, and Beneficiary may require
Trustor to establish and fund a holdback account up to the amount of the difference
between the anticipated debt service and operating expenses of Trustor. In the event of
any default under the Disposition and Development Agreement, this Deed of Trust, any
other Transaction Documents or any reconstruction requirements, Beneficiary may, at its
option, apply any portion or all of such amounts against accrued interest and the
outstanding amounts due under the Disposition and Development Agreement or the Note:
(iv) Receipt by Beneficiary from Trustor of evidence of sufficient cash funds
to cover one hundred percent (100%) of any difference between the estimated costs of
completion, as certified by an architect or engineer reasonably approved by Beneficiary
in writing, and the Proceeds;
(v) Receipt by Beneficiary of a certificate executed by Trustor describing the
work to be performed in connection with such restoration and a certificate by an
independent architect or engineer selected or approved by Beneficiary in writing stating
that the work described in the Trustor's certificate is adequate to restore the Property to
substantially the same size, design, quality and condition as existed prior to the damage.
The architect's or engineer's certificate shall include its estimate of all costs and expenses
which will be required to complete such restorations; and
.:I~30-5243.0592.3
g/8/0J 9:30 ct
15
(vi) Such additional conditions as may reasonably be imposed by Beneficiary
to provide assurance that the Proceeds will be used to restore the Property to substantially
the same condition, to the extent possible, as existed prior to the damage or taking,
including, without limitation, Beneficiary's prior written approval of all permits, plans,
specifications and construction contracts for such restoration.
(c) After completion of the restoration and subject to the conditions herein
stated, and, if Trustor is not then in default under the Disposition and Development Agreement,
this Deed of Trust or any other Transaction Documents, Beneficiary shall pay to Trustor (or such
other persons or entities that may have an interest therein) the undisbursed Proceeds and
Trustor's deposit for any estimated restoration expense held by Beneficiary upon delivery to
Beneficiary of (i) a certificate executed by Trustor showing that the work has been completed
and that all bills for labor performed and materials furnished in connection therewith have been
paid, (ii) unconditional lien releases and other appropriate written acknowledgments of payment
in full executed by all contractors and subcontractors performing labor on or furnishing materials
to the Property; (iii) a certificate executed by an architect or engineer reasonably approved by
Beneficiary confirming that the Property has been restored to substantially the same size, design,
quality and condition as existed immediately prior to the damage and in accordance with all
applicable federal, state, local and other governmental laws and regulations; and (iv) a certificate
of occupancy and other permits issued by the appropriate governmental authorities authorizing
the occupancy of the Property for its intended purposes and use.
If (i) any of the conditions in subparagraph 12(b), above. are not fulfilled within
sixty (60) days after the date of the casualty, or if the reconstruction cannot be completed within
such 60 day period, within such additional time as may be reasonably necessary to complete the
reconstruction, not to exceed one hundred eighty (180) days, and provided such additional time
does not result in a breach by the Trustor under the Disposition and Development Agreement,
this Deed of Trust or any other Transaction Documents; or (ii) if Trustor fails to exercise
diligence in promptly commencing or continuously prosecuting the work; or (iii) if Trustor is
otherwise in default under the Disposition and Development Agreement, the Note, this Deed of
Trust, other Transaction Documents or any reconstruction requirements set forth therein or
herein, Beneficiary may, at its option, subject to the rights of all senior deed of trust
beneficiaries, receive and apply the Proceeds and any deposits made by Trustor hereunder to the
indebtedness secured hereby, or to complete the necessary repairs and use the Proceeds for the
payment thereof. If the Proceeds are so applied to the indebtedness and, together with any other
payments due to Beneficiary under the Disposition and Development Agreement and all other
debts of Trustor to Beneficiary are discharged, Beneficiary shall not have the right to require the
Property to be repaired under the terms of this Deed of Trust, but Beneficiary's rights under any
other lien that it holds against the Property and which is not also required to be released shall not
be thereby impaired or affected.
All work of repairing or restoring damage shall be done in a good and
workmanlike manner with materials of good quality and in conformity with all applicable laws,
4830-5243-0592.1
8/8/03 9:30 ct
16
ordinances, rules and regulations. Nothing herein contained shall be construed as authorizing the
Trustor to subject the Property to any mechanic's, materialman's or other lien for the payment of
bills for material furnished or labor performed in connection with any work contemplated by this
paragraph.
In any event in which the Beneficiary is not otherwise obligated to permit the
insurance proceeds to be applied to the restoration of the Property as hereinabove described and,
at the option of Beneficiary, the proceeds of a loss under any policy, whether or not endorsed
payable to Beneficiary, may be subject to the rights of all senior deed of trust beneficiaries,
receive and applied in payment of the principal, interest or any other sums secured by this Deed
of Trust, whether or not then due, or to the restoration or replacement of any building on the
Property, without in any way affecting the enforceability or priority of the lien of this Deed of
Trust or the obligation of the Trustor or any other person for payment of the indebtedness hereby
secured or the reconstruction of the damaged improvements, whether such Trustor be the then
owner of said building or improvements or not.
13. Use of Condemnation Awards. Should the Property or any portion thereof or any
improvements thereon be taken or damaged by reason of any public improvement or
condemnation proceeding, or by any other form of eminent domain, Trustor agrees that
Beneficiary shall be entitled, subject to the provisions of Section 1265.225 of the California
Code of Civil Procedure, to all compensation, awards and other payments or relief therefor and
may, at its option, commence, appear in or prosecute in its own name any action or proceeding or
make any reasonable compromise or settlement in connection with such taking or damage, and
Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in connection
therewith. All such compensation, awards, damages, rights of actions and proceeds may be
applied by Beneficiary toward the repair of any damage to the improvements on any portion of
the Property not subject to the taking as and subject to the same conditions herein provided with
respect to the disposition of insurance proceeds; provided, however, that if the taking results in a
loss of the Property to an extent which, in the reasonable opinion of Beneficiary, renders or will
render the Property not economically viable or which substantially impairs Beneficiary's security
or lessens to any extent the value, marketability or intended use of the Property, Beneficiary may
apply the condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order
as Beneficiary may determine. Trustor agrees to execute such further assignments of
condemnation proceeds as Beneficiary or Trustee may from time to time reasonably require. If
so applied, any proceeds in excess of the unpaid principal and accrued interest due under or
Disposition and Development Agreement or the Note plus all other sums due to Beneficiary from
Trustor shall be paid to Trustor or Trustor's assignee.
14. Propertv Taxes and Assessments. Trustor shall pay in full on or before the due
date thereof all rents, taxes, assessments and encumbrances, with interest, that may now or
hereafter be levied, assessed or claimed upon the Trustor's ownership or use of the Property that
is the subject of this Deed of Trust or any part thereof, and upon request, provide the Beneficiary
-1X30-5243-0592.3
X/l{/(J3 9:30 C1
17
with copies of official receipts for payment therefor, and shall pay all taxes imposed upon, and
reasonable costs, fees and expenses of, this Deed of Trust.
15. Assessment Districts. Trustor agrees not to consent to inclusion of the Land in
any local improvement or special assessment district or to the imposition of any special or local
improvement assessment against the Property, without Beneficiary's prior written consent.
16. Mortgage Taxes. In the event of the passage after the date of this Deed of Trust
of any federal, state or municipal law, ordinance or regulation relating to the taxation of
mortgages, deeds of trust or debts secured thereby so as to tax or assess any interest of
Beneficiary or any payments secured hereby. Trustor shall bear and pay the full amount of such
taxes.
17. Soecial Assessment and Insurance Reserves. Trustor shall, at the request of the
Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and
insurance premiums estimated by the Beneficiary next to become due, in addition to any other
periodic payment or performances owed by Trustor under the Disposition and Development
Agreement or any other Transaction Documents or this Deed of Trust, so that thirty (30) days
before the due date thereof, or of the first installment thereof, Beneficiary will have on hand an
amount sufficient to pay the next maturing assessments and insurance premiums. The amount of
the additional payment to be made on account of assessments and insurance premiums shall be
adjusted annually or more frequently as Beneficiary deems necessary and any deficit shall be
immediately paid by Trustor upon request and any surplus shall be credited on the mortgage
account. Subsequent payments on account of assessments and insurance premiums shall be
made in accordance with the next estimate by the Beneficiary of annual requirements. To the
extent permitted by applicable law, all monies paid to Beneficiary on account of assessments or
insurance premiums may be commingled and invested with Beneficiary's own funds and, unless
and to the extent required by law, shall not bear interest for Trustor. Beneficiary shall not
exercise the rights granted in this paragraph so long as all of the following conditions are met:
(a) There is no default under the Disposition and Development Agreement,
the Note, this Deed of Trust or any other Transaction Documents; and
(b) Trustor pays all assessments and insurance premiums prior to delinquency.
Upon Trustor's failure to comply with either of conditions (a) or (b), above,
Beneficiary may, at its option, then or thereafter exercised, require Trustor to pay the additional
sums described in this paragraph.
18. Trustor's Right to Contest Taxes. Trustor shall have the right to contest any real
property tax or special assessment so long as (a) no defaults exist under the Disposition and
Development Agreement, this Deed of Trust or any other Transaction Documents; (b) Trustor
makes any payment or deposit or posts any bond as and when required as a condition to pursuing
4830.5243-0592.1
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18
such contest; (c) Trustor commences such contest prior to such tax or assessment becoming
delinquent and continuously pursues the same in good faith and with due diligence; (d) such
contest or any bond furnished by Trustor stays the foreclosure of any lien securing the payment
of any such tax or assessment; and (e) Trustor pays any tax or assessment within ten (l0) days
following the date of resolution of such contest.
19. Report of Real Estate Transaction. Trustor has made or provided for making, or
will make or provide for making, on a timely basis, any reports or returns required by state or
local law relating to the Property, or the development of the Property, notwithstanding the fact
that the primary reporting responsibility may fall on the Beneficiary, or other party. Trustor's
obligations under this paragraph will be deemed to be satisfied, if proper and timely reports and
returns required under this paragraph are filed by a title company involved in each real estate
transaction relating to the Property, but nothing contained herein shall be construed to require
such returns or reports to be filed by Beneficiary.
20. Leases. With respect to any leases currently or hereafter relating to any portion of
the Property, Trustor agrees that:
(a) Prior to the execution of any such lease or rental agreement by the Trustor,
the Trustor shall give the Beneficiary thirty (30) days written notice setting forth the identity of
the tenant and the relevant terms of the proposed lease;
(b) Each such lease shall not be inconsistent with the covenants of the Trustor
under the Disposition and Development Agreement, this Deed of Trust and the other Transaction
Documents;
(c) Trustor shall fully comply with all of its material obligations under all
leases on the Property, so that the same shall not become in default and shall do all that is
necessary to preserve the same in force; and
(d) Beneficiary and its successors and assigns (including any purchaser at a
foreclosure or trustee's sale) shall have the right, at its option, to recognize and continue in effect
any such leasehold interests following any foreclosure or trustee's sale hereunder.
21. Assignment of Leases. Trustor hereby unconditionally and absolutely assigns,
transfers and sets over unto Beneficiary, all leases, subleases, rental agreements, occupancy
agreements, licenses, concessions, entry fees and other agreements that grant a possessory
interest or right of entry in all or any part of the Property, together with all rents, issues, deposits
and profits of the Property, together with the immediate and continuing right to collect and
receive the same, for the purpose and upon the terms and conditions hereinafter set forth.
Trustor further unconditionally and absolutely assigns, transfers and sets over unto Beneficiary
all of its right, title and interest in and to any plans, drawings, specifications, permits,
engineering reports and land planning maps, which it now has or may hereafter acquire regarding
-HUO-5243-U592.3
8/8/03 9:30 ct
19
any improvements now on or to be constructed upon the Property. Beneficiary confers upon
Trustor a license to collect and retain the rents, issues, deposits and profits of the Property, as
they become due and payable, subject, however, to the right of Beneficiary upon a default
hereunder to revoke said license, at any time, in its sole discretion and without notice to Trustor.
Beneficiary may revoke said license and collect and retain the rents, issues, deposits and profits
of the Property assigned herein to Beneficiary upon the occurrence of an Event of Default
hereunder or Trustor's default under any of the obligations secured hereby, and without taking
possession of all or any part of the Property, and without prejudice to or limitation upon any of
its additional rights and remedies granted pursuant hereto or pursuant to the Disposition and
Development Agreement or any other Transaction Documents, and Beneticiary shall, in its sole
and absolute discretion, have the right to apply such income for the payment of all expenses or
credit the net amount of income that it receives from the Property, to the indebtedness in the
manner, order and amounts as Beneficiary shall determine. In the event the Beneficiary
exercises or is entitled to exercise any of its rights or remedies under this Deed of Trust as a
result of the default of the Trustor under the Disposition and Development Agreement, and if any
lessee, sublessee or assignee under any lease assigned under this paragraph files or has filed
against it any petition in bankruptcy or for reorganization or undertakes or is subject to similar
action, Beneficiary shall have, and is hereby assigned by Trustor, all of the rights that would
otherwise inure to the benefit of Trustor in such proceedings, including, without limitation, the
right to seek "adequate protection" of its interests, to compel assumption or rejection of any such
lease and to seek such claims and awards as may be sought or granted in connection with the
rejection of any such lease. Unless otherwise agreed to by Beneficiary in writing, Beneficiary's
exercise of any of the rights provided in this paragraph shall preclude Trustor from the pursuit
and benefit thereof, without any further action or proceeding of any nature. The foregoing
assignment shall not impose upon Beneficiary any duty to produce rents from the Property. and
such assignment shall not cause Beneficiary to be a "mortgagee in possession" for any purpose.
The rights granted in this paragraph shall be in addition to and not in derogation of any similar or
related rights granted to Beneficiary in any separate assignment ofleases and rents.
22. Impairment of Securitv. Trustor shall not, without first obtaining Beneficiary's
written consent, assign any of the rents or profits of the Property or change the general nature or
use of the Property or initiate or acquiesce in any zoning reclassification, or do, or suffer to be
done, any act or thing that would impair the security of Beneficiary's lien upon the Property or
the rents thereof. Trustor shall not, without the written consent of Beneficiary, (i) initiate or
support any zoning reclassification of the Property, seek any variance under existing zoning
ordinances applicable to the Property or use or permit the use of the Property in a manner that
would result in such use becoming a non-conforming use under applicable zoning ordinances;
(ii) modify, amend or supplement any easement, reservation, restriction, covenant. condition or
encumbrance pertaining to the Property; (iii) impose or consent to any restrictive covenant or
encumbrance upon the Property, execute or file any subdivision or parcel map affecting the
Property or consent to the annexation of the Property to any municipality; or (iv) permit or suffer
the Property to be used by the public or any person in such manner as might make possible a
claim of any implied dedication or easement.
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23. Defense of Suits. Trustor shall appear in and defend any suit, action or
proceeding that might affect the value, priority or enforceability of this Deed of Trust or the
Property itself or the rights or powers of Beneficiary or Trustee, including any suits relating to
damage to property or death or personal injuries, whether or not Trustor is ultimately found
liable for any negligence or other wrongful conduct or inaction. Trustor, following mutual
negotiations with Beneficiary, has waived and does hereby waive any immunity to such liability
to Beneficiary under any industrial insurance or similar statute, to the extent such immunity
would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or
defend any such action or proceeding or be made a party to any such action or proceeding by
reason of this Deed of Trust, or elect to prosecute such action as appears necessary to preserve
the value, priority or enforceability of this Deed of Trust or the Property itself, Trustor will at all
times indemnify Beneficiary and Trustee from and, on demand, reimburse Beneficiary and
Trustee for, any and all loss, damage, expense or cost, including cost of evidence of title, expert
witness fees and attorneys* fees, arising out of or incurred in connection with any such suit,
action or proceeding, and any appeal or petition for review thereot~ and the sum of such
expenditures shall be secured by this Deed of Trust with interest at the rate of 10% per annum
and shall be due and payable on demand. Trustor shall pay costs of suit, cost of evidence of title,
expert witness fees and reasonable attorneys* fees in any proceeding or suit brought by
Beneficiary to foreclose this Deed of Trust and in any appeal therefrom or petition for review
thereof.
24. Assignments and Transfers. Trustor acknowledges that Beneficiary relied upon
Trustor's financial statements, credit history, business and real property managerial expertise and
other factors personal to Trustor in making the Loan, and Trustor covenants not to transfer any of
the interest in the Property or to permit the transfer of any interest in Trustor without first
receiving Beneficiary's express written consent in each instance. A breach of this covenant shall
constitute a default under the Disposition and Development Agreement, the Note and this Deed
of Trust. All sums then due to Beneficiary by Trustor hereunder, under the Disposition and
Development Agreement or under the Note may, at Beneficiary's option, be declared
immediately due and payable if any of Trustor's interests in the Property, or any part thereof. are
sold or transferred, voluntarily or involuntarily, without Beneficiary's prior written consent.
25. Matters Requiring Beneficiary's Prior Consent. So long as any part of the Loan
remains unpaid or any part of the Obligations remain unperformed, Trustor shall not do or suffer
any of the following without Beneficiary's prior written consent, which consent shall not be
unreasonably withheld: (i) change its form of organization; (ii) modify its organizational
documents; (iii) cause itself to become organized as the same or any other type oflegal entity in
a jurisdiction other than that under the laws of which it is organized on the date of this Deed of
Trust; (iv) merge with or into, consolidate with, or become subject to control by any other legal
entity; (v) except as permitted pursuant to Section 24, make or suffer any change in its ownership
or management, or become subject to control by persons other than its owners on the date of this
Deed of Trust, voluntarily or by operation of law; (vi) except as permitted pursuant to Section
-1X3U-5243.()592.]
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21
27, sell, convey, assign, or transfer any Property or any interest therein, whether legal or
equitable, directly or indirectly; (vii) create, incur, assume, suffer to exist, or otherwise become
liable on any indebtedness relating to the Property other than (I) a Senior Loan (as defined in
Section 42); (2) the Loan; and, (3) ordinary course trade payables incurred in connection with the
ownership and operation of the Property, none of which shall exceed an amount reasonable and
customary for such an expenditure for properties similar in type, size, and character to the
Property located in the area of the Property; or (viii) grant or suffer the imposition of any lien
upon, security interest in, or other encumbrance of any of the Property. Any violation of the
provisions of this Section 25 shall constitute an Event of Default under this Deed of Trust and
each other Transaction Document, with respect to which Beneficiary shall have the right to
accelerate the maturity of the Loan and pursue all other remedies available to Beneficiary undcr
this Deed of Trust, any other Transaction Document, and/or applicable law.
26. Further Encumbrances. Trustor acknowledges that Beneficiary relied upon the
Property not being subject to additional liens or encumbrances for reasons including, but not
limited to, the possibility of competing claims or the promotion of plans disadvantageous to
Beneficiary in bankruptcy; the risks to Beneficiary in a junior lienholder's bankruptcy; questions
involving the priority of future advances, the priority of future leases of the Property, the
marshaling of Trustor's assets, and the Beneficiary's rights to determine the application of
condemnation awards and insurance proceeds; the impairment of the Beneficiary's option to
accept a deed in lieu of foreclosure; the increased difficulty of reaching agreements for workouts
or to the actions to be taken by trustees, receivers, liquidators and fiduciaries; and Beneficiary's
requirements of Trustor's preservation of its equity in the Property and the absence of debt that
could increase the likelihood of Trustor being unable to perform its obligations when due.
Therefore, as a principal inducement to Beneficiary to make the Loan secured by this Deed of
Trust, and with the knowledge that Beneficiary will materially rely upon this paragraph in so
doing, Trustor covenants not to encumber the Property, without first receiving Beneficiary's
express written consent in each instance, which consent may be withheld by Beneficiary. A
breach of this covenant shall constitute a default under the Disposition and Development
Agreement, the Note and this Deed of Trust, and Beneficiary may exercise all remedies available
to Beneficiary under the Disposition and Development Agreement, the Note or this Deed of
Trust. Without limiting the generality of the foregoing, no mortgages, deeds of trust or other
forms of security interests prior or subordinate to the security interests of Beneficiary shall
encumber any real or personal property that is the subject of any lien or security interest granted
to Beneficiary, without Beneficiary's prior written consent.
27. Partial Release.
(a) So long as Trustor is not in default under any of the Transaction
Documents, and further provided that no Event of Default is then existing, on written request of
Trustor, partial reconveyances from the lien or charge of this Deed of Trust shall be granted for
anyone or more of the Completed Parcels (as defined in the Disposition and Development
4830-5243-0592.1
8/8/03 9:30 ct
22
,
Agreement) pursuant to the provisions of Section 5.04 of the Disposition and Development
Agreement.
(b) Trustor shall deliver to the Beneficiary a request for partial release of the
lien of this Deed of Trust, accompanied by legal descriptions of the security Property to be
released, at least twenty (20) days prior to the date requested for such partial release. Upon
receipt of any such request, Beneficiary shall calculate the total Net Sale Proceeds (as defined in
the Disposition and Development Agreement) payable to Beneficiary from the sale of the portion
of the Property requested to be released from the lien of this Deed of Trust, which will be due
and payable in connection with and prior to or concurrent with such release, and shall submit
written notice of such amount to Trustor and the applicable escrow holder.
(c) All partial release documentation shall be prepared by the attorneys for
Trustor. All costs and charges of any kind and nature regarding any partial release from the lien
of this Deed of Trust shall be paid solely by Trustor. Beneficiary shall not be required to incur
any expenses in documenting or processing or otherwise related to the making of a partial release
from the lien of this Deed of Trust.
(d) So long as Trustor is not in default under any of the Transaction
Documents, and upon approval by the Beneficiary of any improvement agreement, development
agreement or other agreement or instrument imposing conditions on the subdivision of the
Property, on written request of Trustor, the Beneficiary shall (i) release the lien of this Deed of
Trust from any portion of the Property required to be dedicated for public roads or for common
area in connection with the development of the Property and (ii) consent to the granting of any
easement or the making any map or plot of the Property necessary for the development of the
Property in accordance with the Disposition and Development Agreement.
28. Event of Default. An "Event of Default" shall be deemed to have occurred in any
of the following circumstances:
(a) Failure of Trustor to satisfy any performance or payment obligation
required under this Deed of Trust, the Disposition and Development Agreement or any other
Transaction Document within thirty (30) days following written notice from Beneficiary;
(b) Failure of Trustor to properly perform its obligations under this Deed of
Trust, the Disposition and Development Agreement or any other Transaction Document. by a
date specified herein or therein or in a written notice to Trustor, if applicable, within thirty (30)
days following written notice from Beneficiary;
(c) The occurrence of a casualty that is uninsured as a result of Trustor's
failure to maintain insurance required hereunder with respect to, any material (as determined by
Beneficiary) portion of the Property;
4100-5243-0592.3
g/8/03 9:30 ct
23
(d) Trustor becomes insolvent or generally is not paying its debts as they
become due, as defined in the United States Bankruptcy Reform Act, as amended from time to
time (which Act, as amended, is herein called the "Bankruptcy Code"), or shall file a voluntary
petition in bankruptcy seeking to effect a reorganization plan or other arrangement with creditors
or any other relief under the Bankruptcy Code or under any other state or federal law relating to
bankruptcy or other relief for debtors, whether now or hereafter in effect, or shall consent to or
suffer the entry of any order for relief in any involuntary case under the Bankruptcy Code, or
shall be the defendant or subject of any involuntary petition filed under the Bankruptcy Code that
is not dismissed within ninety (90) days of the filing thereof, or shall make an assignment for the
benefit of creditors;
(e) Any court (or similar tribunal) having jurisdiction over Trustor or any of
the Property or other property of Trustor shall enter a decree or order appointing a receiver,
trustee, guardian, conservator, assignee in bankruptcy or insolvency of Trustor, of any of the
Property, of any other real property of Trustor, of any other significant asset of Trustor, or shall
enter a decree or order for relief in any involuntary case under the Bankruptcy Code that is not
dismissed within ninety (90) days of the filing thereof, or shall make an assignment for the
benefit of creditors;
(f) The entry of any final judgment or arbitration award against Trustor that is
not paid or stayed pending appeal, or the sequestration or attachment of, or any levy or execution
upon (i) any of the Property, (ii) any other collateral provided by Trustor or any other person
under this Deed of Trust or as security for performance or payment of the Loan, or (iii) any
significant portion of the other assets of Trustor, which is not released, expunged or dismissed
prior to the earlier of (I 0) days after such sequestration, attachment or execution or five (5) days
before the sale of any such assets;
(g) Trustor shall dissolve, liquidate or wind up its affairs or shall bring any
legal action or take any other action contemplating such dissolution, liquidation or winding up;
(h) The determination by Beneficiary that any representation, warranty or
statement contained in this Deed of Trust or the Disposition and Development Agreement or in
any other writing delivered to Beneficiary in connection with the Disposition and Development
Agreement or any other Transaction Documents was incomplete, untrue or misleading in any
material respect as of the date made;
(i) The occurrence of a default by Trustor under any of the contracts or
agreements assigned to Beneficiary under this Deed of Trust, where such default is not cured
within the applicable cure period, if any, or the failure of Trustor to diligently enforce its rights
and remedies under such contracts and agreements upon the default of any other party thereto;
and
-1S30.5243-0592.!
SIX/OJ 9:30 Cl
24
I
(j) Trustor acknowledges and agrees that all material non-monetary defaults
are conclusively deemed to be and are defaults impairing the security of this Deed of Trust, and
that Beneficiary shall be entitled to exercise any appropriate remedy, including, without
limitation, foreclosure of this Deed of Trust, upon the occurrence of any such material non-
monetary default.
29. Rights and Remedies on Default. Upon the occurrence of any Default or Event of
Default under this Deed of Trust and at any time thereafter, Trustee or Beneficiary may exercise
anyone or more of the following rights and remedies:
(a) Disposition and Development Agreement Remedies. Beneficiary may
exercise any right or remedy provided for in the Disposition and Development Agreement, or
any other Transaction Documents;
(b) Acceleration. Beneficiary may declare the Loan and all other
performances or sums secured by this Deed of Trust immediately due and payable;
(c) Foreclosure Rights. Beneficiary may declare all performances or Silins
secured by this Deed of Trust immediately due and payable either by commencing an action to
foreclose this Deed of Trust as a mortgage, or by the delivery to Trustee of a written declaration
of default and demand for sale and of written notice of default and of election to cause the
Property to be sold, which notice Trustee shall cause to be duly filed for record in case of
foreclosure by exercise of the power of sale herein. Should Beneficiary elect to foreclose by
exercise of the power of sale herein, Beneficiary shall also deposit with Trustee this Deed of
Trust, the documents evidencing the Loan and any receipts and evidence of expenditures made
and secured hereby as Trustee may require, and notice of sale having been given as then required
by law and after lapse of such time as may then be required by law after recordation of such
notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and
place of sale fixed by it in said notice of sale, either as a whole or in separate parcels, and in such
order as it may determine, at public auction to the highest bidder upon any terms and conditions
specified by Beneficiary and permitted by applicable law. Trustee may postpone sale of all or
any portion of the Property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to any purchaser its deed or deeds conveying the
Property, or any portion thereof, so sold, but without any covenant or warranty, express or
implied. The recitals in such deed or deeds of any matters or facts, shall be conclusive proof of
the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase all
or any portion of the Property, as applicable, at sale.
(d) Right to Rescind. Beneficiary, from time to time before Trustee's sale,
may rescind any such notice of breach or default and of election to cause the Property to be sold
by executing and delivering to Trustee a written notice of such rescission, which notice, when
recorded, shall also constitute a cancellation of any prior declaration of default and demand for
4830-5243-0592.3
8/8/03 9:30 ct
25
sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any
breach or default then existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations of default and demand for
sale, and notices of breach or default, and of election to cause the Property to be sold to satisfy
the obligations hereof, nor otherwise affect any provision, agreement, covenant or condition of
the Disposition and Development Agreement and/or of this Deed of Trust or any of the rights,
obligations or remedies of the parties hereunder.
(e) UCC Remedies. Beneficiary shall have all the rights and remedies of a
secured party under the California Commercial Code, including, without limitation, Section
9501(4) thereof. Upon request, Trustor shall assemble and make such collateral available to
Beneficiary at a place to be designated by Beneficiary that is reasonably convenient to both
parties. Upon repossession, Beneficiary may propose to retain the collateral in partial satisfaction
of the Loan or sell the collateral at public or private sale in accordance with the California
Commercial Code or any other applicable statute. Such sale may be held as a part of, distinctive
from or without a trustee's sale or foreclosure of the real property secured by this Deed of Trust.
If any notification of disposition of all or any portion of the collateral is required by law, such
notification shall be deemed reasonably and properly given, if mailed at least ten (10) days prior
to such disposition. If Beneficiary disposes of all or any part of the collateral after default. the
proceeds of disposition shall be applied in the following order:
(i) to the reasonable expenses of retaking, holding, preparing for sale, selling
the collateral, and the like;
(ii) to the reasonable attorneys' fees and legal expenses incurred by
Beneficiary; and
(iii) to the satisfaction of the indebtedness secured by this Deed of Trust.
(f) Remedial Advances. Should Trustor fail to make any payment or to do
any act as herein provided, then Beneficiary or Trustee, without obligation so to do and without
demand upon Trustor and without releasing Trustor from any obligation hereof, may (i) make or
do the same in such manner and to such extent as either may deem necessary to protect the
security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such
purposes; (ii) commence, appear in and defend any action or proceeding purp0l1ing to atTect the
security hereof or the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest or
compromise any encumbrance, charge, lien, tax or assessment, or the premium for any policy of
insurance required herein; and in exercising any such power, incur any liability, expend whatever
amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of
title, employ counsel and pay such counsel's fees. Beneficiary shall be subrogated to the rights
and lien interests of any person who is paid by Beneficiary pursuant to the terms of this
paragraph. Trustor shall repay immediately on written notice to Trustor all sums expended or
4830.5243,0592. ]
8/8/039:30 ct
26
advanced hereunder by or on behalf of Beneficiary, with interest from the date of such advance
or expenditure at the rate of 10% per annum, and the repayment thereof shall be secured hereby.
(g) Summary Possession. Beneficiary may, at its option, either in person or
by agent, employee or court-appointed receiver, enter upon and take possession of the Property
and continue any work of improvement, repair or renovation thereof at Trustor's expense and
lease the same or any part thereof, making such alterations as it finds necessary, and may
terminate in any lawful manner any lease(s) of the Property, exercising with respect thereto any
right or option available to the Trustor. The entering upon and taking possession of the Property,
the collection of rents, issues and profits, or the proceeds of fire and other insurance policies or
compensation or awards for any taking or damage to the Property, and the application or releasc
thereof shall not cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
(h) Collection of Rents. Beneficiary may require any tenant or other user of
the Property to make payments ofrent or use fees directly to Beneficiary, regardless of whether
Beneficiary has taken possession of the Property. If any rents are collected by Beneficiary, then
Trustor hereby irrevocably designates Beneficiary as Trustor's attorney-in-fact to endorse
instruments received in payment thereof in the name of Trustor and to negotiate the same and
collect the proceeds. Payments by tenants or other users to Beneficiary in response to
Beneficiary's demand shall satisfy the obligation for which the payments are made, whether or
not any proper grounds for the demand existed. Beneficiary may exercise its rights under this
paragraph either in person, by agent or through a receiver.
(i) Beneficiary's Enforcement of Leases. Beneficiary is hereby vested with
full power to use all measures, legal and equitable, deemed by it necessary or proper to collect
the rents assigned in this Deed of Trust, including the right, in person or by agent, employee or
court-appointed receiver, to enter upon the Property, or any part thereof, and take possession
thereof forthwith to the extent necessary to effect the cure of any default on the part of Trustor as
lessor in any leases or upon Trustor's default under the Disposition and Development
Agreement. Trustor hereby grants to Beneficiary full power and authority to exercise all rights,
privileges and powers herein granted at any and all times hereafter, without notice to Trustor.
including the right to operate and manage the Property, make and amend leases and perform any
other acts reasonably necessary to protect the value, priority or enforceability of any security for
the obligations of the Trustor under the Disposition and Development Agreement or this Deed of
Trust and use and apply all of the rents and other income herein assigned to the payment of the
costs of exercising such remedies, of managing and operating the Property, and of any
indebtedness or liability of Trustor to Beneficiary, including but not limited to the payment of
taxes, special assessments, insurance premiums, damage claims, the costs of maintaining,
repairing, rebuilding and restoring any improvements on the Property or of making the same
rentable, attorneys' fees incurred in connection with the enforcement of this Deed of Trust, and
any principal and interest payments due from Trustor to Beneficiary under the Disposition and
Development Agreement, the Note and this Deed of Trust, all in such order as Beneficiary may
4830-5243-0592.3
8/8/039:30 ct
27
determine. Beneficiary shall be under no obligation to enforce any of the rights or claims
assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any
leases and does not assume any of the liabilities in connection with or arising or growing out of
the covenants and agreements of Trustor in any leases. It is further understood that this Deed of
Trust shall not operate to place responsibility for the control, care, management or repair of the
Property, or parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable for the
carrying out of any of the terms and conditions of any leases, or for any waste of the Property by
the lessee under any leases or by any other party, or for any dangerous or defective condition of
the Property or for any negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, invitee, licensee, employee or stranger, except as
may result from the gross negligence or willful misconduct of Beneficiary after taking
possession of the Property hereunder.
(j) Beneficiary's Enforcement of Contracts. Beneficiary shall have the right
to enforce Trustor's rights under all architect, engineering, construction and related contracts and
to bring an action for the breach thereof in the name of Beneficiary or, at Beneficiary's option, in
the name of Trustor, in the event any architect, engineer, contractor or other party breaches their
respective contract or contracts, regardless of whether Beneficiary acquires or retains any interest
in the Property. Trustor hereby irrevocably appoints Beneficiary as its attorney-in-fact for the
purposes of the foregoing, which power shall be durable and coupled with an interest.
Beneficiary does not assume and shall not be obligated to perform any of Trustor's obligations
under said contracts nor shall Beneficiary be required to enforce such contracts or bring action
for the breach thereof; provided however, any performance of the respective contracts
specifically required by the Beneficiary in writing, following any default by Trustor under the
Disposition and Development Agreement, this Deed of Trust, any other Transaction Documents
or the contracts, and which is properly and timely undertaken by the contractor, engineer or
architect, shall be paid for by the Beneficiary in accordance with the terms and conditions of the
contracts. Such payments shall be deemed additions to the amounts owed by Trustor to the
Beneficiary under the Disposition and Development Agreement and the Note and secured by this
Deed of Trust and shall bear interest at the rate of 10% per annum from the date of advance to
and including the date of full payment, and shall be secured by any deed of trust, collateral
assignment of leases and rents, security agreement and other documents granted to secure the
Loan.
(k) Appointment of Receiver. Beneficiary has the right to have a receiver
appointed to take possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect the income from the
Property and apply the proceeds, over and above the cost of the receivership, against the Loan.
The receiver may serve without bond, if permitted by law. Beneficiary's right to the appointment
of a receiver shall exist whether or not the apparent value of the Property exceeds the
indebtedness secured hereby by a substantial amount. Employment by Beneficiary shall not
disqualify a person from serving as a receiver. Upon taking possession of all or any part of the
Property, the receiver or Beneficiary may: (i) use, operate, manage, control and conduct business
4830-5243-0592.1
8/S/U3 9:30 Cl
28
on the Property and make expenditures for all maintenance and improvements as in its judgment
are necessary and proper; (ii) collect the income from the Property and apply such sums to the
expenses of use, operation and management; and (iii) at Beneficiary's option, complete any
construction in progress on the Property, and in that connection pay bills, borrow funds, employ
contractors and make any changes in plans or specifications as Beneficiary deems reasonably
necessary or appropriate. If the revenues produced by the Property are insufficient to pay
expenses, the receiver may borrow, from Beneficiary or otherwise, as Beneficiary may deem
reasonably necessary for the purposes stated in this paragraph. The amounts borrowed or
advanced shall be payable on demand and bear interest from the date of expenditure until repaid
at the rate of 10% per annum. Such sums shall become a part of the debt secured by this Deed of
Trust.
(I) Specific Enforcement. Beneficiary may specifically enforce any covenant
in this Deed of Trust or the Trustor's compliance with its warranties herein and may restrain and
enjoin the breach or prospective breach of any such covenant or the noncompliance with any
condition and Trustor waives any requirement of the posting of any bond in connection
therewith.
(m) General Creditors' Remedies. Beneficiary shall have such other rights and
remedies as are available under any statute or at law or in equity, generally, and the delineation
of certain remedies in this Deed of Trust shall not be deemed in limitation thereof
30. Application of Sale Proceeds. After deducting all costs and expenses of Trustee
and of this Deed of Trust, including cost of evidence of title and reasonable attorneys* fees in
connection with sale, as above set forth, Trustee shall apply the proceeds of sale to payment of
all sums expended under the terms hereof, not then repaid, with accrued interest at the rate of
10% per annum; all other sums then secured hereby; and the remainder. if any, to the Beneficiary
and any other person or persons legally entitled thereto.
31. Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee
or Beneficiary is intended to be exclusive of any other remedy provided herein or under the
Disposition and Development Agreement or any other Transaction Documents, or otherwise by
law provided or permitted, or provided in any guaranty given in connection with the Loan, but
each shall be cumulative and shall be in addition to every other remedy. Every power or remedy
given by this instrument to Trustee or Beneficiary or to which either of them may be otherwise
entitled, may be exercised concurrently or independently, from time to time and as often as may
be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent
remedies.
32. No Waiver. No waiver of any default or failure or delay to exercise any right or
remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the
future or a preclusion of any right or remedy with respect to the same or any other occurrence.
4830-5243-0592.3
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29
33. Marshaling. In case of a sale under this Deed of Trust, the Property, real.
personal and mixed, may be sold in one or more parcels. Neither Trustee nor Beneficiary shall
be required to marshal Trustor's assets.
34. SUBMISSION TO JURISDICTION.
(A) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED
OF TRUST, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN SAN BERNARDINO COUNTY, CALIFORNIA, (C)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST
EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN
BERNARDINO COUNTY, CALIFORNIA (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING
IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES
DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE
(BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS
OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(B) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND
FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO
THIS DEED OF TRUST OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY
OR TRUSTOR, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
35. Trustor's Indemnification. Trustor agrees to indemnify and hold harmless Trustee
and Beneficiary from and against any and all losses, liabilities, penalties, claims, charges, costs
and expenses (including attorneys- fees and disbursements) (the "Losses") that may be imposed
on, incurred or paid by or asserted against Trustee and/or Beneficiary by reason or on account of,
or in connection with: (a) any default by Trustor hereunder or under the Disposition and
Development Agreement or other Transaction Documents; (b) Trustee's and/or Beneficiary's
good faith and commercially reasonable exercise of any of their rights and remedies or the
4830-5243-0592. ]
X/8103 9:30 ct
30
r- .
performance of any of their duties hereunder or under any other documents to which Trustor is a
party; (c) the construction, reconstruction or alteration of the Property; (d) any negligence,
willful misconduct or failure to act of Trustor, or any negligence, willful misconduct or failure to
act of any lessee of the Property, or any of their respective agents, contractors, subcontractors,
servants, employees, licensees or invitees; or (e) any accident, injury, death or damage to any
person or property occurring in, on or about the Property or any street, drive, sidewalk, curb or
passageway adjacent thereto, except for the willful misconduct or gross negligence of the
indemnified person; or (f) after the date hereof, any failure of Trustor to file any tax reports or
returns referred to in this Deed of Trust. The indemnity provided under subsection (f) of this
paragraph shall also extend to counsel for the Beneficiary. Any amount payable to Trustee.
Beneficiary or counsel for Beneficiary under this paragraph shall be due and payable within ten
(10) days after demand therefor and receipt by Trustor of a statement from Trustee, Beneficiary
and/or counsel for Beneficiary setting forth in reasonable detail the amount claimed and the basis
therefor, and such amounts shall bear interest at the rate of 10% per annum from and after the
date such amounts are paid by Beneficiary, Trustee or counsel for Beneficiary, until paid in full
by Trustor. Trustor's obligations under this paragraph shall not be affected by the absence or
unavailability of insurance covering the same or by the failure or refusal by any insurance carrier
to perform any obligation on its part under any such policy of insurance. If any claim, action or
proceeding is made or brought against Trustor and/or Beneficiary that is subject to the indemnity
set forth in this paragraph, Trustor shall resist or defend against the same, if necessary, in the
name of Trustee and/or Beneficiary, with attorneys for Trustor's insurance carrier (if the same is
covered by insurance) or otherwise by attorneys approved by Beneficiary. Notwithstanding the
foregoing, Trustee and Beneficiary, in their reasonable discretion, may engage their own
attorneys to resist or defend, or assist therein, and Trustor shall pay, or, on demand, shall
reimburse Trustee and Beneficiary for the payment of the reasonable fees and disbursements of
said attorneys. The indemnity provided for herein shall survive Trustor's performance under the
Disposition and Development Agreement and the Note secured by this Deed of Trust and
foreclosure, whether by judicial foreclosure, power of sale pursuant to this Deed of Trust or by
deed in lieu of foreclosure.
36. Attorneys' Fees; Costs. Trustor agrees to reimburse Beneficiary for all costs,
expenses expert witness and consulting fees and reasonable attorneys* fees that Beneficiary
incurs in connection with the realization or enforcement of any obligation or remedy contained in
this Deed of Trust, the Disposition and Development Agreement or any other Transaction
Documents, with or without litigation, including without limitation any costs, expenses and fees
incurred: (a) on appeal; (b) in any arbitration or mediation; (c) in any action contesting or
seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in which Beneficiary
prevails; (d) in any bankruptcy, probate, receivership or other proceeding involving Tmstor; and
(e) in connection with all negotiations, documentation, and other actions relating to any work-
out. compromise, settlement or satisfaction of the debt secured hereby or settlement of any
covenants and obligations secured by this Deed of Trust or set forth in the Disposition and
Development Agreement or any other Transaction Documents. For the purposes hereof. the
words "reasonable attorneys' fees" shall mean and include the salaries and fringe benefits of the
4&30.5243.0592.3
8/8/039:30 ct
31
I
City Attorney and lawyers employed by the City Attorney of the City of San Bernardino,
computed on a hourly basis, who may provide legal services to the Beneficiary in connection
with the exercise by the Beneficiary of any of its remedies hereunder. All such costs, expenses
and fees shall be due and payable upon demand, shall bear interest from the date incurred
through the date of collection at the rate of 10% per annum, and shall be secured by this Deed of
Trust.
37. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record, as provided by law.
38. Successor Trustee. Trustee may resign by an instrument in writing addressed to
Beneficiary, or Trustee may be removed at any time with or without cause by an instrument in
writing executed by Beneficiary and duly recorded. In case of the death, resignation, removal or
disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a
substitute or successor trustee to act instead of Trustee herein named or any substitute or
successor trustee, then Beneficiary shall have the right and is hereby authorized and empowered
to appoint a successor trustee, or a substitute trustee, without other formality than appointment
and designation in writing executed and acknowledged by Beneficiary and the recordation of
such writing in the office where this Deed of Trust is recorded, and the authority hereby
conferred shall extend to the appointment of other successor and substitute trustees successively.
Such appointment and designation by Beneficiary shall be full evidence of the right and authority
to make the same and of all facts therein recited. If such appointment is executed on behalf of
Beneficiary by an officer of Beneficiary, such appointments shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without proof of any action by the
Trustee or any officer of Beneficiary. Upon the making of such appointment and designation, all
of the estate and title of Trustee in the Property shall vest in the named successor or substitute
trustee and it shall thereupon succeed to and shall hold, possess and execute all the rights,
powers, privileges, immunities and duties herein conferred upon Trustee; but, nevertheless, upon
the written request of Beneficiary or of the successor substitute trustee, the Trustee shall execute
and deliver an instrument transferring to such successor or substitute trustee all of the estate and
title in the Property of the trustee so ceasing to act, together with all the rights, powers.
privileges, immunities and duties herein conferred upon Trustee, and shall duly assign, transfer
and deliver any of the properties and moneys held by the Trustee hereunder to said successor or
substitute trustee. All references herein to Trustee shall be deemed to refer to any trustee
(including any successor or substitute, appointed and designated, as herein provided) from time
to time acting hereunder. Trustor hereby ratifies and confirms any and all acts that Trustee herein
named or its successor or successors, substitute or substitutes, in this Deed of Trust, shall do
lawfully by virtue hereof.
39. Reconveyance. Upon written request of Beneficiary, stating that all performances
and SUfiS secured hereby have been satisfied and paid, and upon surrender of the Note and this
Deed of Trust to Trustee for cancellation and retention, and upon payment of its fees, Trustee
shall reconvey, without warranty, the Property then held hereunder. The recitals in any
.:j.1530-:,243-0592.1
8/8/039:30 ct
32
1-
reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or
persons legally entitled thereto."
40. No Releases. The Property shall not be released from the lien of this Deed of
Trust and no person shall be released from liability under the Loan or any other obligation
secured hereby, except in the manner herein specified. Without affecting the liability of any
other person for the payment and performance of any obligation herein mentioned (including
Trustor should it convey said Property) and without affecting the lien or priority hereof upon any
Property not released, Beneficiary may, without notice, release any person so liable, extend the
maturity or modify the terms of any such obligation, grant other indulgences, make future or
other advances to Trustor or anyone or more parties comprising Trustor, assign or in any manner
transfer this Deed of Trust, release or reconvey or cause to be released or reconveyed at any time
all or part of the said Property described herein, take or release any other security or make
compositions or other arrangements with debtors. Beneficiary may also accept additional
security, either concurrently herewith or thereafter, and sell same or otherwise realize thereon,
either before, concurrently with, or after sale hereunder.
41. Beneficiary's Consents. At any time, upon written request of Trustor, Trustor's
payment of Beneficiary's fees and presentation of this Deed of Trust (in case of full
reconveyance, for cancellation and retention), without affecting the liability of any person for the
payment of the indebtedness, Beneficiary may: (a) consent to the making of any map or plat of
said Property; (b) join in granting any easement or creating any restriction thereon, (c) join in
any other agreement affecting this Deed of Trust or the lien or charge thereof, and (d) reconvey.
without warranty, all or any part of the Property.
42. Further Assurances. Trustor, from time to time, within fifteen (15) days after
request by Beneficiary, shall execute, acknowledge and deliver to Beneficiary, such chattel
mortgages, security agreements or other similar security instruments, in form and substance
reasonably satisfactory to Beneficiary, covering all property of any kind whatsoever owned by
Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is
essential to the operation of the Property covered by this Deed of Trust. Trustor shall further,
from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge
and deliver any financing statement, renewal, affidavit, certificate, continuation statement or
other document as Beneficiary may reasonably request in order to perfect, preserve, continue,
extend or maintain the security interest under, and the priority of, this Deed of Trust and the
priority of each such chattel mortgage or other security instrument. Trustor further agrees to pay
to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in
connection with the preparation, execution, recording, filing and refiling of any such instrument
or document, including the charges for examining title and the attorneys* fees for rendering an
opinion as to priority of this Deed of Trust and of such chattel mortgage or other security
instrument as a valid and subsisting lien. However, neither a request so made by Beneficiary.
nor the failure of Beneficiary to make such request shall be construed as a release of such
4830-5243-0592.3
8/8/03 9.30 ct
33
Property, or any part thereof, from the conveyance of title under this Deed of Trust, it being
understood and agreed that this covenant and any such chattel mortgage, security agreement or
other similar security instrument delivered to Beneficiary are cumulative and given as additional
security.
43. Time of Performance. Time is of the essence hereof in connection with all
obligations of the Trustor herein and under the Disposition and Development Agreement.
44. Notices. The undersigned Trustor requests that a copy of any Notice of Default or
Notice of Sale hereunder be mailed to it at its address as hereinbefore set forth. Any notices to
be given to Trustor by Beneficiary or Trustee hereunder shall be sufficient, if personally
delivered or mailed, postage prepaid, to the address of the Trustor stated hereinabove, or to such
other address that Trustor has requested in writing to Beneficiary. Any time period provided in
the giving of any notice hereunder shall commence upon the date such notice is delivered or
deposited with the United States Postal Service for delivery by regular first-class postage pre-
paid mail, as officially recorded on the certified mail receipt.
45. Beneficiary's Right to Insoect. Beneficiary and its agents and representatives
may enter upon the Property at all reasonable times to attend to Beneficiary's interest and to
inspect the Property.
46. Modification. This Deed of Trust may be amended, modified, changed or varied
only by a written agreement signed by all of the parties hereto. No requirement of this Deed of
Trust may be waived, at any time, except in a writing signed by Beneficiary and any such waiyer
shall be effective only as to its terms and on a single occasion. Neither, Beneficiary's delay or
omission in exercising any right, power or remedy under this Deed of Trust upon default of
Trustor nor Beneficiary's failure to insist upon strict performance of any of the covenants or
agreements contained in this Deed of Trust shall be construed as a waiver of any such right,
power, remedy, covenant or agreement or as an acquiescence in Trustor's breach or default.
47. Assignment by Beneficiarv; Particioation. Beneficiary may assign this Deed of
Trust in whole or in part to any person and may grant participations in any of its rights under this
Deed of Trust, without notice and without affecting Trustor's liability under this Deed of Trust.
In connection with any proposed assignment, participation or similar arrangement, Beneficiary
may make available to any person all credit and financial data furnished or to be furnished to
Beneficiary by Trustor. Trustor agrees to provide to the person designated by Beneficiary any
information as such person may reasonably require to form a decision regarding the proposed
assignment, participation or other arrangement. Trustor may not assign this Deed of Trust to any
person at any time, except in connection with a transaction approved in writing by Beneficiary.
under the terms of this Deed of Trust.
4830-5243-0592.!
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34
48. Successors. Subject to the prohibitions against Trustor's assignments herein, this
Deed of Trust shall inure to the benefit of and bind all of the parties, their successors, estates,
heirs, personal representatives and assigns.
49. Partial Invaliditv. If a court of competent jurisdiction finally determines that any
provision of this Deed of Trust is invalid or unenforceable, the court's determination shall not
affect the validity or enforceability of the remaining provisions of this Deed of Trust. In such
event, this Deed of Trust shall be construed as if it did not contain the particular provision that
was determined to be invalid or unenforceable. No such determination shall affect any provision
of this Deed of Trust to the extent that it is otherwise enforceable under the laws of any other
applicable jurisdiction.
50. Mutual Negotiation. Beneficiary and Trustor confirm that they have mutually
negotiated this Deed of Trust and that none of the terms or provisions of this Deed of Trust shall
be construed against either party.
51. Paragraoh Headings. The paragraph headings in this Deed of Trust are for
convenience only and in no way define, limit, extend, or describe the scope or intent of this Deed
of Trust or any of its provisions.
52. Aoplicable Law. This Deed of Trust and the rights of the parties hereunder shall
be governed by, construed and enforced in accordance with the laws of the State of California.
53. Entire Agreement. This Deed of Trust, the Disposition and Development
Agreement, the Note and the other Transaction Documents, including any exhibits or addenda,
contains the entire agreement of the parties with respect to the subject matter hereof
54. Counterparts. This Deed of Trust may be executed in two or more counterparts.
all of which together shall constitute one and the same instrument and lien. The signature pages
of exact copies of this Deed of Trust may be attached to one copy to form one complete
document. Additional copies of this Deed of Trust may be executed in counterparts and recorded
in two or more counties, all of which shall constitute one and the same instrument and lien.
55. Fixture Filing and Recording. This Deed of Trust constitutes a financing
statement filed as a fixture filing under California Commercial Code Section 9502( c), as
amended or recodified from time to time. This Deed of Trust is to be recorded in the real estate
records of San Bernardino County, California, and covers goods that are, or are to become,
fixtures.
56. Survival of Representations and Warranties. All of Trustor's representations and
warranties contained in this Deed of Trust shall be true and correct at all times during the term of
the Loan secured hereby, until full repayment of the Loan and release and reconveyance of this
Deed of Trust.
48JO.5243-0592.J
8/8/0J 930 ct
35
IN WITNESS WHEREOF, Trustor hereby duly executes this Deed of Trust as of the day
and year first above written.
TRUSTOR
ESSEX ORANGESHOW COMMERCE
CENTER LLC, a California Limited Liability
Company
By:
Its:
By:
Its:
[NOTARY JURAT ATTACHED]
4830-5243-0592.1
8/8/039:30 ct
36
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
.HDO.5243-05923
X/8/039:30 ct
37
EXHIBIT "D"
FORM OF GUARANTY
[TO COME]
Exh."D"
GUARANTY
This Guaranty ("Guaranty") is given for the benefit of the Redevelopment Agency of the
City of San Bernardino, a public body corporate and politic, existing and operating pursuant to
the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq.,
(together with its successors and assigns collectively, "Lender") by
whose address IS
(jointly and severally, individually and
collectively "Guarantor".
RECITALS
rl>~
"..'\; -----
d"
<Ill)1
A. Lender extended credit to The Essex Orangeshow Commerce Center, LLC, a California
limited liability company ("Borrower") in the principal sum of ONe MILLION FOUR
HT~REDNINETY.FIVE THOUSAND SIX HUNDERED4'HIRTY-TWO DOLLARS and
NollOO ~$1,495,g]2.00), pursuant to the terms of that certain Disposition and Development
Agreement by and between Lender and Borrower, dated as of (the "DDN'), that
certain Promissory Note (the "Note") and Deed of Trust associated with the DDA and any other
security documents executed in connection with the transaction contemplated in the DDA,
including all modifications to each such document (collectively, the "Loan Documents").
B. Lender would not subordinate its real property security interest created under the Loan
Documents (the "Lien") to a security interest of (the "Senior
Lender") for a loan from Senior Lender to Borrower in the amount of
$ for the purpose of (i) construction of the "Project", or any
portion thereof, (as defined in the Loan Documents) or (ii) to "take-out" such Project
construction financing with a Permanent Loan (as defined in the Loan Documents), without this
Guaranty.
NOW, THEREFORE, to induce Lender to subordinate its Lien to a security interest in the
"Property" (as defined in the Loan Documents) in favor of the Senior Lender, Guarantor agrees
as follows:
I. Guarantv of Debt.
Guarantor unconditionally guarantees immediate payment (in immediately available U.S.
currency) and performance, upon demand of (a) all obligations owed by Borrower to Lender
under the Loan Documents and/or applicable law (whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, direct or indirect, and
whether recovery may be or hereafter become barred by any statute of limitations or otherwise
be or become unenforceable); and (b) all interest and costs, including but not limited to
attorneys' fees and expenses, incurred by Lender in originating, documenting, administering,
collecting, enforcing, or compromising any of the foregoing, (collectively, the "Debt").
4846.9] 94-4704.4
2. Representations and Warranties.
Guarantor represents and warrants to Lender that the following statements are true and
complete as of the date of this Guaranty:
2.01. Binding Obligation. This Guaranty constitutes a legal, valid and binding
obligation of Guarantor enforceable in accordance with its terms.
2.02. No Conflict. Neither the execution nor delivery of this Guaranty nor compliance
with its terms conflicts with or shall result in a breach or violation of: (a) any
agreement or instrument to which Guarantor is now a party or by which
Guarantor is bound; or (b) any provision of law or any order of any court or other
agency of government.
2.03. No Actions or Proceedings. There is no pending or threatened proceeding
affecting Guarantor, its business, operations, assets, or financial condition before
any court, governmental agency, or arbitrator which, if determined adversely to
Guarantor, would have a material adverse effect on Guarantor's financial
condition or ability to perform Guarantor's obligations under this Guaranty.
2.04. Solvencv. Guarantor is solvent and the execution of this Guaranty does not make
Guarantor insolvent. Moreover, Guarantor represents and warrants to Lender that
its execution, delivery, and performance of this Guaranty, and of any documents
securing its obligations under this Guaranty: (a) is not done with actual intent to
hinder, delay or defraud its creditors or any entity to which Guarantor is indebted
as of the date hereof; (b) is not done at a time when the sum of its assets at fair
valuation is less than the sum of its liabilities, including, without limitation, all
contingent obligations valued at their full face value; (c) is not done at a time
when Guarantor intends or believes or reasonably should believe that it will incur
debts beyond its ability to pay such debts as they mature or become due; and, (d)
based upon Guarantor's historical needs and future projections, is not done at a
time when Guarantor is engaged in business or a transaction, for which its
remaining assets (or any property remaining with Guarantor) are unreasonably
small (or constitute unreasonably small capital) in relation to such business or
transaction.
3. Acknowledgments.
Guarantor acknowledges and agrees that: (a) Lender's granting of financial
accommodation to the Senior Lender and Borrower is sufficient consideration to support this
Guaranty and Guarantor's obligations hereunder; (b) Lender has made no warranty or
representation concerning Borrower's creditworthiness; (c) Guarantor has received copies of and
is fully familiar with each and every document executed and delivered to Lender by Borrower;
and, (d) Guarantor assumes the responsibility for being and keeping himself informed of
Borrower's financial condition and of all other circumstances bearing upon the risk of
nonpayment of the Debt which diligent inquiry would reveal and agrees that Lender shall have
.H46-9 I 94-4704.4
2
no duty to advise Guarantor of information known to it regarding any such conditions or
circumstances.
4. Nature of Guarantv.
This Guaranty is an absolute, unconditional, and continuing guaranty of the payment and
performance of the Debt and is not a guaranty of collection. Lender's recourse against Guarantor
shall not be conditioned on the commencement or completion of any proceeding or the pursuit or
exhaustion of any remedy against Borrower. Lender shall not be required to commence or
complete enforcement or foreclosure of any lien or security interest or realization upon any
collateral for the Debt as a condition of Guarantor's payment and performance of the Debt
pursuant to this Guaranty. Guarantor agrees to remain primarily liable until the Debt is satisfied
even though some act or omission might otherwise operate as a legal or equitable modification of
Borrower's or Guarantor's obligation to payor perform the Debt. This Guaranty shall remain
fully enforceable irrespective of any defenses or counterclaims that Borrower may assert
regarding the Debt. Guarantor's liability hereunder shall be unlimited in amount.
5. No Termination.
This Guaranty shall be a continuing guaranty and shall remain in full force and effect and
shall not be discharged or affected for any reason until the Debt is satisfied. Any notice by
Guarantor to modify Guarantor's obligations hereunder shall have no effect. This Guaranty shall
survive the death of Guarantor and shall be a continuing claim against Guarantor's estate.
6. Revival of Liabilitv.
If the Debt is revived pursuant to the terms of the Note, then Guarantor's obligations
hereunder shall be revived and shall continue in full force and effect until the Debt is discharged
and not subsequently revived. If any payments or proceeds received by Lender are subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid to a
trustee, to Guarantor, directly or as a debtor-in-possession. to a receiver, or any other person.
whether directly or indirectly, under any bankruptcy law, state or federal law, common law, or
equitable cause, then Guarantor's obligation to make all such payments shall be revived and shall
continue in full force and effect as if such payment or proceeds had never been recei ved by
Lender.
7. Waiver of Claims Against Borrower.
So long as any part of the Debt remains unpaid or unperformed and/or any portion of the
Debt that has been paid to Lender remains subject to invalidation or reversal as a preference or
fraudulent transfer or otherwise or to being set aside and/or required to be repaid to Borrower as
a debtor in possession or to any trustee in bankruptcy, Guarantor waives and agrees not to claim
any setoff or assert any counterclaim against Borrower. Guarantor hereby: (a) waives all rights
of subrogation. indemnification, reimbursement, contribution, and all rights arising under
contract or by operation of law; (b) releases and postpones all obligations owed to Guarantor by
Borrower; (c) subordinates all liens and security interest in favor of Guarantor securing or
4846-9194-4704.4
3
purporting to secure any of the foregoing and all rights to receive payments in connection with
any of the foregoing to all liens and security interests in favor of Lender and all rights of Lender
to receive payment and performance of the Debt; and, (d) waives any right to require the
marshaling of any assets of Borrower, which right of marshaling might otherwise arise from any
partial payment of the Debt by Guarantor. As between Lender and Guarantor, Guarantor shall
not be deemed a "creditor" of Borrower with respect to the Debt, as defined in the U.S.
Bankruptcy Code, as amended. If, whether or not at Lender's request, Guarantor shall collect,
enforce or receive payment from Borrower upon any debt of Borrower to Guarantor, any such
sums shall be received by Guarantor as trustee for Lender and shall be paid over to Lender on
account of the debt of Borrower to Lender.
8. Financial Statements.
Guarantor, together with all other guarantors of the Debt, shall, in the aggregate have a
net worth of not less than Five Million Dollars ($5,000,000.00) as shown on financial statements
certified by Guarantor (with respect to his, her or its own financial statement) to be correct and
accurate and shall provide such financial statements to Lender prior to or concurrent with the
Guarantor's execution and delivery of this Guaranty. Thereafter, Guarantor shall keep, at
Guarantor's expense, adequate records and books of account in accordance with generally
accepted accounting principles with regard to all of its income, expenses, assets and liabilities.
Guarantor shall permit Lender, Lender's employees, agents, accountants, and attorneys. to
examine and make extracts from Guarantor's records and books at such reasonable times as
Lender may request. Guarantor shall provide lender copies of Guarantor's: (a) signed financial
statements within 45 days after the end of each fiscal accounting year of Guarantor; and, (b)
annual federal and state tax returns, with all schedules attached, within 20 days after filing with
the IRS. Financial statements shall include at least a balance sheet dated not earlier than 45 days
prior to delivery, a profit and loss or income and expense statement for the most recent calendar
year and the partial year, if any, to the date of the balance sheet, a statement of all contingent
liabilities as of the date of the balance sheet and all other financial information reasonably
requested by Lender and available to Guarantor, all in form and content reasonably satisfactory
to Lender. If one company, business, or entity represents 10% or more of Guarantor's income or
assets, the financial statements of such company, business or entity shall also be provided to
Lender by Guarantor with the financial information of Guarantor required to be provided.
Upon Lender's request, Guarantor shall permit Lender to audit Guarantor's books and
records to determine if the financial statements submitted to Lender accurately reflect
Guarantor's financial condition. Lender shall pay all costs and expenses associated with such an
audit unless it reveals that Guarantors have not maintained the net worth requirement set forth
above. Any such audited statements shall be based upon generally accepted accounting
principles applied on a consistent basis. If requested by Lender, Guarantor shall also furnish to
Lender such other interim statements of Guarantor's financial condition or other financial
information as Lender may reasonably require. Such similar statements need not be audited but
shall be certified to be true and correct.
4846.9194.4704.4
4
9. Rights of Setoff.
Guarantor grants Lender a lien upon and a right of setoff against Guarantor's moneys,
securities, and other property now or hereafter in the possession of or on deposit with the Lender,
whether held in a general or special account or deposit, or for safekeeping or otherwise. Every
right of setoff or lien in favor of Lender shall continue in full force and effect until specifically
waived or released by an instrument in writing executed by the Lender.
10. Costs and Expenses.
In addition to the Debt, Guarantor shall immediately upon Lender's demand, reimburse
Lender for all attorneys' fees and other costs, whether incurred before or after the
commencement of any bankruptcy proceeding, incurred in connection with: a) enforcement or
collection of this Guaranty or the Debt; and b) enforcement of any judgment rendered in
connection with this Guaranty or the Debt.
II. Notices.
All communications required hereunder shall be given to Guarantor and Lender at their
respective addresses set forth in this Guaranty, or at such other addresses as either party may
designate by written notice given in accordance with the terms of this section. All
communications required or permitted pursuant to this Guaranty shall be legible and shall be
deemed to have been properly given and received: a) if delivered by hand, then upon such
delivery; b) if sent by nationally known overnight courier, then on the next business day after
dispatch; c) if mailed by registered or certified U.S. Mail, postage prepaid and return receipt
requested, then 3 days after deposit in the U.S. Mail; and d) if sent via facsimile prior to 4:00
p.m. Pacific Time on a business day (as indicated on the confirmation sheet printed by the
facsimile machine), then on the date sent; otherwise, on the next succeeding business day. The
writing shall be deemed legible unless the recipient of the notice notifies the sender to the
contrary within one business day after receipt of the notice.
12. Borrower.
It is not and shall not be necessary for Lender to inquire into Borrower's powers or the
officers, directors, partners, trustees or agents acting or purporting to act on the Borrower's
behalf and the obligations of Borrower under the Loan Documents and any modifications thereto
made or created in reliance upon the professed exercise of such powers shall be guaranteed by
Guarantor pursuant to this Guaranty. Guarantor agrees that Lender's books and records showing
the account between the Lender and Borrower shall be admissible in any proceeding or action
and shall be binding upon Guarantor for the purpose of establishing the items therein set forth
and shall constitute prima facie proof thereof.
13. BankruPtcv - No Discharge.
Notwithstanding anything to the contrary herein contained, this Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time, payment or any part thereof. of
4846.919447044
5
any or all of the Debt is rescinded or must otherwise be restored or returned by Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such
payment had not been made. Notwithstanding any modification, discharge or extension of the
Debt or any amendment, modification, stay or cure of Lender's rights which may occur in any
bankruptcy or reorganization case or proceeding concerning Borrower whether permanent or
temporary, and whether assented to by Lender, Guarantor hereby agrees that Guarantor shall be
obligated hereunder to pay the Debt and discharge Guarantor's other obligations in accordance
with the terms of the Loan Documents and the terms of this. Guarantor understands and
acknowledges that by virtue of this Guaranty, Guarantor has specifically assumed any and all
risks of a bankruptcy or reorganization case or proceeding with respect to Borrower.
14. Waiver of JUry Trial.
Guarantor hereby: (a) waives the right to a trial by jury in any action or proceeding
brought by Guarantor or Lender arising under this Guaranty; (b) has made this waiver
knowingly, intentionally, and voluntarily; (c) acknowledges no reliance upon any oral or written
statements made by Lender or on Lender's behalf, other than those contained herein, either to
induce this waiver of trial by jury or to modifY or nullify its effect; (d) acknowledges reading and
understanding the meaning and ramifications of this waiver provision; and, (e) agrees to take all
such actions as may be required by applicable law to allow this waiver to be enforceable. By
accepting this Guaranty, Lender waives the right to a trial by jury in any action or proceeding
brought by Guarantor or Lender arising under this Guaranty.
15. Guarantor's Waivers.
Guarantor unconditionally and irrevocably waives: (I) the presentment, demand, protest
and notice of: (a) acceptance of this Guaranty; (b) the creation or incurring of the Debt; (c) the
modification, extension or renewal of the Debt; (d) any protest, dishonor, or discharge of the
Debt; (e) the breach or default in payment or performance of the Debt; (f) acceleration of the
Debt; (g) foreclosure or other realization upon any collateral or security for the Debt; (h) any
action taken or omitted by Lender under the Loan Documents or in reliance upon this Guaranty;
(i) any adverse change in Borrower's financial condition which may become known to Lender;
and, (j) all other notices and demands of any kind relating to or affecting the Debt, the
obligations of Guarantor hereunder, any security for any ofthe foregoing and/or the protection of
or realization upon any such security; (II) notice of or any claim, defense, based on impairment
of collateral, election of remedies, marshaling of assets or discharge or release of borrower or
any other guarantor of the Debt; (III) any right to require Lender to sue upon or take action
against Borrower or any other person to collect the Debt, to realize upon any security for the
Debt or to exhaust any remedies before commencing collection or enforcement under this
Guaranty; (IV) any alleged or actual act or omission by Lender (including but not limited to acts
or omissions constituting negligent administration of the Debt) which materially increases the
scope of Guarantor's risk or the extent of Guarantor's liability hereunder or destroys or otherwise
impairs any subrogation rights of Guarantor or any right of Guarantor to demand exoneration or
claim reimbursement against Borrower or to proceed against any other guarantor or other person
liable for any of the Debt for contribution; (V) invalidity or unenforceability of any of the Loan
Documents or any portion thereof; (VI) any election by Lender not to pursue available rights or
4X46-9 [94-4704.4
6
remedies, any delay or lack of diligence by Lender in commencing or maintaining any such
pursuit, or any discontinuance of any such pursuit once begun; (VII) all rights of redemption and
all rights arising under valuation, stay or moratorium laws; (VIII) all defenses of a surety or
based upon suretyship; (IX) any defenses available to Borrower, any other guarantor and/or any
other person liable for any of the Debt or any obligation underlying, securing or relating to the
Debt, including but not limited to failure of consideration, breach of contract, breach of warranty,
fraud, payment, the statute of frauds, bankruptcy, infancy, disability, incompetency, lack of
capacity or authority, the statute of limitations, lack of commercial reasonableness in foreclosing
or realizing upon collateral, lender liability, accord and satisfaction and/or usury; (X) any other
act, omission, fact, circumstance, law, right, claim or defense which but for this provision might
release Guarantor from any liability hereunder, diminish, impair or adversely affect any
obligation of Guarantor or right or remedy of Lender regarding this Guaranty or give Guarantor
any recourse or defense against Lender; (XI) any and all rights and defenses Guarantor may have
because the Debt is secured by real property; and, (XII) any other rights of Guarantor regarding
the Debt, the Loan Documents or this Guaranty which may be waived under applicable law.
16. Guarantor's Consents.
Guarantor hereby consents to and agrees not to assert or take advantage of any claim or
defense based upon the following:
a. Any release by Lender of Borrower, any other guarantor or any other person liable for
any of the Debt and/or any agreement by Lender not to sue any of the foregoing.
b. Any modification, extension or renewal of the Debt or change in the terms thereof
(whether or not Guarantor receives notice or has knowledge thereof).
c. Any release of, change in or substitution for any collateral securing the Debt or the
receipt by Lender of any additional collateral or security for the Debt.
d. The cessation from any cause (including but not limited to a discharge in bankruptcy)
of the liability of Borrower, any other guarantor or any other liable person for the
Debt or any part thereof.
e. Any failure by lender to obtain or file any Loan Document; perfect or maintain
perfection of any lien or security interest; assert or enforce any right, interest or
claim; file any pleading or other document relating to any of the foregoing in any
bankruptcy, probate or other proceeding involving Borrower, any other guarantor or
other person liable for the Debt and/or any collateral or security for the Debt, or any
delay by Lender in doing any of the foregoing.
f. The application of any payments on account of the Debt.
Guarantor agrees that Lender may do any or all of the foregoing in such manner, on such
terms and at such times as Lender, in its sole discretion, deems advisable without impairing,
affecting, reducing or releasing Guarantor from the obligations hereunder and without
4846-9194-4704.4
7
prejudicing Lender's rights to pursue any remedies it may have under this Guaranty, the Loan
Documents or applicable law.
17. Miscellaneous.
a. Headings are inserted into this Guaranty for convenience only and shall not be
considered in construing any provision of this Guaranty.
b. Guarantor has had the opportunity to seek the advice of independent legal counsel of
Guarantor's choice regarding the effect of this Guaranty.
c. This Guaranty may not be modified, released or terminated without Lender's prior
written consent.
d. Time is of the essence in the performance of this Guaranty, but no delay or deferral in
exercising any remedies provided to Lender in this Guaranty shall be deemed a
waiver of such remedies.
e. The provisions of this Guaranty are separable. If any provision is held to be invalid
or unenforceable by any judgment of a court of competent jurisdiction, then the
remainder of this Guaranty shall not be affected by such judgment and the remaining
terms of the Guaranty shall be carried out as nearly as possible according to their
original terms.
f. Lender's rights and remedies pursuant to this Guaranty shall be cumulative.
g. Guarantor shall be jointly and severally liable for the Debt with each other guarantor,
surety, cosigner, endorser or other person now or hereafter primarily or secondarily
liable for payment and/or performance of the Debt.
h. This Guaranty shall be governed and construed in accordance with the laws of the
State of California.
1. All representations and warranties of Guarantor contained in this Guaranty shall
survive the execution and delivery of this Guaranty and shall continue until the Debt
has been satisfied.
J. Lender may assign this Guaranty or any part hereof at any time, but only 111
conjunction with a sale, assignment or transfer of an interest in the Debt.
k. This Guaranty may be executed in counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
I. No provision or waiver in this Guaranty shall be construed as limiting the generality
of any other waiver contained in this Guaranty.
4g46~9194-4704.4
8
THIS GUARANTY has been signed and unconditionally delivered to Lender by
Guarantor on the date shown in the acknowledgment.
GUARANTOR:
[Signature must be notarized]
4846-9194-4704.4
9
EXHIBIT "E"
AGENCY GRANT DEED
[TO COME]
Exh. "E"
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Essex Orangeshow Commerce Center LLC
3141 Redhill Avenue, Suite 150
Costa Mesa, CA 92626
Attn: Burrell Magnusson
GRANT DEED
Space above this line for Recorder's Use
THE UNDERSIGNED GRANTOR DECLARES:
Documentary Transfer Tax is:
9 unincorporated area : City of San Bernardino
Assessor's Parcel No.
9 computed on full value of interest or property conveyed, or
9 computed on full value of liens or encumbrances remaining at time of sale;
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
Redevelopment Agency of the City of San Bernardino, a public body corporate and politic
("Grantor"), hereby GRANTS to ESSEX ORANGESHOW COMMERCE CENTER, a
California limited liability company ("Grantee"), the following described real property in the
City of San Bernardino, County of San Bernardino, State of California:
Parcel of Parcel Map No. , Recorded on
, 19 ,in Book at Pages _ through
inclusive, of Parcel Maps of San Bernardino County, California, as
more specifically described in Exhibit I to this Grant Deed.
SUBJECT TO:
I. Nondelinquent general, special and supplemental real property taxes and
assessments which are a lien not yet payable.
2. Covenants, conditions, restrictions, easements, reservations, rights, rights-of-way
and other matters of record or discoverable by inspection or survey.
3. The following covenants, conditions and restrictions:
3.1. Covenants Appurtenant. Grantee, by acceptance and recordation of this
Grant Deed, expressly accepts, covenants and agrees, on behalf of itself, its lessees, mortgagees,
4828-3432-6784.3
successors and assigns, to be bound by, and to assume performance of, all of the provisions and
requirements set forth in this Grant Deed to be performed by Grantee, all of which provisions
and requirements are acknowledged to be reasonable. Every person or entity which now or
hereafter acquires any right, title, estate or interest in the Property shall be conclusively deemed
to have consented and agreed to every covenant, condition and restriction contained herein to be
performed by Grantee, whether or not reference to these restrictions is contained in the
instrument by which such person or entity acquired an interest in the Property. All such
covenants, conditions and restrictions shall run with the Property; shall be binding upon and
inure to the benefit of Grantor, Grantee and any person or entity having or acquiring any interest
in any portion of the Property; shall be binding upon and inure to the benefit of the Property and.
any portion thereof or interest therein.
3.2. Use of Propertv. The Grantee herein covenants and agrees for itself, its
successors and assigns that upon completion of construction, the Grantee shall cause to be
opened on the property a facility or facilities suitable for light industrial, office, warehouse. light
manufacturing, retail, restaurant or other commercial uses.
3.3. Scope of Development. The Grantee herein covenants and agrees for
itself, its successors and assigns that the Property shall be improved and developed in accordance
with the Scope of Development as set forth in that certain Disposition and Development
Agreement by and between the Grantor and Grantee dated ,200_ (the
"Agreement"). The covenant set forth in this section 3.3 shall run with the land until the earlier
to occur of (i) the recordation of a Certificate of Completion (as defined in the Agreement) or,
(ii) the fifth (5th) anniversary of the recordation of this Grant Deed.
3.4. Mortgagees. A breach of any of the covenants, conditions or restrictions
herein shall not defeat nor render invalid the lien or charge of any mortgage or deed of trust
made in good faith and for value covering the Property or any part thereof; however, such
covenants, conditions and restrictions shall be binding upon and effective against any new owner
of the Property, or any portion thereof, whose title thereto is acquired by foreclosure, trustee' s
sale or otherwise. No mortgagee shall be subject to any reimbursement obligation which accrues
prior to the date such mortgagee takes title to the property.
3.5. Nondiscrimination. The Grantee herein covenants by and for itself, its
successors and assign, and all person claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race,
color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the
Grantee or any person claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation withy reference to the selection, location, number, use
or occupancy of tenant lessees, subtenants, sublessee, or vendees in the premises herein
conveyed. The foregoing covenants shall run with the land.
3.6 Form of Nondiscrimination and Nonsegregation Clauses. The Grantee
covenants and agrees for itself, its successors, its assigns, and every successor in interest to the
Property, or any part thereof, that the Grantee, such successors and such assigns shall refrain
from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of
4828-3432-6784.3
the Property (or any part thereof) on the basis of sex, marital status, race, color, religion, creed,
ancestry or national origin of any person. All deeds, leases or contracts pertaining thereto shall
contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(I) In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of, any person or group
of persons on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry in the sale, lease, sublease, transfer, use.
occupancy, tenure, or enjoyment of the premises herein conveyed, nor
shall the grantee or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessee, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land."
(2) In leases: "The Lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease
is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the leasing, subleasing, transferring.
use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee itself, or any person claiming under or through it, establish
or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy, of
tenants lessees, sublessee, subtenants, or vendees in the premises herein
leased. "
(3) In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color, creed, religion,
sex, marital status, national origin, or ancestry, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed or leased, nor shall the transferee or any person claiming under
or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees of the premises herein transferred." The foregoing provision shall
be binding upon and shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the instrument.
The covenant of this Section _ shall run with the land in perpetuity.
3.7. Maintenance. The Grantee herein covenants and agrees for itself, its
successors, and assigns to maintain the Property in a good condition free from any accumulation
of debris or waste material, subject to normal construction job-site conditions, and shall maintain
in a neat, orderly, healthy and good condition the landscaping required to be planted. In the
event the Grantee or its successors or assigns, fails to perform the maintenance as required
4828.3432-6784.3
herein, the Grantor shall have the right, but not the obligation, to enter the Propeliy and
undertake such maintenance activities. In such event, Grantee shall reimburse the Grantor for all
reasonable sums incurred by it for such maintenance activities.
3.8 Property Taxes. The Grantee covenants and agrees for itself, its
successors, and assigns that neither the Grantee nor its successors and assigns shall use or
otherwise sell, transfer, convey, assign, lease, leaseback, or hypothecate the Property or any
portion thereof to any entity or party, or for any use of the Property, this is partially or wholly
exempt from the payment ofreal property taxes pertinent to the Property, or any portion thereof,
or which could cause the exemption of the payment of all or any portion of such real property
taxes.
3.9. Severability. Invalidation of any provision contained herein by judgment
of court or otherwise shall in no way affect any of the other provisions, which shall remain in full
force and effect.
ENFORCEMENT
Grantor shall have the right to enforce the covenants, conditions and restnchons
contained in this Grant Deed notwithstanding any transfer of the Property or any portion thereof.
Grantor has caused this Grant Deed to be duly executed on
,20
REDEVELOPMENT AGENCY OF THE CITY
OF SAN BERNARDINO, a public body
corporate and politic
By:
Its:
By:
Its:
"Grantor"
4R28-3432-6784.3
EXHIBIT "F"
SCHEDULE OF PERFORMANCE
(Days shall be calendar days, and all dates herein are
subject to change due to force majeure in accordance with
Section 7.05 ofthe Agreement)
Agency approval ofDDA
,2004
..
PROJECT/PHASE TASK DURATION START FINISH
Entire Proiect Grading Plan Check 31 Days 1/19/04 3/1/04
Grading 15 Days 3/2/04 3/22/04
Street & Utility Plan Check 36 Days 2/2/04 3/22/04
Phase I
Bldgs. 5, 6, 7, 10, 11,
12,13 and 14
Building Plan Check
50 Days
1/13/04
3/22/04
Construction
150 Days
3/23/04 10/18/04
Phase II
Bldgs. 1 and 2 Plan Work Drawings 41 Days 1/19/04 3/15/04
Plan Check 30 Days 3/16/04 4/26/04
Construction 129 Days 4/27/04 10/22/04
Bldgs. 3, 4, 8 and 9 Develop Working Drawings 45 Days 8/2/04 10/1/04
Building Plan Check 45 Days 10/4/04 12/3/04
Construction 130 Days 1/3/05 7/1/05
Exh. "F"
EXHIBIT "G"
WHEN RECORDED, MAIL TO:
Essex Orangeshow Commerce Center LLC
3141 Redhill Avenue, Suite 150
Costa Mesa, California 92626
(Space Above Line for Use By Recorder)
CERTIFICATE OF COMPLETION
We, , the Executive Director and , the Assistant Secretary
of the Redevelopment Agency of the City of San Bemardino (the "Agency") hereby certify as
follows:
By its Resolution No. _, adopted and approved
resolved as follows:
, 200_, the Agency has
Section 1. The improvements required to be constructed in accordance with
that certain Disposition and Development Agreement (the "Agreement") dated , by and
between the Agency and Essex Orangeshow Commerce Center LLC, a California limited
liability company (the "Developer") on that certain real property more specifically described in
the legal description attached as Exhibit "A" hereto and incorporated herein by this reference
(the "Completed Parcel"), have been completed in accordance with the provisions of the
Agreement.
Section 2. This Certificate of Completion shall constitute a conclusive
determination of satisfaction of the agreements and covenants contained in the Agreement with
respect to the obligations of the Developer, and its successors and assigns, to construct and
develop the improvements on the Completed Parcel, excluding any normal and customary tenant
improvements and minor building "punch-list" items, and including, without limitation, any and
all buildings, parking, landscaping and related public or private improvements necessary or
required for construction or occupancy of the building on the Completed Parcel, whether or not
said improvements are on the Completed Parcel or on other property, all as described in the
Agreement, and to otherwise comply with the Developer's obligations under the Agreement with
respect to the Completed Parcel and the dates for the beginning and completion of construction
of improvements thereon under the Agreement; provided, however, that the Agency may enforce
any covenant surviving this Certificate of Completion in accordance with the terms and
conditions of the Agreement and the grant deed pursuant to which the Completed Parcel was
conveyed under the Agreement. The Agreement is an official record of the Agency and a copy
of the Agreement may be inspected in the office of the Secretary of the Redevelopment Agency
of the City of San Bernardino located at 201 North "E" Street, Suite 301, San Bernardino,
California, during regular business hours of the Agency.
Exh. "G"
1-
DATED AND ISSUED this _ day of
,200_.
Executive Director
ATTEST:
Assistant Secretary
Exh. "G"
,--
EXHIBIT "H"
PROMISSORY NOTE
[TO COME]
Exh. "H"
I
EXHIBIT" "
PURCHASE MONEY PROMISSORY NOTE
PAYABLE TO A PUBLIC AGENCY
Borrower:
Lender:
Essex Orangeshow Commerce Center, LLC Redevelopment Agency of the City of San Bernardino
3141 Redhill Avenue, Suite 150 201 North "E" Street, Suite 301
Costa Mesa, California 92626 San Bernardino, California 92401
Principal Amount:
$1,495,6:;2.00
g, d)l ,00:). o()
Date of Promissory Note:
,2003
Interest Rate:
8%
Maturity Date of Promissory Note:
December 31, 2008
1. PROMISE TO PAY. ESSEX ORANGESHOW COMMERCE CENTER LLC, a
California limited liability company (the "Borrower"), promises to pay to the Redevelopment
Agency of the City of San Bernardino (the "Agency" or "Holder"), or order, in lawful money of
the United States of America, the principal sum of Oall Million Four-Hundn:d Ninety".Five
TlwttSflflti.&ilt-Htmdred-Thifty-Twe-aru:UlOf.UlO Dollars ($1,495,6J2.tlO~.~ether with interest
on the unpaid outstanding principal balance from time to time as set forth below:.......:'i') ;l;)' y)()
2. INDEBTEDNESS. This Purchase Money Promissory Note evidences the indebtedness
of the Borrower to the Agency under the terms and conditions of that certain Disposition and
Development Agreement dated , 2003 by and between Borrower and the Agency
(the "DDA"). This Promissory Note is referred to in the DDA as the "Note". A copy of the
DDA is on file with the Agency Secretary as a public record of the Agency.
3. PA YMENT. Borrower shall make payments according to this section of the Promissory
Note to the Agency at its address set forth above or such other address as later communicated in
writing to Borrower by the Agency, in immediately available U.S. currency. Payments shall be
applied first to unpaid fees, costs, and expenses which are reimbursable under the terms of this
Promissory Note or the DDA, then to any late charges, then to accrued unpaid interest, then to
outstanding principal. If any payment due date is a Saturday, Sunday, or United States or State
of California official holiday, the due date of the payment shall automatically be extended to the
next following business day of the Agency.
4X 16-361 3-2608.6
A. RELEASE PRICE PAYMENTS.
Other than the Borrower's unconditional obligation to pay the outstanding principal of
this Promissory Note on or before the Maturity Date, payment shall be due and payable from
Borrower as provided in Article 5 of the DDA.
B. FINAL PAYMENT.
All accrued and unpaid interest, late payment charges, outstanding principal, and all other
amounts chargeable under this Promissory Note or the DDA shall be due and payable in full on
the Maturity Date.
4. INTEREST RATE. Interest shall accrue on the outstanding principal balance of this
Promissory Note commencing on the date of Promissory Note set forth above, at the rate of eight
percent (8%) per annum. Interest on this Promissory Note shall be computed on a 365/360
simple interest basis; that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual number of days
the principal balance is outstanding.
5. PREP A YMENT. Borrower may pay without penalty all or a portion of the amount
owed under this Promissory Note earlier than it is due.
6. DEFAULT. Borrower will be in default if any of the following happens:
A. Failure of the Borrower to make any payment to the Agency within five (5) days
of written notice due under this Promissory Note or the DDA.
B. Failure of the Borrower to make any payment to a Senior Lender (as defined in
the DDA) when due, after any applicable notice and cure period.
C. Failure of the Borrower to make any required payment to the Agency when due
under the DDA and/or failure of the Borrower to comply with or to perform when due any term,
obligation, covenant or conditions of the DDA after notice from the Agency under any
applicable notice and cure terms of the DDA, if the failure is not cured in accordance with the
cure provisions of the DDA.
D. Failure of the borrower to comply with or to perform when due any other term
obligation, covenant or condition contained in this Promissory Note or any other agreement
which secures this Promissory Note, after notice from the Agency, under the applicable notice
and cure terms.
E. Failure of the Borrower to comply with or to perform when due any term,
obligation, covenant or condition of any Loan or extension of credit from any Senior Lender
(other than a failure of the Borrower to make any payment to such Senior Lender when due), or
to comply with or to perform when due any term, obligation, covenant or condition of such loan
or extension of credit (other than a failure of the Borrower to make any payment), after notice
48] 6-36 ]]-2608.6
2
from such Senior Lender under the applicable notice and cure terms of such obligations of the
Borrower.
F. Any warranty, representation or statement made or furnished to the Agency by or
on behalf of the Borrower pursuant to the DDA is false or misleading in any material respect at
the time made or furnished,
G. The DDA, this Promissory Note, the Deed of Trust or any Guaranty associated
therewith ceases to be in full force and effect at any time and for any reason (including failure of
any collateral document to create a valid and perfected security interest or lien) due to a default
by the Borrower and failure to cure such default during any applicable cure period and other than
by virtue of the repayment satisfaction and/or mutual release of any such obligation.
H. The dissolution or the termination of the Borrower's existence as a going business
of the insolvency of the borrower, or the appointment of a receiver for any part of the Borrower's
property, any assignment for the benefit of creditors under any type of creditor workout. or the
commencement of any proceeding under any bankruptcy or insolvency laws, unless such
proceedings are discharge or dismissed within ninety (90) days following commencement by or
against the Borrower.
I. Commencement of foreclosure or forfeiture proceedings, whether by judicial
proceeding, non-judicial foreclosure, self-help, repossession or any other method, by any creditor
of the Borrower or by any governmental agency, against any collateral securing this Promissory
Note, or by any governmental agency, unless such proceedings are discharged or dismissed
within ninety (90) days following commencement. However, this event of default shall not be
deemed to have occurred if there is a good faith dispute by the Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture proceeding, and if the
Borrower gives the Agency written notice of the creditor or forfeiture proceeding and furnishes
reserves or a surety bond for the creditor or forfeiture proceeding satisfactory to the Agency and
proceeds to vigorously defend against such a claim.
J. Sale, transfer, hypothecation, assignment, or conveyance of the Property or any
portion or interest in the Property or the Project by the Borrower without the Agency'
If any default (other than a default described in (A), (B) or (F) above) is curable, and if Borrower
has not been given a notice of a default of the same provision of this Promissory Note within the
preceding twelve (12) months, such a default may be cured (and in such event no default will be
deemed to have occurred) if Borrower, after receiving written notice from the Agency
demanding cure of such default:
(i)
cures the default within thirty (30) calendar days; or
(ii)
if the cure requires more than thirty (30) calendar days, immediately
initiates steps which the Agency deems in its reasonable discretion to be
sufficient to cure the default, and thereafter Borrower continuously
pursues such cure to completion.
3
48] 6-36] 3-2608.6
7. RIGHTS OF THE HOLDER. Upon default by the Borrower, the Agency may exercise
any of its rights provided under the DDA, including, without limitation, the declaration by the
Agency or the holder in due course of this Promissory Note (individually or collectively the
'.Holder") that the entire unpaid principal balance of this Promissory Note and all accrued and
unpaid interest is immediately due and payable, without notice or presentment. Upon the failure
of the Borrower to pay all amounts declared due pursuant to this paragraph entitled "RIGHTS
OF THE HOLDER," including failure to pay at the Maturity Date, the Holder, at its option, may
also, if permitted under applicable law, increase the interest rate on this Promissory Note for
interest which accrues after the date such amount is declared due, to the rate of twelve percent
(12%) per annum. The Holder may hire or pay someone else to help collect this Promissory
Note, ifthe Borrower does not pay. The Borrower will pay the Holder the amount of any and all
such collection related expenses, including without limitation, subject to any limits under
applicable law, the Holder's reasonable attorneys' fees, whether or not there is a lawsuit,
including, without limitation, reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any post-judgment collection services. The Borrower also will pay any court costs, in
addition to all other sums provided by law. This Promissory Note has been delivered to the
Holder and accepted by the Holder in the State of California. If there is a lawsuit arising under
this Promissory Note, the Superior Court of the State of California and for the County of San
Bernardino shall have jurisdiction of such lawsuit. This Promissory Note shall be governed by
and construed in accordance with the laws of the State of California.
8. COLLA TERAL. The Borrower acknowledges this Promissory Note is secured by a
Deed of Trust encumbering the Property (as defined in the DDA).
9. GENERAL PROVISIONS. The Holder may delay or forego enforcing any of its rights
or remedies under this Promissory Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Promissory Note, to the extent allowed by law, each
waive any applicable statute of limitations, presentment, demand for payment, protest and notice
of dishonor. Upon any change in the terms of this Promissory Note, and unless otherwise
expressly stated in writing, no party who signs this Promissory Note, shall be released from
liability. All such parties agree that the Holder may renew or extend (repeatedly and for any
length of time) this Promissory Note, or release any party, or collateral; or impair, fail to realize
upon or perfect the Holder's security interest in any collateral; and take any other action deemed
necessary by the Holder in its sole discretion without the consent of or notice to anyone. All
such parties also agree that the Holder may modify this Promissory Note and/or the DDA
without the consent of or notice to anyone other than the party with whom the modification is
made.
All defined words, terms or phrases indicated by initial capital letters used in this
Promissory Note and not specifically defined in this Promissory Note shall have the meanings
ascribed to such word, term or phrase in the DDA.
4816-3613-2608.6
4
PRIOR TO SIGNING THIS PROMISSORY NOTE, BORROWER HAS READ AND
UNDERSTANDS ALL OF ITS PROVISIONS, BORROWER AGREES TO THE TERMS OF
THIS PROMISSORY NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF.
BORROWER
ESSEX ORANGESHOW COMMERCE CENTER, LLC,
a California Limited Liability Company
By:
its Managing Member
48] 6-)6 ])-2608.6
5
EXHIBIT "I"
FORM OF PERFORMANCE GUARANTY
Exh. "f'
PERFORMANCE GUARANTY
This Performance Guaranty ("Guaranty") is made this , 2004 by
(the "Guarantor") in favor of the Redevelopment Agency of the City
of San Bernardino, a public body corporate and politic ("Lender").
RECITALS
A. The Essex Orangeshow Commerce Center LLC, a California limited liability company
(the "Borrower") has entered into that certain Disposition and Development Agreement dated
, 2004, with the Lender (the "DDA") whereby Borrower purchased real
property from the Lender for purposes of developing said property in accordance with the terms
of the DDA. The DDA requires Developer to perform certain obligations and covenants.
B. As a condition of the DDA, Lender has required that Guarantor execute and deliver this
Guaranty guaranteeing the completion of the development as well as the performance of other
obligations and covenants ofthe Borrower as set forth in the DDA.
NOW, THEREFORE, in order to induce Lender to enter into the DDA, and in consideration
thereof, Guarantor agrees as follows:
1. Guarantor hereby absolutely and unconditionally guarantees Completion of the
Improvements. As used herein, "Completion of the Improvements" shall mean that, in Lender's
sole judgment, the following conditions (hereinafter collectively referred to as the "Completion
Obligations") shall be satisfied: (i) the Improvements shall have been constructed, completed,
equipped and furnished in a good and workmanlike manner in accordance with the DDA (ii) all
notices of completion shall have been filed and all statutory lien periods shall have expired: (iii)
all costs of constructing the Improvements will be paid, including without limitation, interest on
the Note prior to Completion of the Improvements; (iv) the obligations and covenants set forth
in the DDA have been performed; and (v) all of the conditions set forth in the DDA shall have
been satisfied.
In addition, Guarantor hereby agrees to pay any and all costs and expenses, including,
without limitation, attorney's fees incurred by Lender in enforcing any rights or remedies under
this Guaranty.
2. In the event the Completion of the Improvements is not accomplished by Borrower in
accordance with the terms of the DDA, Guarantor, promptly upon receipt of written notice
thereof form Lender, shall (i) diligently and expeditiously proceed to cure such default and
procure the Completion of the Improvements at Guarantor's cost and expense; (ii) fully pay and
discharge all direct an indirect costs (including interest due under any promissory note) incurred
or required to be incurred in connection with the Completion of the Improvements; (iii) pay such
amounts as may be necessary to release and discharge any mechanics', materialmen's or other
liens that may come into existence in connection with the same in good faith and pay any
4815-0421-3504.1
judgment arising thereunder; (iv) obtain certificates of occupancy and all other permits and
approvals necessary or appropriate for the operation of the Project; and (v) fully furnish and
equip the Improvements in accordance with the Plans and Specifications set forth in the DDA
(collectively, the "Completion Obligations").
3. The Guarantor guarantees that the Completion Obligations will be performed strictly in
accordance with the terms of the DDA regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the rights of Lender with
respect thereto. The liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
a. any lack of validity or enforceability of any provision of the DDA or other Loan
Documents (or any other agreement or instrument relating thereto);
b. any change in the time, manner or place of payment of, or in any other term of, all
or any of the Completion Obligations, or any other amendment or waiver of or
any consent to departure from any of the loan Documents including, without
limitation, changes in the terms of disbursement of the repayment of the Loan
modification to the Plans and Specifications, modifications, extensions (including
extensions beyond and after the original term ) or renewals of payment dates,
changes in interest rate or the advancement of additional funds by Lender in its
discretion;
c. any exchange, release or non-perfection of any collateral, or any releaser or
amendment or waiver of or consent to departure from any other guaranty, for all
or any of the Completion Obligations; or
d. any other circumstance which might otherwise constitute a defense available to,
or a discharge of, Borrower in respect of the Completion Obligations or Guarantor
in respect of this Guaranty.
Notwithstanding any termination of this Guaranty or cancellation of the Note or any other
agreement evidencing the Completion Obligations, if at any time any payment or
performance of any of the Completion Obligations (from any source) is rescinded, repaid
or must otherwise be returned by Lender (i) due to or upon the insolvency, bankruptcy or
reorganization of Borrower or Guarantor, or (ii) for any other circumstance, this Guaranty
shall continue to be effective or be reinstated, as the case may be, all as though such
payment had not been made.
4. If Guarantor shall fail to perform promptly after written notice as herein provided, Lender
shall have the following remedies:
a. at its option and without any obligation so to do, to proceed to perform on behalf
of Guarantor any of the Completion Obligations as provided in herein and
Guarantor shall, upon demand, pay to Lender all such sums expended by Lender
in such performance on behalf of Guarantor; and
b. from time to time, without first requiring performance on the part of Borrower
4815-0421-3504.1
and without being required to exhaust any or all security held by Lender, to
required performance by Guarantor of any obligation on the part of Guarantor to
be performed pursuant to the terms hereof, by action at law or in equity or both,
and further to collect in any such action compensation for all loss, cost, damage,
injury and expense sustained or incurred by Lender as a consequence of such
breach.
5. The Guarantor agrees that the obligations hereunder are Jomt and several and are
independent of and in addition to the undertakings of Borrower pursuant to the DDA and a
separate action may be brought to enforce the provisions hereof whether Borrower is a party in
any such action or not.
6. The obligations of Guarantor hereunder shall be in addition to any obligations of
Guarantor under any other guarantees of the Completion Obligations and/or any obligations of
Borrower or any other persons or entities heretofore given or hereafter to be given to Lender, and
this Guaranty shall not affect or invalidate any such other guarantees. The liability of Guarantor
to Lender shall at all times be deemed to be the aggregate liability of Guarantor under the terms
of this Guaranty and of any other guarantees heretofore or hereafter given by Guarantor to
Lender.
7. Guarantor hereby represents and warrants:
a. Guarantor is in compliance with all laws, regulations, ordinances and orders of
public authorities applicable to it.
b. Guarantor is validly existing in good standing under the laws of the jurisdiction of
its organizations and qualified to do business in California.
c. The execution, delivery and performance by Guarantor of this Guaranty are
within the power of Guarantor and will not violate any provision of law, any order
of any court or agency of government, or any indenture, agreement or any other
instrument to which Guarantor is a party or by which Guarantor or its property is
bound, or be in conflict with, result in a breach of or constitute a default under any
such indenture, agreement or other instrument.
d. This Guaranty, when delivered to Lender, will constitute a legal, valid and
binding obligation enforceable against Guarantor in accordance with its terms.
8. No amendment or waiver of any provision of this Guaranty nor consent to any departure
by Guarantor therefrom shall in any event be effective unless the same shall be in writing and
signed by Lender, and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No notice to or demand on Guarantor shall in any
case entitle it to any other or further notice or demand in similar or other circumstances.
9. All communications required hereunder shall be given to Guarantor and Lender at their
respective addresses set forth in this Guaranty, or at such other addresses as either party may
4815-0421-3504.1
designate by written notice given in accordance with the terms of this section. All
communications required or permitted pursuant to this Guaranty shall be legible and shall be
deemed to have been properly given and received: a) if delivered by hand, then upon such
delivery; b) if sent by nationally known overnight courier, then on the next business day after
dispatch; c) if mailed by registered or certified U.S. Mail, postage prepaid and return receipt
requested, then 3 days after deposit in the U.S. Mail; and d) if sent via facsimile prior to 4:00
p.m. Pacific Time on a business day (as indicated on the confirmation sheet printed by the
facsimile machine), then on the date sent; otherwise, on the next succeeding business day. The
writing shall be deemed legible unless the recipient of the notice notifies the sender to the
contrary within one business day after receipt of the notice.
10. No failure on the part of Lender to exercise and no delay in exercising any right or
remedy hereunder shall operate as a waiver thereof; nor shall Lender be estopped to exercise any
such right or remedy at any future time because of any such failure or delay; nor shall any single
or partial exercise of any right or remedy hereunder preclude any other or further exercise
thereof of the exercise of any other right or remedy. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
II. This Guaranty shall remain in full force and effect until and including the date upon
which the Completion Obligations are satisfied, at which time Guarantor's obligations hereunder
shall be deemed fully discharges, and Guarantor shall have no further liability under this
Guaranty.
12. Guarantor assumes the responsibility for keeping informed of the condition of Borrower
and of all other circumstances bearing upon the risk of nonperformance of the Completion
Obligations, and agrees that Lender shall have no duty to advise Guarantor of any information
known to Lender regarding any such condition or circumstances.
13. Miscellaneous.
a. Headings are inserted into this Guaranty for convenience only and shall not be
considered in construing any provision of this Guaranty.
b. Guarantor has had the opportunity to seek the advice of independent legal counsel of
Guarantor's choice regarding the effect of this Guaranty.
c. This Guaranty may not be modified, released or terminated without Lender's prior
written consent.
d. Time is of the essence in the performance of this Guaranty, but no delay or deferral in
exercising any remedies provided to Lender in this Guaranty shall be deemed a
waiver of such remedies.
e. The provisions of this Guaranty are separable. If any provision is held to be invalid
or unenforceable by any judgment of a court of competent jurisdiction, then the
remainder of this Guaranty shall not be affected by such judgment and the remaining
4815.0421.3504.1
terms of the Guaranty shall be carried out as nearly as possible according to their
original terms.
f. Lender's rights and remedies pursuant to this Guaranty shall be cumulative.
g. Guarantor shall be jointly and severally liable for the Completion Obligations with
each other guarantor, or other person now or hereafter primarily or secondarily liable
for the performance of the Completion Obligations.
h. This Guaranty shall be governed and construed in accordance with the laws of the
State of California.
1. All representations and warranties of Guarantor contained in this Guaranty shall
survive the execution and delivery of this Guaranty and shall continue until the
Completion Obligations have been satisfied.
J. This Guaranty may be executed in counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
k. No provision or waiver in this Guaranty shall be construed as limiting the generality
of any other waiver contained in this Guaranty.
THIS GUARANTY has been signed and unconditionally delivered to Lender by
Guarantor on the date shown in the acknowledgment.
GUARANTOR:
(signature must be notarized)
4815-0421-3504.1
e
eI3
14
e25
RESOLUTIOl'i t (Q) lP 1[
-
2
3
A RESOLUTION OF THE MAYOR AND COMMOI\' COUNCIL OF THE
CITY OF SAN BERNARDINO ACK.J"IOWLEDGING A CERTAIN
REPORT, MAKING FINDINGS AND DETERMINATIOl'iS AND
GRANTING OTHER APPROVALS RELATING TO THAT CERTAIN
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE REDEVELOPMENT AGEl'iCY OF THE CITY OF SAN
BERNARDINO AND THE ESSEX ORANGESHOW COMMERCE
CEI\'TER, LLC
4
5
6
7
8
WHEREAS, the City of San Bernardino, California (the "City") is a municipal
9
corporation and charter city, duly organized and existing pursuant to the provisions of the
10
constitution of the State of California; and
II
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency")
12
owns certain real property situated within the Central City South Redevelopment Project Area
of the Agency and located at the intersection of Orange Show Road and Arrowhead Avenue
15
(the "Property"); and
16
WHEREAS, an MAl appraisal of the Property was conducted in December 2003 by
17
Smothers Appraisal (the "Appraiser"); and
18
WHEREAS. according to the report dated December. 11, 2003 (the "Appraisal Report"),
19
prepared by the Appraiser, the fair market value of the Property is Two Million Two Hundred
20
Twenty Seven Thousand Dollars ($2,227,000); and
21
WHEREAS, the Agency staff has prepared a draft of a Disposition and Development
22
Agreement (the "Agreement") for the disposition of the Property to the Essex Orangeshow
23
Commerce Center, LLC, a California limited liability company, or its assign (in either case, the
24
"Developer"), together with a report which summarizes the key terms of the Agreement and
describes the manner in which the proposed disposition of the Property to the Developer will
-1-
P;\Ag~ndy,\Rl'~ol"lions\Rl',oluliulI,\2(104\04-02-02 Enu :\lice Reso.doc
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20
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assist in the elimination of blight (the "33433 Report") in accordance with Health and Safety
Code Section 33433; and
WHEREAS, as part of the approval process of the tentative tract map submitted by the
Developer in connection with the Property, the Planning Commission of the City of San
Bernardino (the "Planning Commission"), pursuant to the provisions of the California
Environmental Quality Act ("CEQA") and the CEQA Guidelines developed thereunder (the
"CEQA Guidelines"), conducted an initial study to ascertain whether the proposed Project may
have a significant effect on the environment; and
WHEREAS, the initial study identified potentially significant effects on the environment
in connection with the proposed Project; and
WHEREAS, the Planning Commission has imposed certain conditions on the Project
which would avoid or mitigate the potentially significant effects on the environment, and the
Developer has agreed to implement such conditions; and
WHEREAS, on November 18, 2003, following a duly noticed public hearing, the
Planning Commission adopted a Mitigated Negative Declaration with respect to the Project in
accordance with the provisions ofCEQA and the CEQA Guidelines; and
WHEREAS, the City has considered the initial study and the Mitigated Negative
Declaration and determined that the Planning Commission contemplated all environmental
effects within the scope of its jurisdiction; and
WHEREAS, it is appropriate for the Mayor and Common Council to take action with
respect to the disposition of the Property to the Developer and the Agreement in accordance
with Health and Safety Code Section 33433 (a) (I).
24
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II
II
2
NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED
BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
3 FOLLOWS:
4
Section I.
The above recitals are true and correct and incorporated herein by
5 reference.
Section 2.
On February 2, 2004, the Mayor and Common Council conducted a full
and fair joint public hearing with the Community Development Commission of the City of San
Bernardino relating to the disposition of the Property by the Agency to the Developer pursuant
to the terms and conditions of the Agreement. The minutes of the City Clerk for the February 2,
2004, meeting of the Mayor and Common Council shall include a record of all communication
and testimony submitted to the Mayor and Common Council by interested persons relating to
the joint public hearing, the 33433 Report and the approval of the Agreement.
Section 3.
This Resolution is adopted in order to satisfy the provisions of Health and
Safety Code Section 33433 relating to the disposition and sale of the Property by the Agency to
the Developer on the terms and conditions set forth in the Agreement. A copy of the Agreement
in the form submitted at the joint public hearing is contained as an attachment to the Staff
Report submitted to the Mayor and Common Council for this agenda item. The Mayor and
Common Council hereby find and determine as follows:
(i) the disposition of the Property by the Agency to the Developer in accordance
with the Agreement is consistent with the Redevelopment Plan for the Central City South
Redevelopment Project (the "Redevelopment Plan");
(ii) the terms and conditions of the Agreement contain assurances that the Property
will be used and maintained as contemplated under the Redevelopment Plan;
-3-
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II
II
(iii) the purchase price for the Property payable by the Developer to the Agency,
subject to the satisfaction of the terms and conditions of the Agreement, is an amount which the
3
Mayor and Common Council determine to be fair, just and reasonable, and the disposition of
4
the Property on the terms set forth in the Agreement shall materially benefit and sustain the
5
implementation of the Redevelopment Plan and assist the community to alleviate blighting
6
conditions; and
7
(iv) according to an appraisal conducted with respect to the Property by Smothers
8
9
Appraisal Services, the consideration payable by the Developer to the Agency for the
10
disposition of the Property ($2,227,000.00) is not less than the fair market value at its highest
11
and best use in accordance with the Redevelopment Plan.
12
Section 4.
The Mayor and Common council hereby find and determine that the sale
of the Property pursuant to the Agreement creates no additional environmental effects, not
contemplated by the initial study and Mitigated Negative Declaration, requiring further analysis
15
or mitigation and hereby adopt the Mitigated Negative Declaration and direct the Development
16
Services Department of the City to file a Notice of Determination on behalf of the City with
17
respect thereto.
18
Section 5.
The Mayor and Common Council hereby approve, receive and file the
19
33433 Report and the Agreement in the forms as on file with the City Clerk at and prior to the
20
21
joint public hearing.
22
Section 6.
The Mayor and Common Council hereby approve the disposition of the
23
Property to the Developer on the terms set forth in the Agreement.
24
Section 7. This Resolution shall take effect upon its adoption and execution in the
manner as required by the City Charter.
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3
A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BER."IARDIi'lO ACKNOWLEDGIi'lG A CERTAIN
REPORT, MAKING FINDINGS AND DETERMINATIONS AND
GRANTING OTHER APPROVALS RELATING TO THAT CERTAIN
DISPOSITION AND DEVELOPMENT AGREEME:'IT BY AND
BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SA:\'
BERNARDINO AND THE ESSEX ORANGESHOW COMMERCE
CENTER, LLC
4
5
6
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
7 Common Council of the City of San Bernardino at a
meeting thereof, held on the
8
day of
, 2004, by the following vote to wit:
9 Council Members:
Navs
Abstain
Absent
Aves
10
ESTRADA
1]
LONGVILLE
MCGINNIS
DERRY
SUAREZ
ANDERSON
MC CAMMACK
12
15
16
17
Rachel G. Clark, City Clerk
18
The foregoing resolution is hereby approved this
day of
,2004.
19
20
Judith Valles, Mayor
City of San Bernardino
21
Approved as to fonn and Legal Content:
22 By:
""'
.ft
23
. y Attorney /
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RESOLUT{C!5)jE))1
A RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE
GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BER."IARDINO AND THE ESSEX ORANGESHOW COMMERCE
CENTER, LLC
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency")
owns certain real property situated within the Central City South Redevelopment Project Area
of the Agency and located at the intersection of Orange Show Road and Arrowhead Avenue
(the "Property"); and
WHEREAS, an MAl appraisal of the Property was conducted in December 2003 by
Smothers Appraisal (the "Appraiser"); and
15
WHEREAS, according to the report dated December II, 2003 (the "Appraisal Report"),
16
prepared by the Appraiser, the fair market value of the Property is Two Million Two Hundred
17
Twenty Seven Thousand Dollars ($2,227,000.); and
18
WHEREAS, the Agency staff has prepared a draft of a Disposition and Development
19
Agreement (the "Agreement") for the disposition of the Property to The Essex Group, LLC, a
20
California limited liability company, or its assign (in either case, the "Developer"), together
21
with a report which summarizes the key terms of the Agreement and describes the manner in
22
which the proposed disposition of the Property to the Developer will assist in the elimination of
23
blight (the "33433 Report") in accordance with Health and Safety Code Section 33433;
24
WHEREAS, as part of the approval process of the tentative tract map submitted by the
Developer in connection with the Property, the Planning Commission of the City of San
-1-
P:\Acendll\Resolutionl\Ruolutlonsl2004104-o2-02 Eun CDC Rml.doc:
.
2
_13
14
Bernardino (the "Planning Commission"), pursuant to the proVISIOns of the California
Environmental Quality Act ("CEQA") and the CEQA Guidelines developed thereunder (the
3
"CEQA Guidelines"), conducted an initial study to ascertain whether the proposed Project may
4
have a significant effect on the environment; and
5
WHEREAS, the initial study identified potentially significant effects on the environment
6
in connection with the proposed Project; and
7
WHEREAS, the Planning Commission has imposed certain conditions on the Project
8
9
which would avoid or mitigate the potentially significant effects on the environment, and the
]0
Developer has agreed to implement such conditions; and
I]
WHEREAS, on November 18, 2003, following a duly noticed public hearing, the
12
Planning Commission adopted a Mitigated Negative Declaration with respect to the Project in
accordance with the provisions of CEQA and the CEQA Guidelines; and
WHEREAS, the City has found and determined that the sale of the Property to the
15
Developer creates no additional environmental effects, not contemplated by the initial study and
16
Mitigated Negative Declaration, requiring further analysis or mitigation and has adopted the
17
Mitigated Negative Declaration; and
18
]9
WHEREAS, it is appropriate for the Commission to take action with respect to the
disposition of the Property to the Developer and approve the Agreement as set forth in this
20
Resolution.
21
NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND
ORDER, AS FOLLOWS:
22
23
24
Section I.
The above recitals are true and correct and incorporated herein by
e 25 reference.
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P:\AlrndQ\Rnolulions\ResoluUonl\2004\04-02-01 [sIU CDC RnG,doc
.
.
.13
14
.25
Section 2.
The Commission is a responsible agency under CEQA with respect to the
2
disposition of the Property to the Developer and the development of the Property by the
3
Developer pursuant to the Agreement. The Commission hereby finds that there are no
4
additional environmental effects not contemplated by the Mitigated Negative Declaration,
5
requiring further analysis or mitigation, resulting from the disposition of the Property to the
6
Developer and the development of the Property by the Developer pursuant to the Agreement.
7
The Commission hereby directs Agency Staff to file a Notice of Determination on behalf of the
8
9
Agency consistent with the findings herein
10
Section 3.
On February 2, 2004, the Commission commenced the conduct of a full
11
and fair joint public hearing with the Mayor and Common Council of the City of San
12
Bernardino relating to the disposition of the Property. The minutes of the Agency Secretary for
the February 2, 2004 meeting of the Commission shall include a record of all communication
and testimony submitted to the Commission by interested persons relating to the joint public
15
hearing, the 33433 Report and the approval of the Agreement.
16
Section 4.
A copy of the Agreement in the form submitted at the joint public hearing
17
is contained as an attachment to the Staff Report submitted to Commission for this agenda item.
18
The Commission hereby finds and determines as follows:
19
(i) the disposition of the Property by the Agency to the Developer in accordance
20
21
with the Agreement is consistent with the Redevelopment Plan for the Central City South
22
Redevelopment Project (the "Redevelopment Plan");
23
(ii)
the terms and conditions of the Agreement contain assurances that the Property
24 will be used and maintained as contemplated under the Redevelopment Plan;
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P:\Agendai\R"'$ohllion~\Resolulion~\2004\04-02-02 [un CDC Reio.doc
.
e
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5
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II
12
e 13
14
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18
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e 25
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(iii) the purchase price for the Property payable by the Developer to the Agency,
subject to the satisfaction of the terms and conditions of the Agreement, is an amount which the
Commission determines to be fair, just and reasonable, and the disposition of the Property on
the terms set forth in the Agreement shall materially benefit and sustain the implementation of
the Redevelopment Plan and assist the community to alleviate blighting conditions; and
(iv) according to an appraisal conducted with respect to the Property by Smothers
Appraisal Services, the consideration payable by the Developer to the Agency for the
disposition of the Property ($2,227,000.00) is not less than the fair market value at its highest
and best use in accordance with the Redevelopment Plan.
Section 5. The Commission hereby approves, receives and files the 33433 Report
and the Agreement in the form as submitted at the joint public hearing.
Section 6. The Commission hereby approves the disposition of the Property to the
Developer on the terms set forth in the Agreement. The Executive Director is hereby authorized
and directed to execute the Agreement on behalf of the Agency together with such technical and
conforming changes as may be recommended by the Executive Director and approved by
Agency Counsel. In the event that the Agreement may not be fully executed by the parties for
any reason within sixty (60) days following the date of adoption of this Resolution, the
authorization granted to the Executive Director to execute the Agreement on behalf of the
Agency shall be of no further force and effect.
Section 7. Provided that the Agreement has been fully executed by the parties
within the period of time set forth in Section 6 of this Resolution, the Executive Director of the
Agency is hereby authorized and directed to take all actions set forth in the Agreement on
behalf of the Agency to close the escrow transaction described therein.
Section 8. The Resolution shall become effective immediately upon its adoption.
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P:\Ag~ndas\Relolulillnl\Rt'solutif)m',2004\04-02-02 EIKJr CDC Rc".do(
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3
A RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE
GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO AND THE ESSEX ORANGESHOW COMMERCE
CENTER,LLC
e]
2
4
5
6
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the
7
Community Development Commission of the City of San Bernardino at a
8 meeting thereof, held on the day of
9 Commission Members:- Aves Navs
]0 ESTRADA
II LONGVILLE
MCGINNIS
12
DERRY
e 13
SUAREZ
14 ANDERSON
15 MC CAMMACK
16
17
18
19 The foregoing resolution is hereby approved this
20
21
22
23 Approved a
24 By:
e25
, 2004, by the following vote to wit:
Abstain
Absent
Secretary
day of
,2004.
Judith Valles, Chairperson
Community Development Commission
of the City of San Bernardino
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P:lAcendIlI.RHOlutlons\Resolutlons\2004\04.02.02 [SIU CDC Relo.doc
CITY OF SAN BERNARDINO
Interoffice Memorandum
CITY CLERK'S OFFICE
Records and Information Management (RIM) Program
DATE:
February 9, 2004
TO:
Margaret Parker, Secretary
FROM:
Michelle Taylor, Senior Secretary
RE:
Transmitting Documents for Signature - Resolution CDC/2004-4
At the Mayor and Common Council meeting of February 2, 2004, the City of San Bernardino
adopted Resolution CDC/2004-4 - Resolution approving that certain Disposition and
Development Agreement by and between the Redevelopment Agency and the Essex Orangeshow
Commerce Center, LLe.
Attached is one (I) original agreement. Please obtain signatures in the appropriate location and
return the original agreement to the City Clerk's Office as soon as possible, to my attention.
Please be advised that the resolution and agreement will be null and void if not executed
within 60 days, or by April 4, 2004,
If you have any questions, please do not hesitate to contact me at ext. 3206. Thank you.
Michelle Taylor
Senior Secretary
I hereby acknowledge receipt of the above mentioned documents.
S;gooo !;J;;!0fA~
Date: .&. '(:2 (1)'/ Please SIgn and return
ECONOMUC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
RECElvr',:-elT'! ~u'riK
INTER-OFFICE MEMORANDUM
'04 MPR 25 P 2 :09
SUBJECT:
Michelle Taylor, Senior Secretary, City Clerk's Office
~ 0 Margaret Parker, Secretary
Executed Document
TO:
FROM:
DATE:
March 24, 2004
Enclosed is the fully executed Agreement pertaining to the following resolution:
CDC/2004-4
A Resolution of the Community Development Commission of the City
of San Bernardino, as the Governing Body of the Redevelopment
Agency of the City of San Bernardino, Approving that Certain
Disposition and Development Agreement by and between the
Redevelopment Agency of the City Of San Bernardino and the Essex
Orangeshow Commerce Center, LLC
Please let me know if you have any questions.
Thank you,
Margaret
Enclosure
cc: Barbara Sharp (with Copy of Agreement)
<
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): L-2.-0'j Item #
Vote: Ayes 1-'1 Nays e--
Change to motion to amend original documents D
R-~ '2 i2, Resolution # C OC j 7 ()~ <.j.. Lj
I
Abstain &-- Absent B-
Companion Resolutions 'LDD'-1-lj<"
NullN oid After: (oU days / 4- '2..- 0'-\
Resolution # On Attachments: D Note on Resolution of attachment stored separately: D
PUBLISH D
POST D
RECORD W/COUNTY D
By:
Date of Clerk/CDC Signature:
2-L(-0'l
7--5-0'1
2.-S6'-j
Reso. Log Updated:
Seal Impressed:
IB--
Q--
Date Sent to Mayor:
Date of Mayor's Signature:
Date Memo/Letter Sent for Signature:
I" Reminder Letter Sent:
d 't- Cf-\
Date Returned: 3-dSoY
Not Returned: D
2"d Reminder Letter Sent:
Request for Council Action & Staff Report Attached: Yes~ No By
Updated Prior Resolutions (Other Than Below): Yes No v' By
Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634): Yes No~ By
Updated CDC Personnel Folders (5557): Yes No---L-. By
Updated Traffic Folders (3985, 8234, 655, 92-389): Yes No /' By
Copies Distributed to:
Animal Control D EDA ~ Information Services D
City Administrator D Facilities D Parks & Recreation D
City Attorney D Finance D Police Department D
Code Compliance D Fire Department D Public Services D
Development Services D Human Resources D Water Department D
Others:
Notes:
Ready to File: _
Date:
Revised 12/18/03