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HomeMy WebLinkAboutCDC/2005-02 (See Companion Reso Nos. CDC/2005-3; 2005-12; 2005-13) 1 CDC/ RESOLUTION NO. 2005-2 2 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT ("DDA") AND LEASE AGREEMENT ("LEASE") BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") AND EL PAS EO PETROLEUM, LLC ("DEVELOPER") - 5TH & MT. VERNON IN THE MT. VERNON CORRIDOR REDEVELOPMENT PROJECT AREA 3 4 5 6 7 8 WHEREAS, the Redevelopment Agency of the City of San Bernardino is a public body 9 corporate and politic, existing pursuant to California Health and Safety Code Sections 33100, e 10 seq. (the "Agency"); and 11 WHEREAS, the Community Development Commission of the City of San Bernardino 12 13 (the "Commission") is the governing board of the Agency; and 14 WHEREAS, the City of San Bernardino (the "City") is a charter city organized an 15 existing under the Constitution and laws of the State of California; and 16 WHEREAS, El Paseo Petroleum, LLC, is a California limited liability company (th 17 Developer"); and 18 19 WHEREAS, the Mayor and Common Council of the City (the "Common Council"), by 20 adoption of Ordinance No. MC-733 on August 25, 1990, approved and adopted the 21 Redevelopment Plan for the Mount Vernon Corridor Redevelopment Project (the 22 "Redevelopment Plan"); and 23 WHEREAS, the Mount Vernon Corridor Redevelopment Plan delineates the 24 25 redevelopment project area for the Mount Vernon Corridor Redevelopment Project (the "Project 26 Area"), which Project Area expires on June 25, 2030; and 27 WHEREAS, the Commission has initiated proceedings for the adoption of a Disposition 28 and Development Agreement (the "Agreement") relative to the Agency's acquisition of certain 4828-4804-9152.1 1 P:\Agcndas\Resolutions\Resolutions\200S\05-01-10 HI Pasco COC Reso A.doc CDCj200S-2 1 properties located in the area of the north west comer of 5th and Mt. Vernon and within the 2 Project Area (the "Properties"), and the approval of a Lease Agreement by and between the 3 Agency and the Developer (the "Lease Agreement"), with respect to the completion of 4 5 construction by the Developer of certain private, commercial improvements that the Developer 6 proposes to construct on the Site, which improvements include an AReO-Branded Service 7 Station consisting of nine multiple point dispensers which will provide 18 fueling stations and 8 associated underground storage tanks, an AM/PM Mini-Mart, and a self-service car wash, and 9 10 the proposed AM/PM Mini-Mart will include a license to sell beer and wine beverages intended 11 for off-site consumption (the "Project"); and 12 WHEREAS, the Agency currently owns the following parcel of Phase I Property: APN: 13 0138-115-03; and 14 WHEREAS, the Agency intends to acquire through negotiation or the exercise of the 15 power of eminent domain the following additional Phase I Properties: APN: 0138-115-02; 16 APN: 0138-115-04; APN: 0138-115-05; APN: 0138-115-06; and APN: 0138-115-07; and 17 WHEREAS, the Agency currently owns the following parcels of the Phase II Properties: 18 APN: 0138-114-09 and APN: 0138-114-18; and 19 20 WHEREAS, the Agency intends to acquire through negotiation or the exercise of the power of eminent domain the following additional Phase II Properties: APN: 0138-114-10 and 21 22 APN: 0138-114-11; and 23 WHEREAS, as a source of funding for the Project, the Agency intends to use a portion 24 of the San Bernardino Joint Powers Financing Authority Tax Allocation Bonds Series 2002A 25 (Mount Vernon Project) issued in the initial principal amount of Three Million Six Hundred 26 Thirty-Five Thousand Dollars ($3,635,000) on or about January 1,2002 (the "Bonds"); and 27 WHEREAS, in order to maintain the tax-exempt status of the Bonds, the Agency will comply with applicable provisions for the use of the proceeds of the Bonds as the same pertains 28 4828-4804-9152.1 2 P:\Agendas\Rcsolulion.s\Resoluttoos\200S\OS-OI-IO EI Pasco COC Reso A.doc CDC/ZOOS-Z 1 to any private business use and, the Agency will not loan Bonds proceeds to any other party nor shall it use payments from any other private source for the payment of the debt service on the 2 3 Bonds; and 4 WHEREAS, the Developer has the background, experience and financial capability of 5 6 developing the Project and has been successful in securing a construction financial commitment 7 in the amount of approximately $2.1 million in support of the Project; and 8 WHEREAS, the development of the Site pursuant to the Agreement and the Lease 9 10 Agreement, and the fulfillment generally of the Agreement and the Lease Agreement, are in the 11 vital and best interests of the City and the welfare of its residents, and in accordance with the 12 public purposes; and 13 WHEREAS, the Initial Study (IS) prepared for the Project pursuant to the California 14 Environmental Quality Act (Public Resources Code Section 21000 et sea., "CEQA") concluded 15 16 that the implementation of the Project with mitigation measures would not result in significant 17 adverse environmental impacts, and that accordingly, a Mitigated Negative Declaration 18 ("Mitigated N/D") would be prepared for the Project; and 19 WHEREAS, the text of the draft Mitigated N/D for the Project was made available to 20 the public, responsible agencies and other interested persons for their review and comment 21 22 between November 22,2004 through December 13, 2004 as required by CEQA; and 23 WHEREAS, the Commission has fully reviewed and considered the Final Mitigated 24 N/D, as they relate to the Project and has authorized the filing of the Notice of Determination 25 with the County Clerk; and 26 WHEREAS, the Agency has prepared a report which contains an analysis of the 27 28 Agreement and describes the manner in which the proposed disposition of the Properties to the 4828-4804-9152.1 3 P:\Agendas\ResolutiolUl\Resolutions\200S\05-01-10 EI Pasco CDC Reso A.doc CDC/2005-2 1 Developer will assist in the elimination of blight (the "33433 Report") in accordance with 2 Health and Safety Code Section 33433; and 3 WHEREAS, it is appropriate for the Commission to take action with respect to the 4 5 disposition of the Properties to the Developer and approve the Agreement as set forth in this 6 Resolution. 7 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION 8 ACTING ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN 9 10 BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: 11 Section 1. Recitals. The above recitals are true and correct and incorporated herein 12 by reference. 13 Section 2. Joint Public Hearinl!. On January 10, 2005, the Commission 14 commenced the conduct of a full and fair joint public hearing with the Mayor and Common 15 16 Council of the City of San Bernardino relating to the disposition of the Properties. The minutes 17 ofthe Agency Secretary for the January 10, 2005 meeting of the Commission shall include a 18 record of all communication and testimony submitted to the Commission by interested persons 19 relating to the joint public hearing, the 33433 Report and the approval of the Agreement and 20 Lease Agreement. 21 22 Section 3. Findinl!s of Consistency with Redevelopment Plan. A copy of the 23 Agreement and Lease Agreement in the form submitted at the joint public hearing is on file with 24 the Agency Secretary. The Commission hereby finds and determines as follows: "the 25 disposition of the Properties by the Agency to the Developer in accordance with the Agreement 26 27 and Lease Agreement is consistent with the Redevelopment Plan". 28 4828-4804-9152.1 4 P:\Agcndas\Resolulions\RelOlutions\200S\OS-OI-IO EI Pueo CDC Reso A.doc CDC/2005-2 1 Execution of Aereement is Authorized. The Commission hereby Section 4. 2 approves the disposition of the Properties to the Developer on the terms set forth in the 3 Agreement. The Executive Director is hereby authorized and directed to execute the Agreement 4 5 and Lease Agreement on behalf of the Agency together with such technical and conforming 6 changes as may be recommended by the Executive Director and approved by Agency Special 7 Counsel and is hereby authorized and directed to take all actions set forth in the Agreement on 8 behalf of the Agency for the disposition of the Properties to the Developer as described therein. 9 Section 5. Section 33433 Findines. This Resolution is adopted in order to satisfy 10 11 the provisions of Health and Safety Code Section 33433 as those provisions relate to the 12 disposition of the Properties by the Agency to the Developer on the terms and conditions set 13 forth in the Agreement. The Commission hereby finds and determines as follows: 14 (i) The Summary Report contains the information described in Health and Safety 15 16 Code Section 33433(a)(2) (B); 17 (ii) The disposition of the Properties to the Developer on the terms set forth in the 18 Agreement and Lease Agreement shall assist in the elimination of conditions of 19 blight in the Project Area. 20 (iii) The terms and conditions of the Agreement contain assurances that the Phase I 21 22 Properties will be redeveloped by the Developer in a manner that will, among 23 other things, alleviate blighted conditions and provide necessary commercial 24 facilities in the immediate area. 25 Mitieated Neeative Declaration is Approved. The Facts and Findings Section 6. 26 27 are approved and adopted; the Mitigated N/D is hereby approved and the Executive Director of 28 the Agency is hereby directed to file a Notice of Determination with the County of San 4828-4804-9152.1 5 P:\Agendas\Resolutions\Rcsolutions\200S\OS-OI-IO EI Pasco COC Reso Adoc CDC/200S-2 1 Bernardino Clerk of the Board of Supervisors certifying the Commission's compliance, as the 2 responsible agency under CEQA in reviewing and approving the Mitigated N/D for the Project. 3 Section 7. Effectiveness. The Resolution shall become effective immediately upon 4 5 its adoption. III 6 7 III 8 III 9 III 10 III 11 12 III 13 III 14 III 15 III 16 III 17 18 III 19 III 20 III 21 III 22 III 23 24 III 25 III 26 III 27 III 28 4828-4804-9152.1 6 P:\Agendas\Resolulions\RcsoJutions\200S\OS.OI-lO EJ Pasco CDC Reso A.do, CDC/200S-2 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT ("DDA") AND LEASE AGREEMENT ("LEASE") BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (" AGENCY") AND EL P ASEO PETROLEUM, LLC ("DEVELOPER") - 5TH & MT. VERNON IN THE MT. VE~l\lON CORRIDOR REDEVELOPMENT PROJECT AREA 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 i The foregoing Resolution is hereby approved this ~ da I HEREBY CERTIFY that the foregoing Resolution WflS ~uly aoppted by the Community J o1nt aUJ 6urnell. Development Commission of the City of San Bernardino at a regular meeting thereof, held on the 10th day of January , 2005, by the following vote, to wit: Commission Members: Ayes Nays Abstain Absent ESTRADA X LONGYILLE X - MCGINNIS X DERRY X KELLEY X JOHNSON X - MCCAMMACK ~ 20 ,2005. 21 22 23 24 Approved as to form and legal content: 25 26 27 28 4828-4804-9152.1 7 P\A"pn,b~".,R,.c"111t;()nc\Rf'<:,,1,,t;,,",,',7()()'I\n"_nl_1 () ~l P""p" ('f)(' Ri'''n ^ ri".... CDC/2005-2 ORIGINAL REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DISPOSITION AND DEVELOPMENT AGREEMENT (Mt. Vernon Corridor Redevelopment Project Area) THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this "Agreement") is dated as of January 10, 2005, and is entered into by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, existing pursuant to California Health and Safety Code Sections 33100, et seq. (the "Agency"), and EI Paseo Petroleum, LLC, a California limited liability company (the "Developer"), with reference to the following recitals of facts: RECITALS: A. This Agreement and the Exhibits hereto are intended to effectuate the Redevelopment Plan for the Mount Vernon Corridor Redevelopment Project (the "Project Area") by providing for the disposition and development of a portion of the Redevelopment Project Area designated herein as the "Site" and the development of the "Project" thereon (as those terms are defined in Section 1.1 herein); B. The development of the Site pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of San Bernardino ("City") and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements; C. Since the early 1970's, Agency Staff and Elected Public Officials have held numerous meetings and discussions with prospective developers in an effort to generate development interest and to stimulate economic development activities on the Site and surrounding areas. Up until now, there have been no viable development proposals. The development proposed in this Agreement will serve as a major catalyst and stimulate further economic development interest with the Project Area. D. Pursuant to the terms and conditions of this Agreement, the Agency proposes to acquire certain real property specifically described in Exhibit "A" to this Agreement within the Project Area (the "Site," as defined in Section 1.1), additionally, the Agency shall relocate existing business-owners and assist the Developer; E. On November 17, 2003, the Agency and Tri Palm Corporation, a California corporation (the "Prior Developer") entered into a Redevelopment Project Study and Redevelopment Assistance Agreement (the "Study Agreement") wherein, among other things, the Agency was to consider and study the provision of certain redevelopment assistance to the Prior Developer to facilitate the assembly of the certain Property, as defined hereinafter; and wherein the Agency agreed not to negotiate with any other person or entity regarding the P:\Agendas\Agenda Attllchmcnts\Agrmts-Amend 2005\05-01-[0 El Paseo-5th. MI Vernon DDA.doc 4822-7696-9472.2 disposition of the certain Property, as defined hereinafter, pending the term of the Negotiation Period as defined in the Study Agreement. F. The Agency selected the Developer to perform these services due to its unique qualifications and specialty training and experience in the development of the proposed project and is competent to perform the special services required for the completion of the proposed proj ect. G. This Agreement contemplates that the project proposed by this Agreement will be developed in two separate phases on different parcels that will make up the overall Site if the Developer elects to exercise the option to acquire the Phase II Parcels from the Agency. H. The Site is comprised of multiple separate legal parcels of land under ownership by eight different business owners, formally known, with respect to the Phase I Site, as Assessor Parcel Numbers: 0138-115-02; 0138-115-04; 0138-115-05; 0138-115-06; and 0138-115-07 (the "Phase I Properties"), and with respect to the Phase II Site, formally known as Assessor Parcel Numbers: 0138-114-10 and 0138-114-11 (the "Phase II Properties") (collectively, the "Business Owners"). 1. The parcels of land owned by the Business Owners are generally depicted in Exhibit "B" to this Agreement and are designated therein and in this Recital I as the Phase I Parcels and the Phase II Parcels (collectively, the "Properties"). 1. The Agency is the owner of Assessor Parcel Number 0138-115-03 of the Phase I Properties and Assessor Parcel Numbers 0 13 8-114-09 and 0138-114-18 of the Phase II Properties (collectively, the "Agency-Owned Parcels"). The Agency has commenced condemnation of Assessor Parcel Numbers 0138-114-10 and 0138-114-11, both located in Phase II and tax defaulted properties, and adopted the requisite and respective Resolutions of Necessity on October 4,2004 (collectively, the 'Tax-Defaulted Parcels"). The Agency intends to acquire the remaining Properties separately through negotiations for purchase and sale with the subject Business Owners or alternatively, by eminent domain; regardless, the Agency shall be responsible for payment of all costs and expenses for Site acquisition in accordance with the terms and conditions of this Agreement. K. After the Agency has completed the land assembly and has obtained legal possession of the Site and of all Properties, the Agency intends to lease the Site to the Developer, pursuant to a Lease Agreement, attached hereto as Exhibit "C". L. Pursuant to the Lease Agreement, the Developer shall, among other things, construct certain private, commercial improvements on the Site, specifically an AReO-brand Service Station consisting of nine multiple point dispensers which will provide 18 fueling positions and associated underground storage tanks, an AM/PM Mini-Mart, and a self-service car wash, or similar credit-rated tenants, including all required on-site and off-site improvements, all hardscape and all landscaping in accordance with the Site Plan set forth in Exhibit "D" to this Agreement (the "Improvements," as defined in Section 1.1). 4822-7696-9472.2 -2- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th. Ml. Vernon DDA.doc M. On August 22,2003, BP West Coast Products LLC, a Delaware limited liability company ("BPWCP") acknowledged a written request by the Prior Developer, for consideration of a "Branding Agreement" regarding the acquisition and construction of the ARC a-branded retail gasoline station and AM/PM Mini Market selling beer and wine to be located on the Site, and related improvements and personal property owned by the Prior Developer, as the proposed Franchisee. The Prior Developer made this request of BPWCP on a preliminary basis and is prepared to assign any and all rights, title, and interest to the Branding Agreement and the Franchise Agreement, if any, to the Developer upon the execution of this Agreement. N. The Developer shall be responsible for payment of all costs and expenses for construction of Improvements, in accordance with the terms of this Agreement and the Lease Agreement. O. The Developer estimates the total cost of construction of the Improvements at Two Million Nineteen Thousand Dollars ($2,019,000), as set forth in detail in the "Project Budget" (as defined in Section 1.1). P. Contemporaneous with the execution of this Agreement and pursuant to the California Environmental Quality Act ("CEQA"), the Agency shall consider an "Initial Study" wherein a determination will be made that the Project qualifies for a Mitigated Negative Declaration and will not impose a significant effect on the environment because revisions in the Project have been made by or agreed to by the Developer. Q. On or about January 1,2002, the Agency issued the San Bernardino Joint Powers Financing Authority Tax Allocation Bonds Series 2002A (Mount Vernon Project) in the amount of Three Million Six Hundred Thirty-Five Thousand Dollars ($3,635,000) (the "Bonds"). The Bonds will be a source of funding for the Project. R. In order to maintain the tax-exempt status of the Bonds the Agency must avoid being deemed Private Activity Bonds pursuant to a two-prong test which is as follows: (i) may not use more than ten percent (10%) of the proceeds of the Bond issue for any private business use; and (ii) not more than ten percent (10%) of the payment of principal of and interest on the Bonds may be secured by an interest in, or payments in respect of, property used for a private business use. Accordingly, the Agency will be limited to and investment of only Twenty-Six Thousand Three Hundred Dollars ($26,300) in the Project. Therefore, the proposed annual lease payments from the Developer to the Agency, pursuant to the Lease Agreement (Exhibit "C"), shall not exceed Twenty-Six Thousand Three Hundred Dollars ($26,300). The Agency will not loan Bonds proceeds to any other private party nor shall it use payments from any other private source for this Project. S. The disposition of the Site by the Agency and redevelopment of the Site by the Developer, in accordance with this Agreement, is consistent with the goals and objectives of the Agency Implementation Plan and will improve and alleviate blighted conditions; specifically, abnormally high business vacancies, abnormally low lease rates, high turnover rates, abandoned buildings, underutilized commercial property and a lack of necessary commercial facilities in the immediate area. 4822-7696-9472.2 -3- P:\Agendas\Agenda Attachments\Agrmls-Amend 2005\05~O]-lO El Paseo-5lh Mt Vernon DDA.doc T. The Project will result in additional tax increment revenues to the Agency, will eliminate blighted conditions on the Site, generate jobs for the local community, provide new and modern land uses and services, and will be a stimulus of economic growth and activity in the area which will result in new sales tax revenues for the City which is nonexistent in the Project Area. U. The timing and development of the Project (as defined in Section 1.1 of this Agreement) is subject to many variables including, but not limited to, property acquisition costs, availability of financing, market conditions, and availability of commercial tenants. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND THE COVENANTS, CONDITIONS, REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE AGENCY AND THE DEVELOPER AGREE AS FOLLOWS: ARTICLE I DEFINITIONS 1.1 In addition to the definitions ascribed to certain words, phrases or terms in the preamble, Recitals or other paragraphs, Articles or Sections of this Agreement, the following words, phrases or terms shall be defined as follows: Alley Vacation. The term "Alley Vacation" means and refers to the Agency assistance to the Developer for vacation by the City of that certain alley as located adjacent to the west side of the Phase I Parcels which is intended to be vacated by the City pursuant to the provisions of State law with respect to the vacation of public rights-of-ways and public alleys in furtherance of the assembly of the properties required for the Project on the Site. CEQA. The acronym "CEQA" means and refers to the California Environmental Quality Act, Public Resources Code, Section 21000, et seq. Certificate of Completion. The term "Certificate of Completion" means and refers to that certain certificate to be executed and delivered by the Agency upon the completion of all the Developer construction activities required by this Agreement with respect to the construction, development and completion of the Project in accordance with the terms and provisions of this Agreement. City. The term "City" means and refers to the City of San Bernardino, California. Condemnation Parcel. The term "Condemnation Parcel" means and refers to any of the properties within the Phase I Site or the Phase II Site that the Agency has filed, or intends to file, an action in eminent domain for the acquisition thereof. 4822-7696-9472.2 -4- P-\Agendas\Agenda AttachmentslAgrmts-Amend 2005\05-01-10 EI Paseo-5th, Mt Vernon DDA.doc Conditional Use Permit. The term "Conditional Use Permit" ("CUP") means and refers to the completed application(s) of the Developer for the review and discretionary approval by the City of the plan of improvement of the Project to be undertaken by the Developer, upon transfer of the Site from the Agency to the Developer. The CUP shall include all of the information necessary for the City to issue its development project approvals for the Project, including all development compliance conditions. Promptly following the approval of the CUP by the City, the Developer shall prepare and complete the Project-related development improvement plans and specifications, including without limitation exterior sign and lighting plans and landscape plans in sufficient detail to obtain the issuance of any other necessary permits or entitlements from the City. Construction Lender. The term "Construction Lender" means and refers to the entity or entities that provide the Construction Loan to the Developer. Construction Loan. The term "Construction Loan" means and refers to the loan or loans that the Developer shall obtain in an aggregate principal amount not to exceed Two Million Nineteen Thousand Dollars ($2,019,000) to be used and applied solely for construction of the Improvements on the Site. The Construction Loan shall be obtained by the Developer from a state or federally regulated third-party lending institution or institutions reasonably acceptable to the Agency. Construction Loan Deed of Trust. The term "Construction Loan Deed of Trust" means and refers to a deed of trust or other security instrument required by the Construction Lender to be recorded against the Site or any portion of the Site to secure the Developer's performance under the Construction Loan or the Construction Loan Documents. Construction Loan Documents. The term "Construction Loan Documents" means and refers to the various documents and instruments by and between the Developer and the Construction Lender or Construction Lenders that evidence the Construction Loan for the construction of the Improvements and the security for repayment of the Construction Loan. Developer Equity Funds. The term "Developer Equity Funds" means and refers to the funds that the Developer will be required to pay towards the aggregate costs of construction of Improvements on the Site, excluding the Construction Loan, defined above. Developer Investigations. The term "Developer Investigations" means and refers to the Developer's due diligence investigation of each Site Parcel to determine the suitability of such lands for development. The Developer Investigations shall include an investigation of environmental and geotechnical suitability of such lands as determined at the sole discretion of the Developer. Environmental Law. The term "Environmental Law" means and includes, without limitation, all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any governmental authority regulating, 4822-7696-9472.2 -5- P\Agendas\Agenda Attachmcnts\Agrmts-Amend 2005\05-01-10 EI Paseo-5th. Mt Vernon DDAJoc relating to, or imposing liability or standards of conduct concerning any Hazardous Material, or pertaining to occupational health or industrial hygiene (to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Materials on, under, or about the Site or the Improvements), occupational or environmental conditions on, under, or about the Site or the Improvements, 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 seq.]; the Resource Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901 et seq.]; 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 seq.]; the Hazardous Materials Transportation Act ("HMTA") [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.]; the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [Health and Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [Health and Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [Health and Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [Water Code Section 13000 et seq.] 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 Materials on, under, or about the Site or the Improvements, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use. Environmental Matters. The term "Environmental Matters" shall have the meaning ascribed to the term in Section 6.13. Escrow Agent. The term "Escrow Agent" means and refers to escrow department, or such successor entity as may be designated by the Agency. The Escrow Agent shall administer the Site Transfer Escrow. Event of Default. The term "Event of Default" shall have the meaning ascribed to the term in Section 7.1 of this Agreement. Evidence of Net Worth. The term "Evidence of Net Worth" means and refers to the Developer's evidence, reasonably satisfactory to the Executive Director of the Agency, that the Developer has sufficient funds to initiate the Project and construct the Improvements, which evidence shall be provided pursuant to Section 2.6 of this Agreement. 4822-7696-9472.2 -6- P:\Agendas\Agenda Attachmellts\Agrmts-Amend 2005\05-0].10 El Paseo-Sth. Mt. Vernon DDA.doc Final Budget. The term "Final Budget" means and refers to Developer's final calculation of total cost of constructing the Improvements on the Site, which is estimated at Two Million Nineteen Thousand Dollars ($2,019,000), to be prepared by the Developer and delivered to the Agency upon completion of the Project, as set forth in Section 6.14 of this Agreement. Hazardous Materials. The term "Hazardous Materials" shall mean and refer to 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, uses, guests or invitees of the Site 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 ("CERCLA"), 42 U.S.c. Sections 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq. the Clean Air Act, 42 U.S.c. Sections 7401 et seq., the Hazardous Materials Transportation Act, 49 U.S.c. Sections 1801 et seq., or the Resource, Conservation and Recovery Act, 42 U.S.C. Sections 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 25316 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. Improvements. The term "Improvements" means and refers to those certain private, commercial improvements that the Developer proposes to construct on the Site under the terms of the Lease Agreement, including all tenant improvements which are to be paid for by the Developer through tenant improvement allowance or credit under the Lease Agreement, and required on-site and off-site improvements, including an ARCa AM/PM fueling station with an automated drive through car wash and convenience store, all hardscape and all landscaping in accordance with the Site Plan (Exhibit "D") and the Project Budget and any conditions imposed by the City in its consideration of the Developer's development application related to the Improvements. Joint Powers Authority. The terms "Joint Powers Authority" means and refers to the San Bernardino Joint Powers Financing Authority duly organized and existing under the provisions of Articles 1 through 4 (commencing with Section 56500) of Chapter 45 of 4822-7696-9472.2 -7- P \Agendas\Agenda Anachlllcllts\Agl'lllts-Amend 2005\05-01-10 El Pasea-5th. Mt. Vernon DDA.doc Division 7 of Title 1 of the Government Code of the State of California, of which the Agency and the City are members. Lease Agreement. The term "Lease Agreement" means and refers to the general form of the Lease Agreement by and between the Agency and the Developer for the Site, for development pursuant to the terms of this Agreement and the Lease Agreement, for a term of twenty (20) years, and two (2) five (5) year options to renew, with an option to purchase the Site at the end of the twenty (20) year period for fair market value established by an MAl appraisal which shall comply with the limitations set forth in the Indenture and any applicable state and federal laws. The general form of the Lease Agreement is included as Exhibit "c" and the Lease Agreement will be subordinate to the Construction Loan Deed of Trust in a principal amount not to exceed TWO MILLION NINETEEN THOUSAND DOLLARS ($2,019,000), and the permanent financing that is required to replace such Construction Loan in a principal amount not to exceed TWO MILLION NINETEEN THOUSAND DOLLARS ($2,019,000), or such lesser principal amount as may at any time be then outstanding and unpaid upon such date of the permanent financing. Lease Closing. The term "Lease Closing" means and refers to the time when the conditions for the lease of the Site to the Developer have been satisfied and the applicable form of the Lease Agreement is executed and other necessary documents are recorded. Losses. The word "Losses" shall have the meaning ascribed to the term in Section 6.13. Minimum Assessed Valuation Covenant. The term "Minimum Assessed Valuation Covenant" shall have the meaning ascribed to the term in Section 6.4. Minimum Assessed Value. The term "Minimum Assessed Value" shall have the meaning ascribed to the term in Section 6.4. Minimum Sales Tax. The term "Minimum Sales Tax" shall have the meaning ascribed to the term in Section 6.5. Minimum Sales Tax Covenant. The term "Minimum Sales Tax Covenant" shall have the meaning ascribed to the term in Section 6.5. Notice of Agreement. The term "Notice of Agreement" means and refers to a notice setting forth the material terms of this Agreement that shall be recorded in the official records of the Recorder of the County of San Bernardino, in accordance with Section 6.11, in substantially the form attached to this Agreement as Exhibit "E". Notice of Cessation. The term "Notice of Cessation" has the same meaning as ascribed to the term in California Civil Code Section 3092. Notice of Completion. The term "Notice of Completion" has the same meamng as ascribed to the term in California Civil Code Section 3093. 4822-7696-9472.2 -8- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Pasco-5th_ Ml Vernon DDA.doc Operating Costs Budget. The term "Operating Costs Budget" means and refers to the estimated line-item budget prepared by the Developer setting forth the annual operating expenses of the Project after completion of the Improvements and occupancy by the anticipated tenants, which will include a service station consisting of an 18 pump gasoline service island and associated underground storage tanks, an AM/PM Mini-Mart, and a self-service car wash, or similar credit rated tenants, prepared by the Developer and delivered to the Agency pursuant to Section 5.l.C of this Agreement. Phase I Site. The term "Phase I Site" shall mean the Site as described herein to include the Phase I Properties as referenced in the Recitals hereof, legally described in Exhibit "A", and referenced in a portion of Exhibit "B". Phase II Site. The Term "Phase II Site" shall mean those additional properties identified in the Recitals hereof and in a portion of Exhibit "B" as attached hereto which may be acquired by the Developer at its option and election in accordance with the provisions of Article IV hereof. Project. The term "Project" means and refers to the Agency's acquisition of the Properties upon the close of the Site Transfer Escrow, execution of Lease Agreement, and pursuit to completion of construction by the Developer of the Improvements on the Site, in accordance with the Plans, including the Alley Vacation, and occupancy of the completed Improvements by, at a minimum, an ARCO Service Station consisting of nine multiple point dispensers which will provide 18 fueling positions and associated underground storage tanks, an AM/PM Mini-Mart, and a self-service car wash, or similar credit rated tenants. Project Area. The term "Project Area" means and refers to the Mount Vernon Corridor Redevelopment Project Area of the Agency. Project Budget. The term "Project Budget" means and refers to the Developer's estimate of the total cost of constructing the Improvements on the Site which is estimated at Two Million Nineteen Thousand Dollars ($2,019,000) to be paid by the Developer. The Project Budget was prepared by the Developer and delivered to the Agency pursuant to Section 5 .l.B of this Agreement. Schedule of Performance. The term "Schedule of Performance" means and refers to the development project list of "milestone dates" set forth in Exhibit "F" to this Agreement. Site or Project Site. The term "Site" or "Project Site" means and refers to the area of land created by assembly of, collectively, the Phase I Properties, all within the geographic boundaries of the Project Area and the City, and more specifically described in the legal descriptions set forth in Exhibit "A" to this Agreement and shall specifically exclude the Phase II Properties. 4822-7696-9472.2 -9- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th_ Mt. Vernon DDAdoc Site Improvements Program. The term "Site Improvements Program" means and refers to the program of redevelopment and construction of Improvements on the Site composed of the Phase I Properties by the Developer and assistance to be provided by the Agency on a best efforts basis to the Developer as set forth in Section 2.6.2. Site Parcel. The term "Site Parcel" means and refers to each of the legal parcels of land, which comprise the Site for Phase I of the Project (e.g., the Phase I Properties). As of the date of this Agreement the Agency owns only Assessor Parcel Number 0138-115-03. The Agency intends to lease Assessor Parcel Number 0138-115-03 to the Developer along with the remaining Phase I Properties, pursuant to the terms and conditions of this Agreement and the Lease Agreement. For all purposes of this Agreement, Site Parcel shall refer to the Phase I Properties except for the commitments of the Agency pursuant to Article IV hereof with respect to the development of the Phase II Site. The Agency owns Assessor's Parcel Numbers 0138-114-09 and 0138-114-18 that are situated in the Phase II Site. The Agency does not own or possess any equitable interest in any other Site Parcel, other than the Assessor's Parcel Number 0138-115-03 and the Assessor's Parcel Numbers 0138-114-09 and 0138-114-18. A legal description of all of the Site Parcels, which comprise the Site for the Phase I Properties is included as Exhibit "A". Site Parcel Escrow. The term "Site Parcel Escrow" means and refers to each of the individual escrow transaction accounts established by the Agency with each Property Owner of a Site Parcel within the Phase I Site for the acquisition of such Site Parcel by the Agency for the Phase I Site. The Developer shall not be a party to a Site Parcel Escrow. Site Plan. The term "Site Plan" means and refers to the site plans and specifications for construction of, which illustrates the various components, which comprise the Improvements. Title Company. The term 'Title Company" means and refers to [Stewart Title Insurance Company]. Title Insurance Policy. The term "Title Insurance Policy" means and refers to each of the owner's policies oftitle insurance to be issued by the Title Company to the Agency at the close of the Site Transfer Escrow, and any endorsements to such policies, whether endorsed on the policies at the original time of issuance or subsequently, insuring marketable, lien-free, fee title to the Site, vested in the name of the Agency for the full amount of the purchase price paid for each ofthe properties which comprise the Site. Unavoidable Delay. The term "Unavoidable Delay" means and refers to any delays which occur following the date of the Lease Closing that are beyond the control of the Developer, including delays caused by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions, civil commotion, fire or similar causes, but excluding financial circumstances or events that may be resolved by the payment of money and circumstances subject to Section 6.9 of this Agreement. 4822-7696-94722 -10- I' \Agendas\Agenda Attachmcllts\Agrmls-Amend 2005\05-01-10 El Paseo-5th Ml Vernon DDAdoc ARTICLE II FINANCIAL PROVISIONS 2.1 Agency Financial Commitments. A. The Agency hereby agrees to provide an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000), on a reimbursable basis, from the proceeds of the Bonds to be used by the Developer on and after the date of the Lease Closing for the payment of the construction and installation of public improvements, including the payment of City inspection fees and permits and civil engineering design costs incurred by the Developer, and other similar off-site infrastructure costs which qualify for the use of such Bond proceeds in accordance with the documents providing for the issuance, sale and delivery of the Bonds, exclusive of any investor owned utilities required for the Project in connection with the construction of the Improvements (the "Infrastructure Funds"). The Developer shall comply with the provisions of Sections 3.1.4 (2) and 5.1 F hereof with respect to the payment of prevailing wages for the work performed and materials installed for the requisite off-site public improvements, and the Developer shall assure the Agency in a certification that a satisfactory form of public bidding had been undertaken by the Developer which was substantially similar to the process that would have been undertaken by the Agency to obtain the lowest responsible bid for each labor and materials contract for which the Developer seeks to apply the Infrastructure Funds for the payment of such labor and materials contracts. The final amount of the Infrastructure Funds to be disbursed by the Agency shall not exceed the total amount of the public works infrastructure costs required to be constructed and installed by the Developer. In the event the costs of such public works infrastructure exceed the amount of the Infrastructure Funds, the Developer shall be required to pay the excess amounts from other funds of the Developer and not from any other Agency source of funds or increases to the Infrastructure Funds. B. In addition to the Infrastructure Funds as provided in subsection 2.1.A. above, the Agency further agrees to provide an additional amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000), on a reimbursable basis, (the "Site Development Grant") which shall be used and applied by the Developer on and after the date of the Lease Closing for the payment or reimbursement of architectural and engineering costs associated with the Improvements, the payment of City plan check fees, City building inspection fees, City water and sewer capacity and connection charges and school development impact fees of the San Bernardino City Unified School District. In the event the costs of such public works infrastructure exceed the amount of the Infrastructure Funds, the Developer shall be required to pay the excess amounts from other funds of the Developer and not from any other Agency source of funds or increases to the Infrastructure Funds. In the event the costs of such architectural and engineering costs associated with the Improvements exceed the amount of the Site Development Grant, the Developer shall be required to pay the excess amounts from other funds of the Developer and not from any other Agency source of funds or increases to the Site Development 4822-7696-9472.2 -11- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th. ML Vernon DDAdoc Grant. C. All disbursements of the Infrastructure Funds and the Site Development Grant shall be made by the Agency only (1) upon the receipt of a valid invoice, contract or purchase order for the particular expense item directly to the vendor or provider of the labor or materials in accordance with such invoice, contract or purchase order, or (2) as a reimbursement to the Developer with respect to the prior payment by the Developer of the items specified in (1) preceding, with verification to be provided by the Developer in the form of cancelled checks or other evidence of payment, together with a copy of the actual invoice, contract or purchase order, that all such amounts have been paid in accordance with an invoice, contract or purchase order that complies with the provisions of this Section 2.1. D. Any moneys attributable to the Infrastructure Funds or the Site Development Grant that remain undisbursed upon the issuance of the Certificate of Completion by the City as to the Improvements shall be retained by the Agency with no further obligations thereafter to disburse any of said amounts under this Agreement and such undisbursed moneys shall be retained by the Agency for other purposes of the Agency. 2.2 rRESERVEDl 2.3 rRESERVEDl 2.4 Fiscal Limitations Imposed Upon Agency By Provisions in the Bonds. The Joint Powers Authority has covenanted to maintain the tax-exempt status of the Bonds and to comply with other terms and conditions of the Indenture of Trust by and between the Joint Powers Authority and U.S. Bank, N.A., Trustee (the "Indenture"). The Agency proposes to comply with the terms and conditions of the Indenture and will assist in maintaining the tax-exempt status of the Bonds. In order to maintain the tax-exempt status of the Bonds, the Agency agrees, in accordance with the Internal Revenue Code, not to use more than ten percent (10%) of the proceeds of the Bond issue for any private business use, and not more than ten percent (10%) of the payment of principal of and interest on Bonds will be secured by an interest in, or payments in respect of, property used for a private business use. 2.5 Covenants of Developer Regarding Availability of Developer Equity Funds for the Project. Any money required in excess of the Construction Loan to fully pay all costs incurred in constructing the Improvements and operating the Project and pursuing the Project to completion shall be provided by the Developer in the form of Developer Equity Funds and the Construction Loan. 2.6 Evidence of Funds Sufficient to Initiate Construction of Improvements on the Site. A. In addition to the use of the Infrastructure Funds and the Site Development Grant as specified in Section 2.1 above, the Developer anticipates that the Developer's costs to construct the Improvements will not exceed Two Million Nineteen 4822-7696-9472.2 -12- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-]0 El Paseo-5th, Mt Vernon DDAdoc Thousand Dollars ($2,019,000) for which the Developer intends to obtain the Construction Loan for the payment of such costs for the construction of the Improvements. B. The obligation of the Agency to exercise its best efforts to complete the assembly of those Site Parcels and to cause the Site Transfer Escrow to be in a condition to close, is contingent upon and subject to confirmation by the Agency that the Developer has sufficient Developer Equity Funds for the Project, pursuant to Section 2.5, above. C. As of the date of this Agreement the Developer has provided the Agency with satisfactory evidence that the Developer is financially qualified to undertake the Project and to provide all funds through current cash available to the Developer and loan commitments sufficient to construct all Improvements on the Site. D. As a condition precedent to the execution of the Lease Agreement, and ninety (90) days prior to the execution of the Lease Agreement, the Developer shall submit to the Agency evidence reasonably satisfactory to the Executive Director that the Developer: (1) has obtained sufficient equity capital for the payment of the construction of Improvements on the Site; (2) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and firm and binding commitments for construction financing for the Project; and (3) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and firm and binding commitments for permanent financing; all as may be necessary for the payment of the full amount of the construction of the Improvements in accordance with this Agreement. In lieu of the foregoing, the Developer may submit evidence to the Agency that it has sufficient funds of its own for the purposes set forth in this Section, which evidence shall be acceptable to the Agency in its sole discretion. E. Any and all Developer financing for the redevelopment of the Project shall be obtained by the Developer from reputable, recognized and well-established financial institutions or lending sources including, but not limited to, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like. Whenever the source of financing for all or part of the development is from other than the Developer, the Developer shall promptly submit the following to the Agency: (1) Copies of all construction commitments received by the Developer; and (2) Proof of acceptance of each such loan commitment by the Developer and proof of payment of all up-front loan commitment fees, if any. F. The Executive Director shall approve or disapprove such documents and/or financing commitments or sources within fifteen (15) business days of receipt by the Agency of the documents and information required hereunder; provided, however, that the failure of the Executive Director to disapprove any of the foregoing matters in writing within said fifteen (15) business day period shall be deemed to constitute approval thereof. 4822-7696-9472.2 -13- P\Agendas\Agenda Auachments\Agflllts-Amend 2005\05-01-10 El Paseo-5th. Mt. Vernon DDAdoc G. In the event that by the latest date set forth in the Schedule of Performance, the Developer may not have submitted to the Agency the evidence of each of the financing commitments as set forth in this Section 2.6, then in such event either party may terminate this Agreement as provided in Section 7.3. 2.6.1 Lease of the Site bv the Agency to the Developer for Redevelopment. The Site is comprised of the lands described in this Agreement as the Properties as more fully set forth in Exhibit "A" and Exhibit "B" as the Phase I Properties. Each such separate legal parcel of land is referred to as a "Site Parcel", which shall be fully acquired by the Agency through negotiations for purchase and sale with Business Owners or by condemnation as a Condemnation Parcel. As of the date of approval of this Agreement by the governing board of the Agency, the Agency only owns Assessor Parcel Number 0138-115-03 within the Phase I Properties. The Agency also owns Assessor Parcel Numbers 0138-114-09 and 0138-114-18 in the Phase II Properties. The Agency does not own any other parcels other than and described herein. It is the intent of the Developer and the Agency that the Agency shall use its best efforts to acquire each of the Site Parcels directly from the current owners thereof by negotiated purchase, subject to the terms and conditions of the Agreement, in the event that following due and diligent effort, the Agency may not be able to directly acquire any such Site Parcel from the owner thereof, then the Agency shall consider the facts and evidence as presented to it in the manner required by law and then may authorize the exercise of the power of eminent domain to acquire such Site Parcel as a Condemnation Parcel. Nothing in this Agreement shall require the Agency to incur a cost or expense, which the Agency has determined, based upon its approved real property appraisal report for such Site Parcel, exceeds the fair market value for such Site Parcel. The obligation of the Developer to construct and complete the Improvements shall not arise until such time as the Site Transfer Escrow is in a condition to close, such assembly of each of the Site Parcels in the Site is completed and the execution of the Lease Agreement by the Agency and the Developer. If the necessary Site Parcels for the Site cannot be assembled, and the Site Transfer Escrow placed in a condition to close on or before December 31, 2005, subject to such extensions of time as may be approved by the Developer and the Agency, this Agreement shall be subject to termination by either party as provided in Section 7.3. 2.6.2 The Agency hereby agrees to exercise its best efforts to assemble such Site Parcels for the Phase I Site, and to lease such Site Parcels for the Phase I Site as the Agency may hereafter acquire to the Developer, pursuant to the Lease Agreement, and the Developer hereby agrees to: (1) pay the applicable Lease Payments to the Agency; and (2) cause the Improvements to be constructed on the Site following the Lease Closing in accordance with the CUP and the other provisions of this Agreement. 2.6.3 Commencing upon the approval of this Agreement by the governing board of the Agency, the Developer and Agency staff shall conduct regular meetings at the Agency offices to review the status of each of the following matters of mutual interest as applicable: 4822-7696-9472.2 -14- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th_ Mt. Vernon DDAdoc (1) Phase I Site assembly by the Agency; (2) the Developer Investigations; (3) the preparation of the CUP, and the submission of an application to the City for approval of a parcel map or the issuance of one or more certificates of subdivision compliance at the time of close of the escrow for the Phase I Site; and (4) review and confirmation of the dates and times set forth in the Schedule of Performance for the performance of certain obligations and satisfaction of various conditions precedent with respect to the redevelopment of the Project. 2.6.4 The Schedule of Performance, Exhibit "F" herein and incorporated by reference, sets forth various dates and times relating to the accomplishment of the various tasks for the satisfactory construction and completion of the Project by the Developer upon the close of the escrow for the Phase I Site. The parties agree and declare that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent in view of the large investment of resources, which both parties recognize will be required for the redevelopment of the Site and the undertaking of the Project. In the event that the date or time for the performance of a task set forth either in the text of this Section 2.6 or in the Schedule of Performance may not be achieved, then prior to such date or time set forth in the Schedule of Performance, the parties shall, as part of their consultations under Section 2.6.2, consider whether a modification to the Schedule of Performance may be indicated. Any decision to approve a modification to a time or date as provided in either this Agreement or the Schedule of Performance shall be subject to the sole discretion of each party. 2.6.5 The Developer and the Agency have jointly prepared and approved a Project Budget, which sets forth a detailed itemization and estimate of the costs of construction ofImprovements including a reasonable contingency reserve. 2.6.6 Provided the Agency commences acquisition of a Site Parcel, the Agency shall take all necessary and appropriate steps to provide for the relocation of occupants of each affected Site Parcel. The relocation of each such occupant of the affected portions of the Site shall be accomplished in accordance with the provisions of Government Code Section 7260, et ~., and other applicable law. 2.6.7 Prior to the time of the close of each Site Parcel Escrow, the occupant or occupants of the affected Site Parcel shall be given an appropriate written notice of displacement by the Agency which instructs the occupant to vacate the premises and surrender possession thereof to the Agency (or to the Developer, if applicable), within the following times: (1) ninety (90) days following the date of such notice of displacement, or (2) ninety (90) days following the close of such escrow; or (3) such other date designated by the Agency. Each notice of displacement shall advise the occupant that the Agency shall pay relocation assistance benefits to each qualifying occupant in accordance with applicable law. 4822-7696-9472.2 -15- P\Agendas\Agcncla Altachmenls\Agrlllls-Amclld 2005\05-01-10 El Paseo-5th. f\.1t Vernon DDAcloc 2.7 Site Parcel Escrows. 2.7.1 The Escrow Agent has served and shall continue to serve as the escrow agent for each Site Parcel Escrow, which the Agency has caused and may hereafter cause to be opened with one or more owners of the Site Parcels. The Agency shall be responsible for paying for all of the costs, fees and charges of the Escrow Agent in connection with the performance of its duties as escrow agent for each Site Parcel Escrow. 2.7.2 The Agency has reviewed and approved certain preliminary title reports for the particular Site Parcel (together with legible copies of the recorded exceptions to title noted in such report). The Agency has made offers to certain Business Owners and anticipates making offers to additional Business Owners for the acquisition of lien- free merchantable title of each respective Site Parcel, subject only to utility service easements and other matters approved by the Agency, and the possessory interests of month-to-month tenants in lawful possession of each such Site Parcel. 2.8 Conditions for Lease Closing and Lease Post-Closing. 2.8.1 The Developer shall not be obligated to execute the Lease Agreement and cause the Lease Closing to occur until the following conditions have been satisfied: (1) the Developer has approved the environmental condition of each Site Parcel; (2) the Agency shall have acquired fee title to the Phase I Site or shall have obtained an order for immediate possession in an action of condemnation for the acquisition of any Site Parcel within the Phase I Site: (3) the Agency shall have relocated all tenants, business owners, and business tenants and shall have caused all demolition of buildings, above ground and below ground structures to be removed, except below ground utility lines shall not be disturbed or removed by the Agency nor shall the Agency complete any level of soil compaction work; (4) the Agency has confirmed to the Developer the satisfaction of its conditions under Section 2.8.2; and (5) the Agency is not then in default under this Agreement. 2.8.2 The Agency shall not be obligated to execute the Lease Agreement and cause the Lease Closing to occur until the following conditions have been satisfied: (1) the Site Parcel Escrow has closed or is in a condition to close; 4822-7696-9472.2 -16- P:\Agendas\Agenda Attachmenls\Agrmts.Amend 2005\05-0)-10 E] Paseo-5th. Me Vernon DDAdoc (2) the Developer has confirmed to the Agency the satisfaction of its conditions under Section 2.8.1; (3) the Developer has delivered Evidence of Financing to the Executive Director of the Agency pursuant to Section 2.6 of this Agreement; and (4) the Developer is not then in default under this Agreement. 2.8.3 Upon Post-Closing of the Lease, and within thirty (30) days from the execution of the Lease between the Developer and the Agency, the Developer shall diligently pursue and apply for all requisite entitlements and approvals from the City for the Project including, but not limited to, the CUP and the Alley Vacation on terms and conditions reasonably acceptable to the Agency. The Agency, through the Executive Director of the Agency, reserves the sole and exclusive right to extend the terms of this condition 2.8.3. 2.8.4 Upon Post-Closing of the Lease, and within one hundred-twenty (120) days from the execution of the Lease between the Developer and the Agency, the Developer shall have been granted and shall have obtained all requisite entitlements and approvals from the City, in final form including, but not limited to, the CUP and the Alley Vacation for the Project on terms and conditions reasonably acceptable to the Agency, and has commenced the grading activities on the Phase I Site and the development of the Project. The Agency, through the Executive Director of the Agency, reserves the sole and exclusive right to extend the terms of this condition 2.8.4. 2.9 Obligation of the Agency to Provide Leasehold Interest. 2.9.1 As of the date of this Agreement, the Agency only owns fee title to Assessor Parcel Number 0138-115-03 within the Phase I Site; the Agency does not own fee title or have other equitable interest to any other Phase I Property. The parties intend that the Agency shall exercise its best effort to cause the condition of title in each Site Parcel as may hereafter be referred to it by the Developer for construction of Improvements to be in a marketable condition for the purposes of the redevelopment of the Project by the Developer. 2.9.2 If by July 31, 2005, the Agency is not able to provide marketable leasehold interest to the Developer, then either party may upon thirty (30) days written notice to the other party, which references this Section 2.9.2, terminate this Agreement. 2.10. Due Diligence Period and Developer Investigations. The Developer shall have thirty (30) days following the date of the opening of each Site Parcel Escrow to complete all of its Developer Investigations at its sole cost and expense. All of the tasks, work, review or analysis relating to its Developer Investigations of the condition and suitability of each Site Parcel including any intrusive testing or engineering study of the Site or intrusive sampling of any structure on the Site shall be subject to the applicable provisions of the Lease Agreement for the particular Site Parcel on which the Developer may hereafter undertake its Developer Investigations. The Agency makes no representation or warranty to the Developer relating to the 4822-7696-9472.2 -17- P:\Agendas\Agenda Attachmellls\Agrmts-Amend 2005\05-01-10 El raseo~5Ih. Ml Vernon DDA.doc suitability of Site or any Site Parcel or any Condemnation Parcel for use by the Developer. The Developer shall rely solely and exclusively upon the results of its Developer Investigations of the Site including geotechnical soil conditions and compliance with applicable laws pertaining to the use of the Site by the Developer and any other matters relevant to or arising from the suitability of the Site for the Project, including without limitation, a construction loan commitment in favor of the Developer from a third party construction lender on terms satisfactory to the Developer, as the Developer may deem necessary and proper. ARTICLE III 3.1 Agreement to Subordinate to Construction Loan. The Agency agrees to subordinate the Lease Agreement to the Construction Loan Deed of Trust as provided in this Section 3.1, subject to the satisfaction of the following conditions: 3.1.1 The maximum principal amount of the Construction Loan shall not exceed Two Million Nineteen Thousand Dollars and No Cents ($2,019,000.00); 3.1.2 At the time of the Agency's execution ofa subordination agreement, there shall be no default of the Developer under this Agreement; 3.1.3 No provision of the subordination agreement shall require the Agency to waive or suspend their rights to receive payments pursuant to the Lease Agreement, when due, or enforce any right of the Agency under this Agreement, including without limitation, the enforcement of the Minimum Assessed Valuation Covenant (as said term is defined in Section 6.4) in the event of a default by the Developer under this Agreement; and in the event of a default by the Developer under the Construction Loan or this Agreement, no provision of the Construction Loan shall require the Agency to first obtain the consent of such Construction Lender before the Agency may assert any such remedy against the Developer or realize upon the value of any security given by the Developer to the Agency under this Agreement; 3.1.4 The Construction Loan Documents shall contain provisions reasonably satisfactory to the Agency, which assure the Agency that: (1) an independent lender's disbursement control service shall be used to perform the customary functions of a construction lender disbursement control and payment verification; (2) the Construction Lender, and the construction lender disbursement control service, shall require the Developer to provide the Construction Lender as part of each application for a disbursement of funds under the Construction Loan for labor performed on the Site, a written certification (with a copy to the Agency) that all labor and construction trades personnel employed by either the Developer or the Developer's contractors and all subcontractors of either of them who perform work on the Site have been paid not 4822-7696-9472.2 -18- P\Agendas\Agenda Attachmellts\Agrmls-Amend 2005\05-01-10 EI Paseo-5th. Mt. Vernon DDAdoc less than "prevailing wages" as this term is defined under Labor Code Section 1720, et seq., and applicable federal law. 3.2 Agreement to Subordinate to Permanent Financing. subordinate the Lease Agreement to a permanent loan and deed satisfaction of the following conditions: The Agency agrees to of trust, subject to the 3.2.1 The maximum principal amount of the permanent loan shall not exceed the lesser of (1) the aggregate sum of the outstanding amount owed under the Construction Loan expended directly on the Project or (2) Two Million Nineteen Thousand Dollars and No Cents ($2,019,000.00); and 3.2.2 At the time of the Agency's execution of a subordination agreement for the permanent loan, there shall be no default of the Developer under this Agreement or the Construction Loan Documents. ARTICLE IV OPTION TO LEASE PHASE II SITE 4.1 Exercise of Option to Lease Phase II Site. A. In the event the Developer at anytime after the completion of the Project upon the Phase I Site elects to proceed with the expansion of the Project on the Phase II Site, but in any event on or before December 31, 2007, the Agency and the Developer shall negotiate in good faith in the attempt to determine the economic feasibility of proceeding with a Phase II Site development and determining all procedural and economic factors with respect thereto. The Developer may at anytime after the issuance of a Certificate of Occupancy by the City for the Project deliver a notice to the Agency stating that the Developer does thereby exercise its option to proceed with the negotiation for the expansion of the Project on the Phase II Site. Neither party shall be bound to unconditionally agree to any elements of a disposition and development agreement, lease agreement or any other similar project agreement or financing document except at their sole and absolute discretion. B. In the event the Agency seeks to develop the Phase II Site for other uses or has another proposal for the development thereof, the Agency shall give the Developer notice of such substitute use for the Phase II Site and the Developer shall have thirty (30) calendar days to either exercise its option to lease the Phase II Site or to forever thereafter relinquish any development rights that the Developer may have as to the Phase II Site. If the Developer should provide the notice to the Agency that the Developer thereby elects to exercise its option to develop the Phase II Site, in the event a final and binding agreement is not executed and approved by and between the Developer and the Agency within one hundred eighty (180) calendar days after the delivery of the notice of election to exercise the option to lease the Phase II Site, the Developer shall thereafter forever relinquish any and all rights for any use or development of the Phase II Site. Thereafter, the Agency shall be permitted to enter into such agreements with any other private parties or public entities for the use of the Phase II Site 4822-7696-9472.2 -19- P\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-0]-10 EI Paseo-5th. Ml. Vernon DDAdoc without any further restrictions being imposed pursuant to either this Agreement or the Lease Agreement. ARTICLE V DEVELOPER'S REPRESENTATIONS AND WARRANTIES 5.1 The Developer represents and warrants to the Agency, as follows: A. Organization of Developer; Authority to Enter Into Agreement. Developer is a corporation organized and existing under the laws of the State of California. Each individual executing this Agreement on behalf of the Developer represents and warrants that they are duly authorized to execute and deliver this Agreement on behalf the corporation in accordance with the Developer's Articles ofIncorporation and Bylaws, as in effect on the date of their execution and delivery of this Agreement. This Agreement and all documents referenced in or attached to this Agreement will when executed and delivered, constitute valid and binding obligations of the Developer, each enforceable in accordance with their terms. B. Proiect Budget. The Project Budget is true and correct in all material respects and was prepared by the Developer in accordance with generally accepted construction budget estimation practices and commercial development project accounting principles. C. Operating Costs Budget. The Operating Costs Budget is true and correct in all material respects and was prepared by the Developer in accordance with generally accepted construction budget estimation practices and commercial development project accounting principles. D. Compliance with Agreements. The execution, delivery and performance of this Agreement and all documents referenced in or attached to this Agreement does not and will not constitute a breach or default under any other agreements, law or court order by which the Developer is or may be bound or affected or which may affect the Site or the construction, use, occupancy or operation of all or any part of the Improvements. E. Prohibited Interest of Officials and Employees of Agency and Developer. No member of the governing board of the Agency nor any other officer or employee of the Agency, or their agents during their tenure, employment or engagement, and for one (1) year thereafter, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed pursuant to this Agreement. The Developer shall incorporate or cause to be incorporated, in all contracts and subcontracts relating in any manner to the construction of the Improvements, a provision prohibiting such interests. F. Labor Standards Provisions. The Developer and each of its contractors and all subcontractors engaged under contracts in excess of ONE THOUSAND DOLLARS ($1,000) for the construction, alteration, and/or repair of the Improvements shall comply with State of California Labor Code Sections 1720, et seq., pertaining to public works projects and the applicable requirements of the regulations of the State of California Department of Industrial Relations under Title 8 California Code of Regulations Sections 16000, et seq., governing the 4822-7696-9472.2 -20- P\Agcndas\Agenda Attachlllcnts\Agrmls-Amend 2005\05-01-10 El Pasco-5th_ Ml. Vernon DDAdoc payment of wages and the ratio of apprentices and trainees to journeymen. If wage rates higher than those required under such regulations are imposed by the State of California, nothing in this Agreement shall relieve the Developer of its obligation to require payment by its contractors and subcontractors of such higher wage rates. The Developer shall instruct in writing each contractor and subcontractor engaged to perform construction work related to the Improvements, or such portion thereof as constructed or installed by such person, to keep accurate payroll records for the Improvements as provided in Labor Code Section 1776. The Developer for itself and for each such contractor and subcontractor engaged for the construction of the Improvements shall cause to be delivered to the Agency a certified copy of the payroll records enumerated in Labor Code Section 1776(a) related to the Improvements performed by the Developer, contractor or subcontractor, as applicable, within ten (10) days after receipt of a written request from the Agency for a certified copy of such records. The Developer shall provide the Agency promptly upon its written request with a current listing of all contractors and subcontractors who are engaged in connection with construction ofthe Improvements on the Site. G. No De-Barred Contractors. The Developer shall not utilize or allow to be utilized in the construction of the Improvements any contractor or sub-contractor that is ineligible to bid on or perform such work under the provisions of any applicable regulations of the State of California Department of Industrial Relations or the United States Department of Labor. H. Nondiscrimination Requirements. The Developer is subject to all applicable requirements of the following Acts, promulgations and regulations with respect to its activities under this Agreement: (1) Title VI of the Civil Rights Act of 1964 (P.L. 88-352) and the regulations issued pursuant thereto (24 CFR Subtitle A, Part 1), which provides that no person in the United States shall on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity for which the applicant receives federal financial assistance and will immediately take any measures necessary to effectuate this assurance. Where the federal financial assistance is to provide or is in the form of personal property or real property interest or structures thereon, this assurance shall obligate the applicant, or in the case of any transfer of such property, any transferee, via the instrument effecting any disposition by the applicant or transferee, in the case of a subsequent transfer, of such real property, structures or improvements thereon, or interest therein, to require a covenant running with the land assuring nondiscrimination for the period during which the real property or structure is used for a purpose for which the federal financial assistance is extended or for another purpose involving the provision of similar services or benefits, or for as long as the applicant retains ownership or possession of the property, whichever is longer. Under this assurance the United States shall have the right to seek its judicial enforcement. The Developer is required to take all measures necessary to effectuate this Title in the manner set forth in Section 1.5 of the above-mentioned regulation. (2) Title Vlll of the Civil Rights Act of 1968 (P.L. 90-284) as amended, administering all programs and activities relating to housing and community development in a manner to affirmatively further fair housing; and requiring action to 4822-7696-9472.2 -21- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 E] Paseo-5th. Me Vernon DDAdoc affirmatively further fair housing in the sale, lease or rental of housing, the financing of housing, and the provision of brokerage services within the jurisdiction of the City. (3) Executive Order 11063, as amended, and the regulations issued pursuant thereto (24 CFR Part 107) which require that all actions necessary and appropriate be taken to prevent discrimination because of race, color, creed, or national origin in the sale, rental, leasing or other disposition of residential property and related facilities or in the use or occupancy thereof where such property or facilities are owned or operated by the federal government, or provided with federal assistance by HUD, and in the lending practices with respect to residential property and related facilities of lending institutions insofar as such practices relate to grants insured, guaranteed or purchased by HUD. 1. Equal Employment Opportunity. During the course of the planning, design, and construction of the Improvements, and during subsequent operation of the Improvements and the Site, the Developer shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Developer shall take affirmative action to insure that applicants for employment are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such affirmative action shall pertain to, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of payor other forms of compensation; and the selection for training, including apprenticeship. The Developer shall post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Agency setting forth the provisions of this nondiscrimination clause. The Developer shall state, through such nondiscrimination clause, that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. Except as otherwise provided for in Parts II, III and IV of Executive Order 11246, dated September 24, 1965, as amended, and in attendant Code of Federal Regulation provisions, the Developer shall require to be included in each contract entered into by the Developer and modification thereof, if not included in the original contract, the "Equal Opportunity" clause contained in Section 202 of Executive Order 11246 (48 CFR 52.222-26). The Developer agrees that it shall assist and cooperate actively with the Agency, HUD and the Secretary of Labor in obtaining the compliance of contractors and subcontractors with the equal opportunity clause and the rules, regulations, and relevant orders of the Secretary of Labor; that it will furnish the Agency such information as they may require for the supervision of such compliance; and that it will otherwise assist the Agency in the discharge of their primary responsibilities for securing compliance. The Developer agrees that it will refrain from entering into any contract or contract modification subject to Executive Order 11246 of September 24, 1965, with a contractor debarred from, or who has not demonstrated eligibility for, government contracts and federally assisted construction contracts pursuant to the Executive Order and will carry out such sanctions and penalties for violation of the equal opportunity clause as may be imposed upon contractors and subcontractors by the Secretary of Labor pursuant to Part II, Subpart D of the Executive Order. 1. Incorporation of Representations and Warranties. The Developer's submission or consent to the submission of any Grant Disbursementwritten Rrequest for disbursements of the Infrastructure Funds and the Site Development Grant under this Agreement 4822-7696-9472.2 -22- P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2005\05-01-10 El Paseo-5th_ Mt. Vernon DDAdoc shall constitute a certification by the Developer that the each of the representations and warranties set forth in this Article IV are true and correct in all material respects as of the date of such request. K. Survival of Representations and Warranties. All of the representations and warranties contained in this Article IV shall be true and correct in all material respects from the date of this Agreement until the Lease Agreement is terminated. L. Continuing Accuracy. During the entire term of this Agreement, the Developer shall promptly notify the Agency of any event that would render any of the representations or warranties in this Article V untrue or misleading in any material respect. ARTICLE VI SPECIAL COVENANTS OF THE DEVELOPER 6.1 General. From the date of this Agreement and continuing until such time as a Certificate of Completion is issued to the Developer under the Lease Agreement, the Developer covenants and agrees that it will: A. Promptly pay principal and interest and all other sums falling due under the Construction Loan (and later the permanent loan) as and when the same become due and payable; B. Maintain, preserve and keep its personal property and equipment situated on the Site in good repair, working order and condition and from time to time make all needful and proper repairs, renewals, replacements and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained; C. Pay when due and before any penalty attaches all general taxes and all special taxes, special assessments, water charges, drainage and sewer charges and all other charges of any kind whatsoever, ordinary or extraordinary which may be lawfully levied, assessed, imposed or charged on or against the Site or the Improvements, and will, upon written request, provide the Agency official receipts evidencing such payments; D. Agreement; and Obtain and maintain the insurance coverage required in Section 6.2 of this E. Pay all taxes, filing and recording expenses (including stamp taxes, if any), all title insurance charges, all escrow fees and expenses, all appraisal fees and expenses, if any, the fees and commissions lawfully due to brokers and consultants in connection with the transactions contemplated in this Agreement. 6.2 The Developer, to protect the Agency, its governing board, commissions, agents, officers, employees and authorized representatives, against all claims and liability for death, injury, loss and damage resulting from the Developer's actions in connection with the use and disbursement of the Infrastructure Funds, the Site Development Grant, the development and operation of the Site, and the construction and operation of the Improvements, shall secure and 4822-7696-9472.2 -23- P:\Agendas\Agenda Attachmcllts\Agrmts-Amend 2005\05-01-10 El Paseo-5th Mt Vernon DDA,doc maintain insurance, as described below. No Grant Disbursement of the Infrastructure Funds or the Site Development Grant shall be paid to the Developer, until the Developer provides the required policies and/or certificates evidencing the insurance required by this Agreement to the Agency and the Agency approves such evidence of insurance. The Developer shall pay any deductibles and self-insured retentions under all insurance policies in satisfaction of the terms of this Agreement. A. Workers' Compensation Insurance Requirement. The Developer shall submit written proof that the Developer is insured against liability for workers' compensation in accordance with the provisions of section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by section 1861 of the Labor Code: "I, the undersigned authorized representative of the Developer, am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement. " The Developer shall require each contractor and sub-contractor to provide workers' compensation coverage for all of such contractor's or sub-contractor's employees, unless the employees of the contractor or sub-contractor are covered by workers' compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Improvements is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate workers' compensation insurance covering such employees. B. Liability and Permanent Insurance Requirements. (1) The Developer shall maintain in full force and effect, at all times during the term of this Agreement, the following insurance: (a) Commercial General Liability Insurance. Commercial General Liability Insurance coverage shall include, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically concerning the indemnity provisions of this Agreement), Products-Completed Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Improvements and/or the Developer's operation of the Site or the Improvements. Said insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. (b) Automobile Liability Insurance. Automobile Liability Insurance shall include, but is not limited to, coverage against claims of Personal Injury 4822-7696-9472.2 -24- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 E] Paseo-5th. Mt. Vernon DDAdoc (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and ONE MILLION DOLLARS ($1,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. (c) Consultant Coverage. If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Improvements, the Developer shall require such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000). (d) Fire and Extended Coverage. Upon acceptance of the Improvements by the Developer, or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance on the Improvements on a blanket basis or with an agreed amount clause in amounts not less than one hundred percent (100%) of the replacement value of the Improvements so accepted. C. Construction Period Coverage. During the construction of the Improvements, the Developer shall require that all contractors performing work on the Improvements maintain the following insurance coverage at all times during the performance of said work: (1) Builder's Risk Insurance. Builder's Risk Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Improvements. (2) Commercial General Liability Insurance. Commercial General Liability Insurance shall include limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Improvements from claims involving bodily injury and/or death and damage to the property of others. (3) Automobile Liability Insurance. Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor's obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and ONE MILLION DOLLARS ($1,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. D. The Commercial General Liability Insurance required in sub-paragraph B, above, shall include an endorsement naming the Agency, the Agency's board members, HUD, and their officials, officers, agents, and employees as additional insureds for liability arising out of this Agreement and any operation related to this Agreement. 4822-7696-9472.2 -25- P\Agendas\Agenda Anachments\Agrlllb-Amend 2005\05-0]-10 El Paseo-5th_ ~11 Vernon DDAdoc E. If any of the insurance coverage required under this Agreement is written on a claims-made basis, such insurance policy shall provide an extended reporting period continuing through the fifth (5th) anniversary of the date of acceptance of the Improvements by the Developer. F. Receipt of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement. G. The above stated insurance coverage shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the completion of all of the Developer's obligations under this Agreement, and shall not be reduced, modified, or canceled without thirty (30) days' prior written notice to the Agency. Also, phrases such as "endeavor to" and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall not be included in the cancellation wording of any Certificates of Insurance or any coverage for the Agency, the Agency's board members, its officials, agents, and employees. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy. H. All insurance to be obtained and maintained by the Developer under this Agreement shall be issued by a company or companies listed in the current "Best's Key Rating Guide, Property/Casualty" publication with a minimum of a "B+/VII" rating and be a California admitted insurance company. I. If the Developer is or becomes self-insured, during the term of this Agreement, the Developer shall provide coverage equivalent to the insurance coverages and endorsements required above. The Agency will not accept such coverages unless the Agency determines, in its sole discretion and by written acceptance, that the coverage proposed to be provided by the Developer is equivalent to the above-required coverages. A determination by the Agency that proposed self-insurance coverage is not equivalent to required coverages will be communicated to the Developer in writing by the Agency, along with the reasons for such determination. J. All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any other insurance maintained by the Agency. K. Insurance coverage in the minimum amounts set forth in this Agreement shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Agency from taking such other actions as are available to it under any other provision of this Agreement or otherwise at law. L. Failure by the Developer to maintain all insurance required by this Agreement in effect at all times shall be an Event of Default by the Developer. The Agency, at 4822-7696-9472.2 -26- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 E] Paseo-5tn. Mt Vernon DDA.doc its sole option, may exercise any remedy available to it in connection with such an Event of Default. Additionally, the Agency may purchase such required insurance coverage and the Agency shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the Agency for such insurance. Any election by the Agency not to purchase insurance for the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement. 6.3 Construction Start and Completion of Improvements. The Developer shall commence construction of the Improvements within thirty (30) days following the granting of all entitlements and applications from the City including, but not limited to, the CUP and the Alley Vacation, and thereafter shall diligently proceed to complete the construction of Improvements, in a good and workmanlike manner in accordance with the Plans. The Improvements shall be completed within one hundred eighty (180) days following the Lease Closing (the "Completion Date"), subject to reasonable extensions at the sole and exclusive discretion of the Executive Director of the Agency. The Agency acting by and through its Executive Director may extend the Completion Date for up to an additional one hundred eighty (180) days. The Developer will, promptly upon completion of the Improvements, cause the Improvements to be inspected by each governmental body with jurisdiction over the Site or the Improvements, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Improvements. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses and authorizations on or before the Completion Date. After commencement of the work of construction of the Improvements, the Developer shall not permit the work of construction of the Improvements to cease or be suspended for a time period in excess of thirty (30) calendar days, either consecutively or in the aggregate, for any reason. Notwithstanding the foregoing, such thirty (30) calendar day period may be extended by the Agency acting by and through its Executive Director, up to an additional aggregate maximum of ninety (90) calendar days upon the occurrence of an Unavoidable Delay; provided, however, that the Developer has notified the Agency of such asserted Unavoidable Delay within ten (10) days of the occurrence of such asserted Unavoidable Delay and an Unavoidable Delay shall automatically extend scheduled performance obligations for a period of time equal to the time lost due to the occurrence of such Unavoidable Delay. For the purposes of this Section 6.3, an Unavoidable Delay shall have the meaning set forth in Section 8.15.B, herein. 6.4 Minimum Assessed Valuation of the Site with the Improvements. The Developer covenants to and for the benefit of the Agency that, upon completion of the construction of the Improvements, the Site and the Improvements shall, collectively, be assessed by the Assessor of the County of San Bernardino, for general property tax purposes, at a minimum assessed value of Two Million Five Hundred Thousand Dollars and No Cents ($2,500,000.00) (the "Minimum Assessed Value"). If, upon completion of the construction of the Improvements, the Site and the Improvements are, collectively, assessed by the Assessor of the County of San Bernardino, for general property tax purposes, at a value less than the Minimum Assessed Value, the Developer shall pay to the Agency the dollar amount of the difference between the property tax revenues received by the Agency from the property taxes assessed against the Site and the Improvements and the amount of property tax revenues that would have been received from the property taxes 4822-7696-9472.2 -27- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-5th. Mt. Vernon DDA.doc assessed against the Site and the Improvements, if the Site and the Improvements were assessed at the Minimum Assessed Value. This Minimum Assessed Value covenant of the Developer shall be evidenced by the recording in the official records of the Recorder of the County of San Bernardino of a "Minimum Assessed Valuation Covenant", in substantially the form as attached to this Agreement as Exhibit "G". The Developer agrees to execute the Minimum Assessed V aluation Covenant, by and through the signatures of its duly authorized representatives, with notary acknowledgments of each such signature. The Developer further authorizes the Agency to record the Minimum Assessed Valuation Covenant in the official records of the Recorder of the County of San Bernardino against the Site and the Improvements or any portion thereof. The recorded Minimum Assessed Valuation Covenant shall be in first position against the Site and the Improvements, superior to any other security interests in the Site or the Improvements, including the Construction Loan Deed of Trust and the Construction Loan Documents. The Agency shall not subordinate its interests in the recorded Minimum Assessed Valuation Covenant. 6.5 Minimum Sales Tax Covenant. The Developer covenants to, and for the benefit of the Agency that, upon completion of the construction of the Improvements, the Site and the Improvements shall, collectively, generate in gross retail sales, as maintained by the State Board of Equalization, at Five Million Dollars ($5,000,000.00) for each and every year of operation of the Project pursuant to the Lease Agreement, until the expiration of the Lease Agreement, regardless of whether the Term of Lease Agreement is extended (the "Minimum Sales Tax"). If, upon completion of the construction of the Improvements, the Site and the Improvements are, collectively, as determined by the State Board of Equalization, at a value less than the Minimum Sales Tax, the Developer shall pay to the City the dollar amount of the difference between the sales tax revenues actually received by the City and generated by the Improvements and the Site and the Improvements and the amount of sales tax revenues that would have been received from the sales taxes generated by the Improvements, if the Site and the Improvements were assessed at the Minimum Sales Tax. This Minimum Sales Tax Covenant of the Developer shall be evidenced by the recording in the official records of the Recorder of the County of San Bernardino of a "Minimum Sales Tax Covenant", in substantially the form as attached to this Agreement as Exhibit "H". The Developer agrees to execute the Minimum Sales Tax Covenant, by and through the signatures of its duly authorized representatives, with notary acknowledgments of each such signature. The Developer further authorizes the Agency to record the Minimum Sales Tax Covenant in the official records of the Recorder of the County of San Bernardino against the Site and the Improvements or any portion thereof. The recorded Minimum Sales Tax Covenant shall be in first position against the Site and the Improvements, superior to any other security interests in the Site or the Improvements, including the Construction Loan Deed of Trust and the Construction Loan Documents. The Agency shall not subordinate its interests in the recorded Minimum Sales Tax Covenant. 6.6 Recordation of Construction Loan Deed of Trust. The Developer covenants to the Agency that the Developer shall cause the Construction Loan Deed of Trust to be recorded against the Site, within thirty (30) days after the Lease Closing. 6.7 Construction Inspections. The Agency and its representatives shall have the right at all reasonable times during regular business hours (and at any time in the event of an 4822-7696-9472.2 -28- P\Agendas\Agenda Anachments\Agrmls-Amend 2005\05-01-10 El Paseo-5th, Mt Vernon DDAdoc emergency) to enter upon the Site and inspect the work of construction of the Improvements to determine that the same is in conformity with the Plans and all of the requirements of this Agreement. If in the Agency's reasonable judgment it is necessary, the Agency shall have the further right, from time to time, to retain a consultant or consultants, at the Developer's expense, to inspect the work and verify compliance by the Developer with the provisions of this Agreement. The Developer understands and agrees that any such Agency inspections are for the sole purpose of protecting the interests of the Agency in the Phase I Site and are made solely for the Agency's benefit and that the Agency's inspections may be superficial and general in nature, primarily to inform the Agency of the progress of construction of the Improvements and that the Developer shall not be entitled to rely on any such inspection or inspections as constituting the Agency's approval, satisfaction or acceptance of any materials, workmanship, conformance to the Plans or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Improvements to determine that the quality of the Improvements and all other requirements of the work of construction of the Improvements are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the Agency in writing should the Developer's inspections show any work to be unsatisfactory in any manner. Without limiting the foregoing, the Developer shall permit the Agency to examine and copy all books and account records and other papers relating to the Site and the construction of the Improvements; and the Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the Agency to enable such examination. 6.8 Compliance with Laws. All work performed in connection with the Improvements shall comply with all applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or which may be enacted hereafter, and with all applicable directions, rules and regulations of the fire department, health department, building department or other departments of every governmental agency now having or hereafter acquiring jurisdiction over the Site or construction or operation of the Improvements. 6.9 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 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 hereby 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 sixty (60) days written notice to the Developer of the Agency's intent to terminate this Agreement, referencing this Section 6.9, 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 4822-7696-9472.2 -29- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-]0 El Paseo-5th. Mt. Vernon DDA.doc 6.9. Within thirty (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. 6.10 Developer Indemnification of the Agency. The Developer agrees to indemnify, defend (upon written request by Agency) and hold harmless the Agency, its governing board, commissions, agents, officers, employees, attorneys and authorized representatives, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney's fees of counsel retained by the Agency, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, which are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer's officers, agents, employees, independent contractors, subcontractors of any tier, or authorized representatives, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, or any authority or obligation exercised or undertaken by the Developer under this Agreement. Without limiting the generality of the foregoing, the Developer's obligation to indemnify the Agency shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Agency, any workers' compensation claim or suit or any other matter arising from or connected with any services performed pursuant to the Agency Infrastructure Funds, the Site Development Grant, the Improvements or the Site on behalf of Developer by any person or entity. 6.11 Notice of Agreement. The Developer agrees to execute in recordable form the Notice of Agreement, including notary acknowledgement ofthe signatures of the duly authorized representatives of the Developer executing the Notice of Agreement. The Developer also authorizes the Agency to record the Notice of Agreement in the official records of the Recorder of the County of San Bernardino against the Phase I Site, or any portion thereof, immediately upon the execution by the Developer of the Lease Agreement. 6.12 Permanent Financing and Future Refinancings. The Developer shall obtain a permanent loan to re-finance the Construction Loan, upon completion of the Improvements, in an amount not to exceed the aggregate sum of the outstanding amount owed under the Construction Loan expended directly on the Project or Two Million Nineteen Thousand Dollars ($2,019,000), whichever is less, plus customary and reasonable expenses directly related to obtaining any such permanent loan ("Permanent Financing"). At any time during the term ofthis Agreement, the Developer may also seek to refinance the Permanent Financing and obtain more favorable rates ("Future Refinancings"). Any proceeds of any such Permanent Financing or Future Refinancings obtained by the Developer in excess of the limitations set forth in this 4822-7696-9472.2 -30- P-\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-5th Mt Vernon DDA.doc section 6.12 shall be deemed to be proceeds of sale or refinancing of the Site or the Improvements and shall be paid immediately upon receipt by the Developer to the Agency. 6.13 Environmental Indemnity of the Agency by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the Agency, which approval shall not be unreasonably withheld) the Agency and its trustees, elected officials, officers, attorneys, agents and employees and each of them, 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, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages of any kind or of any nature whatsoever (collectively, "Losses") that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Agency directly or indirectly relating to or arising from any of the following "Environmental Matters" existing or occurring during or arising from the Developer's ownership of the Site or the Improvements or construction or operation of the Improvements: A. The presence of Hazardous Materials on, in, under, from or affecting all or any portion of the Site or the Improvements; B. The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under, from or affecting the Site or the Improvements; C. The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Materials on, in, under, from or affecting the Site or the Improvements; D. The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer's activities on the Site or regarding the Improvements; E. The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardous Materials on, in, under, from or affecting the Site or the Improvements; F. The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Materials existing, stored or generated on, in, under or from the Site or the Improvements; G. Any investigation, inquiry, order, hearing, action or other proceeding by or 4822-7696-9472.2 -31- P:\Agendas\Agenda Attachmellts\Agrmts-Amend 2005\05-01-10 El Paseo-5th_ ~'- Vernon DDAdoc before any governmental agency in connection with any Hazardous Materials on, in, under, from or affecting the Site or the Improvements or the violation of any Environmental Law relating to the Site or the Improvements; H. The Developer shall pay to the Agency all costs and expenses including, without limitation, reasonable attorneys fees and costs, incurred by the Agency in connection with enforcement of the aforementioned environmental indemnity. 6.14 Final Proiect Budget Audit By Agency. A. Within ninety (90) days following the date of the issuance by the City of a Certificate of Completion for the Project, the Developer shall prepare and deliver to the Agency a suitably detailed written accounting of Final Project Budget. Such an accounting shall be prepared in accordance with generally acceptable principals of accounting. B. The Agency shall have the right at its own cost and expense, to conduct an audit of the Developer's books and accounting records relating to Actual Project Costs. Such an audit by the Agency shall be undertaken and completed, subject to the cooperation of the ARTICLE VII DEFAULT AND REMEDIES 7.1 Event of Default. The occurrence of any of the following events shall constitute an Event of Default under this Agreement: A. Any default by the Developer under the Construction Loan Documents for any purpose or reason. B. Any breach by the Developer of any of the non-monetary covenants and conditions of this Agreement, other than the covenant of the Developer in Section 6.6, that is not cured to the Agency's reasonable satisfaction within thirty (30) days following written notice of the breach to the Developer from the Agency or the expiration of an applicable shorter cure period set forth in this Agreement. C. in Section 6.6. Any failure of the Developer to satisfy the Developer's covenant set forth D. Any representation, warranty or disclosure made to the Agency by the Developer regarding this Agreement is materially false or misleading, whether or not such representation or disclosure appears in this Agreement. E. The Developer fails to make any payment or deposit of funds required under this Agreement or to pay any other charge set forth in this Agreement, following seven (7) days' written notice to the Developer from the Agency of such failure. 4822-7696-94722 -32- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th. ML Vernon DDAdoc F. Any material deviation in the work of construction of the Improvements from the Plans, without the prior written approval of the Agency, or the appearance of defective workmanship or materials and such defects are not corrected or substantially corrected within thirty (30) days after receipt of written notice thereoffrom the Agency to the Developer. G. Any of the Improvements encroach over the Site or setback lines or violate any easement rights, or any structure upon adjoining lands encroaches upon the Site and the condition is not corrected within thirty (30) days following written notice of such encroachment or violation to the Developer from the Agency. H. The work of construction of the Improvements is delayed or suspended for a period in excess of that permitted under Section 6.3 of this Agreement; or the work of construction of the Improvements does not proceed with due diligence, subject to the occurrence of an Unavoidable Delay; or the work of construction of the Improvements is not completed by the Completion Date. 1. A stop notice is served on the Agency and is not released or an acceptable counter-bond provided to the Agency within ten (10) days of the Developer's receipt of written notice from the Agency that such stop notice was served on the Agency. 1. There occurs any event: (1) of dissolution or termination of the Developer or its general partner(s), (2) that adversely and materially affects the business or financial condition of the Developer, or (3) that adversely and materially affects the operation or value of the Site or the Improvements, and such event is not corrected within five (5) days following written notice of such event from the Agency to the Developer. K. The discovery of Hazardous Materials or toxic substances on, under or about the Site or the Improvements in violation of applicable laws or ordinances that makes the Improvements impossible to construct or complete. 1. The Developer sells, transfers, hypothecates, encumbers or assigns its ownership interest in the Site or the Improvements, or any portion thereof, whether voluntarily or involuntarily or by operation oflaw, without the prior written consent of the Agency. M. Either the ARC 0 Service Station, the AM/PM Mini Market, or a self- service car wash fails to obtain a Temporary Certificate of Occupancy from the City for the applicable leasehold space in the completed Improvements, as set forth in each of their leases with the Developer, within sixty (60) days of recordation of a Notice of Completion for the Improvements. 7.2 Remedies. Upon the occurrence of an Event of Default, the Agency may, in addition to any other remedies that the Agency has under this Agreement, at law or in equity, at its option and without prior demand or notice, take any or all of the following actions: 4822-7696-9472.2 -33- P \Agendas\Agenda Anachments\Agrmts-Amend 2005\05.01-10 E[ Paseo-5th_ Mt Vernon DDAdoc A. Enter upon the Site and complete construction of the Improvements in accordance with the Plans, with such changes as the Agency may from time to time and in its judgment deem appropriate, all at the risk and expense of the Developer. The Agency shall have the right, at any time, to discontinue any work commenced by it in respect to the Improvements or to change any course of action undertaken by it and not be bound by any limitations or requirements of time, whether set forth in this Agreement or otherwise. The Agency shall have the right and power (but not the obligation) to assume any construction contract made by or on behalf of the Developer in any way relating to the Improvements and to take over and use all or any part of the labor, materials, supplies and/or equipment contracted for by or on behalf of the Developer, whether or not previously incorporated into the Improvements, all in the discretion of the Agency. In connection with any work of construction undertaken by the Agency pursuant to the provisions of this Section 7.2.A., the Agency may (1) engage builders, contractors, architects, engineers and others for the purpose of furnishing labor, materials and equipment in connection with the work of construction, (2) pay, settle or compromise all bills or claims that may become liens against the Site or the Improvements or that have been or may be incurred in any manner in connection with completing construction of the Improvements or for the discharge of liens, encumbrances or defects in title of the Site, (3) take such other action, including the employment of watchmen to protect the Site or the Improvements, or refrain from taking action under this Agreement as the Agency may in its discretion determine from time to time. The Developer shall be liable to the Agency for all sums paid or incurred for completing construction of the Improvements, whether the same shall be paid or incurred pursuant to the provisions of this Section 7.2.A. or otherwise, and all payments made or liabilities incurred by the Agency of any kind whatsoever shall be paid by the Developer to the Agency upon demand, with interest at the maximum rate allowed by applicable law. For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted by this Section 7.2.A., the Developer unconditionally and irrevocably constitutes and appoints the Agency its true and lawful attorney- in-fact to enter into such contracts, perform such acts and incur such liabilities as are referred to in this Section 7.2.A. in the name and on behalf of the Developer. This power of attorney is coupled with an interest. B. Where substantial deviations from the Plans appear that have not been approved by the Agency, as required in this Agreement, or defective or unworkmanlike labor or materials are being used in the construction of the Improvements, or upon receipt of knowledge of encroachments to which there has been no consent by the Agency, the Agency shall have the right to immediately order the stoppage of further construction on the Improvements and demand that such condition(s) be corrected. After issuance of such a stop order in writing, no further work shall be done on the Improvements, except for such work of correction, without the prior written consent of the Agency, unless and until said condition is fully corrected. C. The Agency, in its sole and absolute discretion, may elect to cure any Event of Default. The Developer unconditionally and irrevocably constitutes and appoints the Agency its true and lawful attorney-in-fact to assume any contracts, perform any acts and incur 4822-7696-9472.2 -34- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 E] Paseo-5th. Mt. Vernon DDAdoc any liabilities in furtherance of the Project, as referred to in this Section 7.2.C. in the name and on behalf of the Agency. This power of attorney is coupled with an interest. 7.3 Termination of Agreement. A. The Developer may terminate this Agreement in its sole discretion at any time prior to the Lease Closing, provided that the Developer is not then in material default, by giving the Agency written notice of such termination, which references this Section 7.3. Thereafter, the parties shall be mutually released and discharged from any further obligation, which arises under this Agreement except as set forth in Section 6.9, Section 6.10, and Section 6.13. B. The Agency may terminate this Agreement in its sole discretion at any time prior to the Lease Closing, provided that the Agency is not then in material default, if: (1) the Executive Director does not or is unable to confirm that the matters described in Section 2.6.1 have been satisfied no later than December 31, 2005; (2) the Site Transfer Escrow is not in a condition to close no later than June 30, 2005, and does not in fact close on or before such date; or (3) if the Lease Closing has not occurred for any reason whatsoever no later than July 31,2005. C. The Developer may terminate this Agreement after the Lease Closing, but prior to completion of construction of the Improvements, provided that the Developer reimburses the Agency for any and all advances of Agency funds, including the Infrastructure Funds and the Site Development Grant, and the other Agency costs incurred to said date in furtherance of the demolition and relocation of tenants on the Phase I Site. D. Any other rights of termination by the Developer, if any, not referenced above, shall be governed by the Lease Agreement. 7.4 Attorney Fees Provision. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, or is made a party to any action or proceeding brought by the Escrow Agent, then as between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, its reasonable attorneys' fees as fixed by the Court 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 "attorney fees" for purposes of this Section. ARTICLE VIII MISCELLANEOUS 8.1 No Waiver. No waiver of any default or breach by the Developer under this Agreement shall be implied from any failure by the Agency to take action on account of such 4822-7696-9472.2 -35- P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2005\05-01-10 El Paseo-5th_ ML Vernon DDAdoc default, if such default persists or is repeated during a period of time when the Developer is in default or breach of its obligations under this Agreement, and no express waiver shall affect any default other than the default specified in the waiver and shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term or condition contained in this Agreement shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by the Agency to or of any act by the Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. 8.2 Successors and Assigns. This Agreement is made and entered into for the sole protection and benefit of the Agency and the Developer, their successors and assigns, and no other person or persons shall have any right or right of action under this Agreement. The terms of this Agreement shall inure to the benefit of the successors and assigns of the Agency and the Developer; provided, however, that the Developer's interest in this Agreement cannot be assigned or otherwise transferred without the prior consent of the Agency. 8.3 Notices. Notices shall be sufficiently given under this Agreement, if personally served upon the Agency Executive Director, or if sent by United States mail, postage prepaid, and addressed as follows: If to the Developer: El Paseo Petroleum, LLC 27403 Ynez Road, Suite 218 Temecula, CA 92591 Attention: Managing Member If to the Agency: Redevelopment Agency ofthe City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, California 92401 Attention: Executive Director Notices shall be deemed given upon receipt at the address set forth above. Notice of any changes of address or of the person to whom notices are to be sent shall be given in the manner set forth in this Section 8.3. 8.4 Time. Time is of the essence of each provision of this Agreement. 8.5 rReserved - No Textl. 8.6 Amendment. No amendment, modification, termination or waiver of any provision of this Agreement, nor consent to any departure by the Developer therefrom, shall in any event be effective, unless the same shall be in writing and signed by the Agency, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 4822-7696-9472.2 -36- P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-5th. Mt. Vernon DDAdoc 8.7 Headings. The article and section headings set forth in this Agreement are for convenience of reference only and in no way define, limit, extend or interpret the scope of this Agreement or of any particular Article or Section of this Agreement. 8.8 Number and Gender. When the context in which words are used in this Agreement indicate that such is the intent, words in the singular number shall include the plural and vice-versa. References to anyone gender shall also include the other gender, if applicable under the circumstances. 8.9 Validity. In the event that any provision of this Agreement shall be held to be invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this Agreement. 8.10 Governing Law. This Agreement shall be governed by and construed III accordance with the laws of the State of California. 8.11 Survival of Warranties. All agreements, representations and warranties made by the Developer in this Agreement shall survive the execution and delivery of this Agreement and any of the documents referenced or described in this Agreement and continue in full force and effect until the obligations of the Developer under this Agreement are fully performed and discharged. 8.12 Incorporation of Exhibits. All Exhibits referenced in or attached to this Agreement are incorporated into this Agreement by this reference, as if fully set forth herein. 8.13 Venue and Forum. In the event that any legal action should be filed by any party to this Agreement against any other party to this Agreement, the venue and forum for such action shall be the Superior Court of the State of California for the County of San Bernardino. Each of the persons and entities who are shareholders or partners or members of the Developer also agree to said venue and forum and further agree that, if they are not residents of California at the time of such actions, service of process may be made upon them by delivery via United States registered or certified mail. 8.14 Legal Relationships. The relationship between the Developer and the Agency is that of the Agency and the Developer, and no partnership, joint venture, or other similar relationship shall be inferred from this Agreement. The Developer shall not have the right or authority to make representations, to act, or to incur debts or liabilities on behalf of the Agency. The Developer is not executing this Agreement as an agent or nominee for an undisclosed principal, and no third party is intended to be benefited by the execution of this Agreement. 8.15 Force Maieure and Unavoidable Delay. A. Prior to the date of the Grant Disbursement Lease Closing, neither party to this Agreement shall be liable for any failure or delay in performance under this Agreement (other than for delay in the payment of money due and payable hereunder) to the extent said failures or delays are proximately caused by causes beyond that party's reasonable control and 4822-7696-9472.2 -37- P:\Agendas\Agenda Auachments\Agrmts-Amend 2005\05-01-]0 El raseo-5th, ML Vernon DDAdoc occurring without its fault or negligence, including, but not limited to, war, strikes, fires, floods, acts of God, governmental restrictions, power failures, or damage or destruction of any network facilities or servers, failure of suppliers, subcontractors, and carriers to substantially meet its performance obligations under this Agreement, provided that, as a condition to the claim of nonliability, the party experiencing the difficulty shall give the other prompt written notice, with full details following the occurrence of the cause relied upon. Dates by which performance obligations are scheduled to be met will be extended for a period of time equal to the time lost due to any delay so caused, if reasonable. Otherwise, all performance obligations shall be waived and forever cease to exist; provided however, that no extensions or series of extensions shall cause the date by which the Lease Closing to occur to be scheduled to a date later than July 31,2005. B. After the date of the Lease Closing, neither party to this Agreement shall be liable for any failure or delay in performance under this Agreement (other than for delay in the payment of money due and payable hereunder) to an Unavoidable Delay; provided that, as a condition to the claim of nonliability, the party experiencing the Unavoidable Delay shall give the other prompt written notice, with full details following the occurrence of the cause relied upon. Dates by which performance obligations are scheduled to be met will be extended for a period of time equal to the time lost due to any delay so caused not to exceed in the aggregate ninety (90) days attributable to the Unavoidable Delay. {SIGNATURES ON SUBSEQUENT PAGEl 4822-7696-9472.2 -38- P-\Agendas\Agenda Anachmellts\Agrmts-Amend 2005\05-01-10 EI Paseo-5th. Mt. Vernon DDAdoc CDC/200S-2 IN WITNESS WHEREOF, the Redevelopment Agency of the City of San Bernardino and El Paseo Petroleum, LLC, have executed this Agreement as of the date first written above by and through their duly authorized representatives. AGENCY: Redevelo(j?genCy / ran Bernardino By ~ It-vc /1/ ary V Osdel Exec lve Director APPROVED AS TO FORM: By: ()jU. DEVELOPER: El Paseo Petroleum, LLC By: ~ ~ rJ . ;/acl21....~_... 4822.7696.94722 .39- EXHIBIT "A" LEGAL DESCRIPTION OF THE PHASE I SITE Parcels referred to as assessors parcel numbers: 013 8-115-02, 03, 04, 05, and 07 situated on Mt. V ernon Avenue. 4822-7696-94722 A-I P\Agendas\Agenda Attachmcnts\Agrmts-Amcnd 2005\05-01-]0 El Paseo-5th, Mt Vernon DDA.doc EXHIBIT "B" ASSSESSOR PARCEL MAP OF THE PHASE I SITE AND PHASE II SITE 4822-7696-94722 B-1 P\Agendas\Agenda Att3chme11ls\Agrmts-Amend 2005\05-01-10 EI Paseo-5th f\..h Vernon DDAdoc - - Q) ::J c:: ~ 0::( c:: .E 0) .c:: ~ I Q3 J:: I (il I I I 6th Street ~ ::::: 0::( Spruce Street Legend: 5th Street _ . . - Mt. Vernon Corridor Project Area --------- I I Private Property -------.. Q) ::J c:: ~ 0::( c:: o E ~ ~ ~ I I - - PROJECT SITE MAP Proposed Project Site Phase 1 APN: 138-115-02 138-115-04 138-115-06 138-114-09 138-115-03 138-115-05 138-115-07 138-114-10 138-114-11 Proposed Project Site Phase 2 APN: 138-114-09 138-114-10 138-114-11 Exhibit II B II October 28, 2004 EXHIBIT "C" LEASE AGREEMENT 4822-7696-9472.2 C - 1 P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 E[ Paseo-5th. Mt. Vernon DDAdoc NEIGHBORHOOD REDEVELOPMENT LEASE BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND EL PAS EO PETROLEUM, LLC (Mt. Veruon Corridor Redevelopment Project Area) THIS NEIGHBORHOOD REDEVELOPMENT LEASE (the "Lease") is dated as of January 10,2005, by and between the Redevelopment Agency of the City of San Bernardino (the "Agency") and EI Paseo Petroleum, LLC. a California Limited Liability Company (the "Tenant" or "Developer"). and this Lease is entered into in light of the facts set forth in the Recitals. RECIT ALS A. This Lease and the Disposition and Development Agreement (5th & Mount Vernon ~ EI Pasco Petroleum. LLC) (the "Agreement") and the Exhibits thereto are intended to dTectuate the Redevelopment Plan for the Mount Vernon Corridor Redevelopment Project (the "Project Area") by providing lor the disposition and development of a portion of the Redevelopment Project Area designated herein as the "Site" and the development of the "Project" thereon (as those terms are defined in the Agreement); B. The development of the Site pursuant to the Agreement. and the fulfillment generally of the Agreement, are in the vital and best interests of the City of San Bernardino ("City") and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements; C. The Agreement contemplates that the Project wirll be developed in two phases (Phase I and Phase II) on the Agency Property; D. The Agency proposes to acquire certain real property specifically described in Exhibit "A" to the Agreement within the Project Area (the "Site," as defined in the Agreement) additionally; the Agency shall relocate existing tenants and assist the Developer with a certain Alley Vacation; E. Pursuant to this Lease, the Agency shall lease approximately forty thousand (40,000) square feet of land area to the Developer, including rights of ingress and egress and reciprocal parking prjvileges on the Site;.. F. Pursuant to this Lease, the Developer shall, with the assistance of the Agency, construct certain private, commercial improvements on the Site, including all required on-site ! 4845-0847-0272.1 1 P.\A~endas\Agenda Allachments\Agrmts-Amend 2005\05-01-10 El Paseo.Lease Agrmt..doc and otT-site improvements, all hardscape and all landscaping in accordance with the Agreement and the. ~pecitications set forth in Exhibit "D" to the Agreement (the "Improvements," as ddined in the Agreement): G. The Developer shall be rcsponsible for payment of all costs and expenses for construction of Improvements, in accordance with the terms of the Agreement and this Lease; and H. The Developer estimates the total cost of construction of Improvements at Two Million Nineteen Thousand Dollars ($2,019,000), as set forth in detail in the "Project Budget". NOW, THEREFORE, THE TENANT AND THE AGENCY FOR THEMSELVES AND THEIR SUCCESSORS AND ASSIGNS DO HEREBY AGREE AS FOLLOWS: ARTICLE I DEFINITIONS 1.1 Detinitions. In addition to the ddinitions of certain terms and phrases set f()rth in the Recital and elsewhere in this Lease, the words, which appear below in bold text, shalf have the following meanll1gs: Agency means and refers to the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic. Agency Property means and refers to all real property currently owned or which may hereafter be acquired by the Agency that is a part of the Project. Agreement means and refers to that certain Disposition and Development Agreement (5th & Mount Vernon - El Paseo Petroleum, LLC) and the Exhibits thereto executed by the Agency and the Developer on or about January 10,2005. Bonds means and refers to that certain issuance of tax allocation bonds issued by the San Bernardino Joint Powers Financing Authority on or about January 24, 2002, designated as the $3,635,000 San Bernardino Joint Powers Financing Authority, Tax Allocation Bonds, Series 2002A (Mount Vernon Project). Business means and refers to the use and operation of the Improvements on the Agency Property by the Tenant for an ARCO-brand Service Station consisting of nine multiple point dispensers which will provide 18 fueling positions, an AM/PM Mini-Mart, with beer and wine license and the sale of items typically found in such ARCO-branded AM/PM Convenience Stores, a self-servicelcar wash and no other uses or business activities unless approved in writing by the Agency at its sole discretion. ! 4845,0847-0212. I 2 P\A~endas\Agenda Attachmenls\Agrmts-Amend 2005\05-01.10 EI Pasoo-Lease Agrmt._doc Lease. City means and refers to the City of San Bernardino. The City IS not a party to this I Commencement Date means and refers to the day on which the Agency delivers possession of the Agency Property to Tenant. The Commencement Date shall be confirmed when the Agency issues its delivery notice to Tenant for the Agency Property or any portion thereo f. Contractor means and refers to contractor. The Contractor shall construct the Project. . a licensed California general First Extension Term is detined in Section 3.2.2. Improvements means and refers to all buildings, structures and improvements and all additions to or improvements of. or in, now or at any time hereafter. to be constructed on the Agency Property. and including but not limited to all the foundations and footings therefore. underground storage tanks. environmental containment structures. underground piping. drainage structures and claritiers. machinery. engines. motors, compressors. dynamos. tittings. equipment and tixtures of every kind and description now or hereafter affixed Or attached to or incorporated 'in the Project and any building. structure or improvements. including all machinery and equipment used or procured for use in connection with. or for. the heating. cooling. lighting. plumbing. ventilation. air conditioning. refrigeration. cleaning. or general operation of the Project. Lease Term is detined in Section 3.2.1. Leasehold Nfortgagee means and refers to the beneticiary under a mortgage executed and recorded in the Office of the County Recorder. which mortgage encumbers. in part. Tenant's interest under this Lease. Mortgage means and refers to the mortgage encumbering Tenant's leasehold interest in this Lease. in favor of the Leasehold Mortgagee. as the same may be amended or supplemented from time to time. Project means and refers to the design. construction. and financing of the Improvements by the Tenant and thereafter. the continuous operation of the Business on the Agency Property, as contemplated by this Lease. The functional elements of the Project are more particularly described in Exhibit "0" to the Agreement. Second Extension Term is defined in Section 3.2.2. Site means and refers to the Agency Property. Site Plan m~ans and refers to the site plan that illustrates the various components that comprise the Improvements to be constructed on the Site as set forth in Exhibit "D" to the Agreement. ! 4845-0847-0272.1 3 P:\Agendas\Agenda Attachmenu\Agrmls-Amend 2005\05-01-10 EI Paseo.Lease AgrmLdoc I Tellallt means and refers to EI Paseo Petroleum, LLC as the Tenant pursuant to this Lease. Trade Fixtures means and refers to personal property as further defined in section 7.1.3 which the Tenant shall cause to be installed on the Agency Property as part of the Project and shall be removable. ARTICLE II PROJECT PURPOSE 2.1 Purpose of the Proiect. The purpose of this Lease is to provide for the redevelopment, use and occupancy of the Site by the Tenant for the operation of the Business subject to the terms and conditions of this Lease. The Agency has determined that the development and use of the Site contemplated by this Agreement arc consistent with the Redevelopment Plan for the Mount Vernon Redevelopment Project. ARTICLE III THE LEASE 3. I Agreement to Lease. For and in consideration of promises and covenants of the Tenant under this Lease, Agency agrees to lease the Agency Property, to Tenant, and Tenant agrees to lease the Agency Property or such portion as the Agency may acquire, from the Agency, on the terms and conditions set forth in this Lease. ~ ') J._ Term of the Lease. 3.2.1 Lease Term. Provided the Delivery Date has occurred, the term of this Lease shall be for a period of twenty (20) years following the Commencement Date unless terminated earlier as provided in this Lease (the "Lease Term"). 3.2.2 Extension of Lease Term. Subject to the conditions set forth in Section 11.6 and so long as Tenant is not then in default unde~ any of the provisions of this Lease, the Tenant may extend the Lease Term on the terms and conditions set forth h~rein for two (2) additional five (5) year periods of time upon ninety (90) days' prior written notice, for each additional term, as the case may be, received ! 4845-0847-0272.1 4 P "A~endas\Agenda Atlac:hmcnts\Agflllls.Amend 2005\05-01-10 El P<lseo.Lease Agrml doc in writino bv the Allencv li'om the Tenant (respectively. the "First Extension Term" and the .:r.. ...."' "Second Extension Term"). 3.3 Rental Rate. 3.3.1 Tenant agrees to pay to Agency annual rent of Twenty-Six Thousand Three Hundred Dollars ($26,300), payable monthly in the amount equal to Two Thousand One Hundred Ninety-One Dollars and Sixty-Seven Cents ($2,191.67) per month for months one (I) through twelve (12) of each year during the Lease Term. which payment shall be due on the tirst day of each month commencing thirty (30) days after the issuance of the Certificate of Occupancy by the City, and monthly thereafter for each year during the Lease Term. The Agency reserves the right to request an increase in the Rental Rate, at its discretion. based upon the Consumer Price Index for All Items--U.S. Average ("'CPI"), provided such increase is in compliance with state and federal laws governing the Agency and the tax-exempt status of the Bonds. ARTICLE IV USE 4.1 Use of the Site. Tenant shall use the Site solely for the purpose of constructing, maintall1111g, and operating the Business. Thereafter and until the end of the Lease Term, or any extended term thereof, Tenant shall not change the use of the Site without tirst obtaining the written consent of the Agency. The Tenant shall not use and shall not permit or suffer the Site or any portion of the Site to be used in any manner that would violate the provisions of any certiticate of occupancy issued with respect to any of the Improvements. or any other license, permit, or other governmental authorization that is required for the lawful use or occupancy of all or any portion of the Site or the Improvements. 4.2 Petroleum Products Marketinll Allreement. Tenant shall maintain an ARCO Branding Agreement or similar agreement with a gasoline supplier, in full force and effect continuously during the Lease Term, to enable it to operate a gasoline dispensing facility Business on the Site. 4.3 Utilities. Upon the Commencement Date, the Tenant shall fully and promptly pay when due for all water, gas, electric, telephone and other public utilities of every kind furnished to the Site throughout the term of this Lease, and all other costs and expenses of every kind whatsoever of or in connection wit~ the use, operation, and maintenance of the Site, the Improvements and the Business, and all activities conducted thereon, and Agency shall have no responsibility of any kind for same. ! 4845-0847-0212.1 5 P:\Agendas\Agenda Attachments\Agrmls-Amend 2005\05.0].10 EI llaseo.Lease AgrmLdoc ARTICLE V CONSTRUCTION OF IMPROVEMENTS 5.1 Tenant's Construction Obli~ations. The Agency and Tenant acknowledge and agree that prior to the Delivery Date of this Lease, Tenant shall cause to be prepared Site Plan and working drawings (the "Site Plan") for construction of the Improvements by Tenant in accordance with the Agreement. The effectiveness of the Construction Contract is conditioned only on the joint execution of this Lease by the Tenant and the Agency. The Construction Contract contains. among others, the provisions required pursuant to the Agreement. each of which is hereby also made a part of and an obligation of Tenant under this Lease. 5.1.1 [Reserved] 5.1.2 Change in Site Plan. Construction shall be in accordance with the Site Plan, and no change may be made in such plans or the construction that constitutes a material change in design. operational elements of the Improvements. exterior appearal1ce of the Improvements, or any portion thereof. or that involves a single change resulting in a decrease of construction costs in excess of Ten Thousand Dollars ($10,000) or that involves changes in the aggregate that decn:ase construction co~ts equal to or in excess of Fifty Thousand Dollars ($50,000) without the Agency's prior written consent and approval. The Agency agrees to not unreasonably withhold or dday approval. and the t~lilure of the Agency to approve or disapprove a proposed change within ten (10) business days after a request therefor, shall constitute the Agency's approval of the change. provided the Agency has received with the request for the proposed change, adequate copies of the change order, drawings. and other information necessary for the Agency to make an informed decision as to whether to approve or disapprove a change. Tenant's construction of the Improvements shall be subject to all of the requirements set forth in the Agreement and in this Lease. 5.2 Payment of Construction Costs. Tenant shall pay all costs of constructing the Improvements, including but not limited to fees and costs charged by architects, engineers, general contractor, subcontractors, and laborers and materialmen. Tenant shall also pay all costs of landscaping, all oft:'site improvements required for construction of the Improvements, and all costs of permits, licenses, and bonds required for construction of the Improvements. Agency shall have no obligation to pay any costs or fees in any way related with construction required by Tenant under this Lease except as set forth in the Agreement as the Infrastructure Funds and the Site Development Grant. 5.3 Condition of Agency Property; No Warranties. l / The Agency makes no covenant or warranty respecting the condition of the soil or subsoil or any other condition of the Agency Property, or any plans and specifications previously ! 4845-0847-0212.\ 6 P:\Agendas\Agenda Auachments\Agrmts-Amend 2005\05-01-10 EI Paseo.Lease Agrmt.-doc approved,by Agency at the commencement of this Lease or approved by the Agency under this Lease. . ARTICLE VI DUTY TO MAINTAIN 6.\ Dutv to Maintain First-Class Condition. Throughout the Lease Term and any extended term thereof: Tenant shall, at Tenant's sole cost and expense, and at no cost and expense to the Agency, maintain the Site in first-class condition and repair (defined in Section 6.5), and in accordance with (a) all applicable laws, permits, licenses and other governmental authorizations, rules, ordinances, orders, decrees and regulations now or hereafter enacted, issued, or promulgated by federal, state, county, municipal. and other governmental agencies, bodies, and courts having or claiming jurisdiction and all their respective departments, bureaus, and officials CLaws"); (b) rules, orders, regulations, and requirements now or hereafter enacted, issued, or promulgated by the insurance underwriting board or insurance inspection bureau having or claiming jurisdiction and all insurance companies insuring all or any part of the Site (the "Insurance Requirements"). (1.2 Prompt and Dili"ent Repair. Tenant shall promptly and diligently repair. restore, alter, add to, remove, and replace,'as required, the Site and all Improvements thereon to maintain or comply as above, or to remedy all damage to or destruction of all or any part of the Improvements. Any repair, restoration, alteration, addition, removal. maintenance, replacement, and other act of compliance under this Section 6.2 (hereafter collectively referred to as "Restoration") shall be completed by Tenant whether or not funds are available from insurance proceeds, condemnation proceeds or Subtenant contributions. The Restoration shall satisfy the requirements of any Sublease then in effect for the Improvements with respect thereto or, if no Sublease is then in effect, shall be repaired or restored at least to the building standard and quality of the Improvements in existence prior to the date of such damage or destruction. 6.3 Election to Terminate. If during the last five (5) years of the term of this Lease, a casualty occurs for which insurance is not required under this Lease and which causes damages in excess of one-half of the then fair market value of the Improvements, then the Agency may elect to terminate this Lease. 6.4 Limitation of Article, Nothing in this Article defining the duty of maintenance shall be construed as limiting any right given elsewhere in this Lease to alter, modify, demolish, remove, or replace any Improvement. No dlfprivation, impairmrnt, or limitation of use resulting from any event or work contemplated by this Article shall entitle Tenant to any abatement, deduction, diminution, offset, or reduction in rent nor to any termination or extension of the term, except as provided herein. ! 4845-0847-0212.1 7 r \Agendas\Agenda Anachments\Agrmls-Amend 2005\05-01-10 EI Paseo-Lease A~rmUJoc 6.5 First-Class Condition Ddined. I "First-class condition and repair", means Restoration that is necessary to keep the Site and Improvements in efficient and attractive condition, at least substantially equal in quality to the condition of the original Expansion Improvements constructed by Tenant. The Agency and Tenant do not intend by the immediately preceding sentence that a property item is not in flrst- class condition and repair merely because of ordinary and reasonable wear and tear that does not materially reduce the attractiveness or utility of the item. Tenant's obligation to maintain the Site and all Improvements in first-class condition and repair also require that Tenant employ Tenant's best efforts to cause to be operated by itself and any Subtenant in a manner that will produce at all times the Minimum Assessed Valuation and Minimum Sales Tax as defined in the Agreement and as set forth in the Minimum Assessed Valuation Covenant and the Minimum Sales Tax Covenant. as provided in Exhibits "'I" and --r, respectively, to the Agreement. 6.6 Contest bv Tenant. On prior written notice to the Agency, Tenant has the right to contest by appropriate judicial or administrative proceedings, without cost or expense to the Agency. the validity or application of any Laws requiring Tenant to repair, maintain, alter. 'or replace the Improvements in whole or in part, and Tenant shall not be in dct~lUlt for failing to do such work until a reasonable time following tinal determination of Tenant's contest; provided, however, this right shall not abridge, minimize, or otherwise modify any other applicable provision of this Leasc which provision is to remain in full force and effect. If Tenant gives notice of contest, Tenant shall first furnish the Agency with security satisfactory to the Agency in its sole and arbitrary discretion or with a bond, satisfactory to the Agency in its sole and arbitrary discretion in form. amount, and insurer, guaranteeing compliance by Tenant with the contested Laws and indemnifying the Agency against all liability and expenses that the Agency may sustain or incur by reason of Tenant's failure or delay in complying with the Laws, including attorneys' fees. The Agency may, but is not required to, contest any such Laws independently of Tenant, and . may take positions inconsistent with those of Tenant. Tenant shall not take any position with respect to any such Law that, in the Agency's sole and arbitrary discretion, might result in an interpretation that Agency is required to repair. alter, or replace all or any portion of the Expansion Improvements. 6.7 Minor Construction. The Agency's approval is not required for Tenant's minor restoration. "Minor" means an expenditure for restoration that does not exceed Fifty Thousand Dollars ($50,000) ("Minor Amount"). The Minor Amount shall be increased (or decreased) proportionately to any increase (or decrease) in the Consumer Price Index for All Items--U.S. Average ("CPI"), as published by the United States Department of Labor, Bureau of Labor Statistics. The increase (or decrease) in the Minor Amount shall be determined by multiplying the sum of Dollars ($ ) by a jraction, the numeJator of which is the adjustment index (as hereinafter defined) and the denominator of which is the base index (as hereinafter defined). The term "base index" as used in this Lease is the CPI figure as of the date of this Lease. The term "adjustment index" as used in this Lease shall be the CPI figure closest to the date on which restoration is t 4845-0847-0212.1 8 P:\A~endas\Agenda ^ttachm~nts\AgrmI5.Amend 2005\05-0 I. JO EI Paseo.Lease Agrmldoc scheduled to commence. as this tigure is recorded in the United States Department of Labor's most con;prehensive official index then in use and most nearly similar and corresponding to the base index. If the adjustment index is calculated from a base different ti'om the base used herein for the base index, the base index used for calculating the new Minor Amount shall tirst be converted to correspond to the adjustment index under a formula supplied by the Department of Labor. If the United States Department of Labor shall discontinue publication of the base index. in that event a consumer price index of the same type and character shall be determined and published by another department of the United States government. then the index most nearly similar to the base index shall be used for the computation contemplated herein. In the absence or any such ofticial consumer price index published by a United States governmental agency, then the most nearly similar index published by a responsible private organization shall be used. "Major" means all other restoration. Restoration cost shall include the actual cost to Tenant for any demolition and any removal of existing Improvements or parts of Improvements as well as for preparation. construction. and completion of all new Improvements or parts of Improvements. 6.8 Maior Construction/Chan!2:e in Plans. Except as provided for the construction of the Expansior\ Improvements. before any m<~or restoration or change in the Site Plan (as detined in Section 5.1) is commenced on the Site or Improvements. including, without limitation, the delivery of any building materials to the Site in connection with such work and the entering into and the commencement of work under any contract covering both off-site and on-site work ("Major Work of Improvement'") Tenant shall comply with all the following conditions: 6.8.1 Site Plan. Tenant shall deliver and assign to the Agency for the Agency's approval and use two sets of the Site Plan prepared by an architect or engineer licensed to practice as such in the State of California. Said Site Plan shall provide for the construction of all Improvements within the exterior property lines of the Site; provided. however, that work beyond the Site required by the Laws or work on utilities serving the Site or affected by the contemplated construction, work on access areas, and work required by conditional use requirements will not violate this provision. With the Site Plan, Tenant shall deliver to the Agency the certiticate of the person or persons who prepared the Site Plan acknowledging aI'l.d accepting assignment of the Site Plan to, and their use by, the Agency and certifying that Tenant has fully paid for them or waiving payment and waiving any right to a lien for preparing them and otherwise acceptable to the Agency in its sole and arbitrary discretion. 6.8.2 Agency's Consent Required. The Agency shall not unreasonably disapprove the Site Plan. Approval or disapproval shall be communicated in the manner provided for notices, and disapproval shall be accompanied by specification of the grounds for disapproval; provided that the Agency's failure to disapprove within thirty (30) days after receipt by the Agency shall be conclusively considered to be approval by the Agency. Following the Agency's first or any subsequent disappro~al, Tenant may elect to (a) to submit revised plans and specifications or (b) to give notice contesting the reasonabltness of the Agency's disapproval. If the reasonableness of the Agency's disapproval is sustained, Tenant shall perform as in (a) above; if it is not sustained, the plans and specifications shall be considered approved. Disapproval and election to I 4845-0847-02'/2.1 9 P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2005\05.01-10 El Paseo.Lease Agrmt..doc submit [(,vised plans and specitications shall extend the time to commence and complete construction by the longer of (a) thirty (30) days or (b) the period of time attributable to resolution of any dispute over the reasonableness of the Agency's disapproval of the plans and speci tications. 6.8.3 Governmental A~encv Approvals. Tenant shall submit the Site Plan to the appropriate governmental agencies for approval. and deliver and assign to the Agency for the Agency's approval and use one complete set as approved by the governmental agencies. Changes from the Site Plan shall be considered to be within the scope of such plan if they are not substantial or if they are made to comply with suggestions, requests, or requirements of a governmental agency or official in connection with the application for permit or approval, and if they do not diminish substantially in size, utility, or value the Improvements as the same that then exists or are contemplated in the Site Plan previollsly approved by Agency. With the Site Plan, Tenant shall deliver to Agency the certiticate of the person or persons who prepared the Site Plan acknowledging and accepting assignment of the Site Plan to, and their use by, the Agency, and certifying that Tenant has fully paid for them or waiving payment and waiving any right to a lien for preparing them and otherwise acceptable to the Agency in its sole and arbitrary discretion. 6.8.4 Notice of Commencement of Construction. Tenant shall notify the Agency of Tenant's intention to commence any Major Work of Improvement at least ten (10) days before commencement of any such work. The notice shall specify the approximate location and nature of the intended work. The Agency shall have the right to post and maintain on the Site any notices of nonresponsibility provided for under applicable law, and to inspect the Site or Improvements in relation to sllch work at all reasonable times. 6.8.5 General Contractor. Funds to Complete. Tenant shall contract with a general contractor licensed by the State of California for any Major Work of Improvement. Tenant shall furnish the Agency with a true copy of Tenant's contract with the general contractor, together with evidence of the general contractor's tinancial condition and evidence that Tenant has sufficient funds committed to complete the construction. The general contract shall (i) give the Agency the right, but not the obligation. to assume Tenant's obligations and rights under that contract if Tenant should default under the contract or this Uase; and (ii) provide that the Agency. its agents and representatives, may enter the Site or Improvements at any reasonable time thereafter to cause completion of the construction. Tenant shall assign to the Agency for its use the general contract and all of said bonds, and Tenant shall deliver to the Agency an acknowledgment and acceptance by the general contractor and issuer of the bonds to the assignment to the Agency, said acknowledgment and acceptance to be in such form as the Agency in its sole and arbitrary discretion may require. The Agency may disapprove the Tenant's contract with the general contractor or the general contractor's financial condition by giving written notice thereof to Tenant. The notice shall specify the grounds for disapproval. The Agency shall not unreasonably disapprove and shall be considered to have approved in the absence of notice of pis approval given 'Yithin thirty (30) days after Tenant furnishes the contract and evidence specified above. ! 4845.0847.0272.\ 10 P:\Agendas\Agcnda AttaclllTl~nts\Agrmls.Amend 2005\05-01-10 El Pnseo-Lease Agrmt..doc 6.8.6 Compliance with Laws. Tenant shall procure. and on prior request of the Agency, deliver to the Agency at T enant"s expense evidence of compliance with all the Laws. including, without limitation. all permits. licenses. and other governmental authorizations. 6.8.7 Insurance Required. Tenant shall deliver to the Agency (a) certificates of insurance, (b) evidence of workers' compensation insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against the Agency or any of the Agency Property, or the Agency's interest in the Agency Property, the Improvements and this Lease or any of them or against Tenant. the Improvements and the leasehold estate of Tenant, and (c) evidence that Tenant has paid or caused to be paid all premiums for the coverage described above in this Section and insurance provided for in Section 6.2 of the Agreement. sufficient to assure maintenance of all insurance required under this Lease and the Agreement during the anticipated course of the work and thereafter as required pursuant to the Agreement. Tenant shall maintain, keep in force, and pay all premiums required to maintain and keep in force all insurance required under this Section 6.8.7 at all times during which such work is in progress. ARTICLE VII OWNERSHIP OF IMPROVEMENTS/LEASEHOLD FINANCING 7.1 Ownership of Improvements and Personalitv. 7.1.1 Ownership of Improvements Durin\.( Lease Term. Title to Improvements to be constructed on the Agency Property by Tenant shall be owned and may be depreciated for income tax purposes by Tenant until expiration of the Lease Term, or any extended term thereof, or sooner termination of this Lease; provided, however, the Agency disclaims any warranty of title or any representation or warranty that depreciation may be available to Tenant. 7.1.2 Ownership of Improvements at Termination. All Improvements on the Agency Property at the expiration of the Lease Term or any extended term thereof, or sooner termination of this Lease shall. without compensation to Tenant. then automatically and without any act of Tenant or any third party become the Agency's property. Unles~ the Tenant has duly exercised the option to purchase the Agency Property as provided in Article XVIII hereof, Tenant shall surrender the Improvements to the Agency at the expiration of the Lease Term or any extended term thereof, or sooner termination of this Lease, in good condition and repair, ordinary wear and tear excepted, free and clear of all liens and encumbrances, other than those, if any, permitted under this Lease or otherwise created or consented by the Agency. Tenant agrees to execute, acknowledge, and deliver to the Agency any instrument requested by the Agency as necessary in the Agency's opinion to perfect the Agency's right, title, and interest to the Agency Property. / ! 4845-0847-0272.1 11 P:\Agendas\Agenda Attachmenls\Agrmls-Amend 2005\05-01-10 EI Paseo-Lease Agrmt doc 7.1.3 Trade Fixtures. Any property that may be removed by the Tenant, or any Subtenan~ pursuant to a Sublease approved by the Agency under Section 8.2, herein. may be removed by such party when permitted thereunder subject to all the terms of this Lease. including. without limitation, repair of damage caused by such removal. Excluding the property described in the preceding sentence, Tenant agrees that the following items are real property or, if personalty. shall be treated as real property and shall not be removable for purposes of this Section 7.1: All machines. equipment. material. appliances. and fixtures now or hereafter installed or placed by Tenant on or in the Agency Property or the Improvements for the generation and distribution of air. water. heat. electricity, light, fuel or reti'igeration. or for ventilating or air-conditioning purposes, or for sanitary or drainage purposes. or for the exclusion of vermin, or insects, or for the removal of dust, refuse, or garbage, and including all awnings, window shades. drapery rods and brackets, screens, floor coverings, incinerators, carpeting and all furniture and tixtures used in the operation of the intended business operations and other Improvements together with all additions to, substitutions for, changes Il1 or replacements of, the whole or any or all of said articles of property. 7.1.4. Real Estate Covenant. The Agency and Tenant covenant and agree that all the Improvements shall at all times be. and remain, real property notwithstanding Tenant's ownership of the Improvements. 7.2 Leasehold Financin~ bv Tenant. 7.2.1. Tenant's Ri~ht to Finance. Tenant may at any time during the Lease Term or any extended term thereof, subject Tenant's leasehold estate and attendant rights created under this Lease to one or more Mortgages as security for a loan or loans or other obligations of Tenant solely for the purpose of constructing. maintaining or replacing the Improvements or any portion thereof on the Site, provided that any such Mortgage shall be subject to all covenants, conditions, and restrictions set forth in this Lease and to all rights and interests of the Agency except as may be otherwise provided herein, and further provided that Tenant shall give the Agency prior written notice of any Mortgage, together with a c~py of the mortgage instrument and the promissory note. Any proceeds of any such financing or retinancings obtained by the Tenant in excess of the limitations set forth in section 6.12 (i.e., $2,019,000) of the Agreement shall be deemed to be proceeds of sale or refinancing of the Site or the Improvements and shall be paid immediately upon receipt by the Tenant to the Agency. 7.2.2. Leasehold Mortgagee. The holder or holders of any lien created by a mortgage secured by Tenant's leasehold estate are the Leasehold Mortgagees. Upon written consent of the Agency, a Leasehold Mortgagee or its assigns may enforce its lien and acquire title to the .leasehold estate in any lawful way and, pending foreclosure of the lien, the Leasehold Mortgagee may take possession. of and operate the Site, performing all obligations performable by Tenant, and on foreclosure of the lien by pow~r of sale, judicial foreclosure, or on acquisition of the leasehold estate by deed in lieu of foreclosure, the Leasehold Mortgagee may, on notice to the Agency, sell and assign the leasehold estate hereby created. ! 4845-0847-0272.1 12 P:\A.gendas\Agenda Attachments\A~rmts.Amend 2005\05-01-10 EI raseo-Lease Agnnl__doc I Notwithstanding the provisions set forth herein, and prior to the exercise of any rights by any Leasehold Mortgagee. the Agency shall have the right, but not the obligation. to cure any default and may enforce any lien and acquire title to the leasehold estate in any lawful way and, pending foreclosure of the lien. the Agency may take possession of and operate the Site, performing all obligations performable by Tenant, and on foreclosure of the lien by power of sale, judicial foreclosure. or on acquisition of the leasehold estate by deed in lieu of foreclosure, the Agency may sell and assign the leasehold estate hereby created. The Leasehold Mortgagee or any person or entity acquiring the leasehold estate, as applicable. shall be liable to perform Tenant's obligations under this Lease only during the period. if any, in which such person has ownership of the leasehold estate or possession of the Site. A Leasehold Mortgagee shall have such further rights and responsibilities as hereinafter set forth in Section 16.9 of this Lease. ARTICLE VIII SUBLEASES 8.1 Requirements for Sublease. Tenant shall have the right after the Commencement Date of this Lease to enter any suhlease (the "Suhlease") after first providing the Agency with a written Sublease Notice (the "Sublease Notice") .at least forty-live (45) days before the proposed effective date of the Sublease. The Sublease Notice shall include all of the following: 8.1.1 Information regarding the proposed Subtenant, including the name, address and ownership of Subtenant; the nature of the Subtenant's business; the Subtenant's character and reputation; and, the Subtenant's current tinancial statements (certitied by an officer, partner or owner of the Subtenant), bank account statements, tax returns and a detailed business plan acceptable to the Agency; and 8.1.2 All the material terms of the proposed Sublease, including the consideration payable by the Subtenant; the portion of the Site that is subject to the Sublease (the "Subject Space"): a general description of any planned alterations or Bcpansion Improvements to the Subject Space; the proposed use of the Subject Space; the effective date of the Sublease; and a copy of all documentation concerning the proposed Sublease; and 8.1.3 Any other information or documentation reasonably requested by the Agency. 8. 1.4 The Developer shall be responsible for any relocation costs of Subtenant(s) in the event of relocation by Developer or any other third party. Agency shall not be responsible for any relocation costs of Subtenant(s). / ! 4845-0847-0212.\ 13 P.\A~endas\Agenda Altachmt:nts\Agrmls~Amend 2005\05-01-[0 El Paseo.Lease Agrmt_.doc 8.2 A7encv's Consent. The Agency shall have thirty (30) days to approve or disapprove, in writing, the Sublease set forth in the Sublease Notice. Failure of the Agency to respond to such Sublease Notice with the time frame shall be deemed to be approval by the Agency of the Sublease. In the event the Agency does not approve any such Sublease, it shall state the reasons in writing at the time of the submission of the disapproval of the Sublease. The Agency may not unreasonably withhold its consent to any proposed Sublease that complies with this Article VIII. Reasonable grounds for denying consent to a Sublease include any of the following: 8.2.1 Subtenant's character. reputation, credit history, business or proposed use is not consistent with the character or quality of the Improvements; or 8.2.2 Subtenant would be a signi ticantly less prestigious occupant of the Improvements than other Subtenants and the Tenant: or 8.2.3 Subtenant's intended use of the portion of the Site IS inconsistent with the permitted uses set forth in this Lease; or 8.2.4 Subtenant's tinancial condition is or may be inadequate to support the its obligations under the Sublease and/or this Lease; or 8.2.5 The Sublease would cause the Agency to violate another lease or agreement to which the Agency is a party. 8.3 Tenant's Remedies. If the Agency wrongfully denies or conditions its consent. Tenant may seek only declaratory and injunctive relief. Tenant specitically waives any damage claims against the Agency in connection with the withholding of consent. 8.4 Sublease Terms. Each Sublease shall be reasonably satisfactory to the Agency and shall contain a provision requiring the Subtenant to attorn to the Agency on the termination of this Lease. The Sublease shall also provide that if Tenant defaults under this Lease, the Subtenant will make payments directly to the Agency after receipt of notice of Tenant's default and, notwithstanding any dispute between the Agency and Tenant, any such payment which complies with the terms and conditions of the Sublease shall constitute full satisfaction of the Subtenant's obligation to Tenant under the Sublease. The Sublease shall further provide that in the event of a Tenant default under the Sublease the Subtenant will not terminate the Sublease until the Agency has received notice of the default The Agency shall not be required or obligated to cure any default The Agency shall hfve thirty (30) days following receipt of notice to determine whether it wishes to cure the default and thereafter, if it does wish to cure, the Subtenant may not terminate the Sublease so long as the Agency is diligently prosecuting the cure to completion. ! 4845-0847-02712.1 14 P-\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease AgrmLdoc 8.5 Afceptance of Rent. Tenant shall not accept. directly or indirectly. more than one (1) month's prepaid rent from any Subtenant. 8.6 Exclusive Occupancv. Each Sublease shall be to a Subtenant for actual possession and shall require the Subtenant to exclusively occupy the portion of the Site and Improvements so leased within ninety (90) days after the monthly rent becomes payable. Tenant shall not be in default. however. if within ninety (90) days after such Subtenant was required to pay monthly rent. Tenant at Tenant's sole expense commences an action to terminate such Sublease and diligently pursues such action to completion. 8.7 Consistencv of Sublease. The Sublease shall not be inconsistent with any provision of this Lease and shall require the payment of rent equal to the fair market rental value of that portion of the Site leased. 8.8 Cost of Subtenant Improvements. The cost of all restoration. and all construction allowances agrel:d to be paid by Tenant or on behalf of the Subtenant. in connection with the Sublease and any Expansion Improveml:nts shall be securl:d to the satist~lction of the Agl:ncy. If rl:qul:sted by the Agency, the Subtenant shall have entered into a written agreement with the Agency agreeing to complete any tenant improvement work, including any Expansion Improvements. required of it under the Sublease. 8.9 Inducements to Enter Sublease. All inducements to enter the Sublease shall have been fully satistied and the Tenant shall have been offered no rental concession or agreement other than as stated in the Sublease to induce Subtenant to enter the Sublease. 8.1 0 Waiver of Collection of Securitv Deposit. Subtenant has agreed to waive collection of the security deposit, if any, against the Agency, unless the Agency actually receives the security deposit from the Tenant and fails to refund it to the Subtenant. 8.11 Agencv Recognition of Sublease on Lease Termination. In connection with any proposed Sublease: l / 8.11.1 Tenant may request as part of the Sublease Notice under subsection 8.1 regarding a proposed Sublease that the Agency give the Subtenant under such Sublease a recognition agreement (the "Recognition Agreement") providing that if this Lease is terminated as a result of ! 4845-0847-0272.1 15 P:\Agendas\Agenda Attachments\Agrmts.Amend 2005\05-01-10 EI Paseo.Lease Agrml..doc T ~nant" s d~fault the AQency shall recoQnize that such Subleas~ is a direct lease bdween the I ' ~ - ~ Agency and that Subtenant. The Agency shall not be required to grant that request and execute a Recognition Agreement for such a Sublease unless: (a) All other conditions and requirements for the granting of the Agency's consent to such Sublease have been satistied; and (b) Such Sublease lease is solely for the business of selling merchandise and services consistent with this Lease; and (c) The Agency has determined in good faith that the reputation, character, and financial strength of the Subtenant under such Sublease equals or exceeds the criteria for those attributes that the Agency would then apply in determining whether to enter into a direct lease of that portion of the Site that is subject to such Sublease on terms and conditions that are acceptable to Landlord at that time. 8.11.2 When the Agency is required to execute a Recognition Agreement, the following conditions and limitations shall be retlected in the Recognition Agreement: , (a) The Agency shall not be bound by any terms or conditions of such Sublease that are inconsistent with the terms and conditions of this Lease. The e~onomi~ terms of such Sublease may be more f~lVorable to the Agency than those stated in this Lease and the Agency may reserve the right to adjust the rent under such Sublease on termination of this Lease to an amount equal to the then fair market rental value of the portion of the Sit~ to b~ leased under such Sublease, as determined by the Agency in good faith; and (b) The Agency shall not be liable for any act or omission of Tenant; and (c) The Agency shall not be subject to any setoffs or defenses that the Subtenant might have as to Tenant or to any claims for damages against Tenant; and (d) The Agency shall not be required to credit the Subtenant with any rent or security deposit paid by the Subtenant to Tenant pursuant to the terms of such Sublease; and (e) The Agency shall be responsible for performance of only those covenants and obligations of Tenant under such Sublease accruing after the termination of this Lease; and (f) The Subtenant shall agree, on termination of this Lease, to make complete attornp1ent to the Agency, as lessor, under a written agreement executed by the Agency and the Subtenant, to establish direct privity of contract between the Agency and the Subtenant with the same force and effect as thought such Sublease was originally made directly between the Agency and the Subtenant. ! 4845-0847-0272.1 16 P.\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EJ Paseo-Lease A~rnll .doc 8.11.3 On the Agency's written n:quest given any time after the termination of this Lease, th~ Subtenant shall execute a new lease for such portion of the Site on the same terms and conditions as in the Recognition Agreement. Despite any other provision of this Lease. when Tenant requests a Recognition Agreement the Agency's deemed consent to any such Sublease under Section 8.2 shall not be construed as consent to or agreement to execute the requested Recognition Agreement. 8.12 Performance. Tenant shall comply with and perform each of the covenants. terms, and conditions of any Sublease affecting the Site or Improvements and shall not alter. amend. cancel, terminate, or modify any such Sublease without tirst obtaining the written consent of the Agency. Approval of the alteration. amendment, cancellation, termination, or moditication of a Sublease shall be deemed given by the Agency unless within thirty (30) days after the request for approval is submitted to the Agency, the Agency gives Tenant written notice of its objection. ARTICLE IX ASSIGNMENT BY TENANT 9.1 Assignment of Lease. Tenant may assign this Lease or any interest herein, subject to the prior written consent of the Agency, which consent shall be in the Agency's sole and absolute discretion. The proposed assignee must be financially qualitied and have sufficient experience in the operation and management of facilities and a business as contemplated by this Lease for the use of the Improvements, be able to perform all the agreements, undertakings, and covenants of this Lease and all other agreements entered into by Tenant that relate to the management, operation, maintenance. construction, and restoration of the Improvements and the Site. To assist the Agency in determining whether or not the proposed assignee is so qualitied, Tenant shall furnish to the Agency at no expense to the Agency, prior to such assignment, detailed and complete tinancial statements of the proposed assignee, audited by a certified public accountant reasonably satisfactory to the Agency (if the proposed transferee causes its statements to be so audited in its normal course of business), together with detailed and complete information about the business of the proposed assignee, including its experience in operating businesses similar to that as contemplated by this Lease for the use of the Improvements, the use to be made of the Agency Property and Improvements by the proposed assignee, projections by the proposed assignee of the sources of funds to be used to repay any indebtedness of Tenant that the proposed assignee will assume or take subject to, or agree to pay to Tenant, and other claims on and requirements for such funds, together with such other information as the Agency may reasonably require to assist the Agency in determining whether or not the proposed assignee is so qualified. The Agency shall have thirty (30) days after receipt of the information described above to notify Tenant of whether it~consents or does n9t consent to the proposed assignment. Absent any such notification by the Agency during said 30-day period, the Agency shall be conclusively deemed to have not consented to the assignment. Consent by the Agency to one assignment shall not be deemed to be a consent to any subsequent assignment. Any assignment made contrary to the ! 4845-0847-0272.1 17 P\Agendas\Agenda Attachmems\Agrmls-Amend 2005\05.01.10 EI Paseo-Lease AgrmLdoc terms of this subsection shall be null and void: provided. howevcr. that the parties hereto acknowledge and agree that Tenant mav assign all of its right. title and interest in this Lease to ............. .,..... ..... an entity (the "Approved Assignec") (a) at least twenty fivc percent (25%) of which is owned directly or indirectly by Tenant or an entity that owns or is in common ownership \vith Tenant (the "Tenant Member: and. (b) the managing member or manager of which is the Tenant Member. Any Approved Assignee shall expressly assume the obligations of Tenant under this Lease and agree to be subject to the conditions and restrictions to which Tenant is subject under this Lease and. upon such assumption. the Approved Assignee shall become Tenant hereunder for all purposcs. 9.2 Leaschold Mortgagees. Notwithstanding anything to the contrary contained in Section 9.1, the consent of the Agency shall not be required for any transfer. conveyance. or assignment resulting from a foreclosure or acceptance of a deed in lieu of foreclosure of any Leasehold Mortgage. or for any transfer, conveyance. or assignment by any Leasehold Mortgagee following its acquisition of this Lcase and the leasehold estate of Tenant created hereby as a result of foreclosure or acceptance of a deed in lieu of foreclosure. ARTICLE X PUBLIC WORKS PROJECT 10.1 Prevailing Wage / Public Works Proiect. The parties hereto acknowledge and agree that any construction performed for the benefit of the Project shall be deemed a "Public Works" project as defined in the California Labor Code and therefore subject to the provisions of the California Labor Code. 10.2 The Tenant shall carry out the construction of the Project in conformity with the California Labor Code provisions requiring payment of general prevailing rate of per diem wages and other applicable state labor standards and requirements. 10.3 The Tenant shall provide the Agency with certified payroll records in accordance with the requirements set forth in California Labor Code Section 1776 for all aspects of construction of the Project. ARTICLE XI ACCOUNTING AND BOOKKEEPING 11.1. Accounting Required. ~ th ,- On or before May 15 of each year during the Lease Term, or any extended term thereof, beginning in the first year during which the Business conducted upon the Improvements have been open for business for at least ninety (90) days preceding said date, Tenant shall, without ! 4845-0847-0272.1 18 P'\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrmt"doc notice or demand from AL(encv. ddi\'er to AL(encv in the manner prescribed in this Lease for giving no~ices. a statement~ prepared in accorda~lce ~vith generally accepted accounting principles consistently applied and by a Certilied Public Accountant acceptable to the Agency showing the !2rllSS income and deductions for the preceding Calendar Year. Delivery by mail or other means :hall be deemcd made in accordancc with thc ddinition of delivery set forth in Section 19.1.2 of this Lease. 11.2 Audit. Tenant shall keep true and correct records of the gross income and deductions. All records relating to the management. operation. maintenance. repair. construction or alteration of or addition to the Site and Improvements shall be kept at the principal business otTice of Tenant for not less than three years after delivery of the required annual report. The Agency shall have the right. at its cost and at any reasonable time and from time to time after giving prior written notice to Tenant. to do or cause to be done any of the following: to audit the records. to cause an audit of the records to be made; to make abstracts from thc records: to make copies of any or all of the records: to examine any or all Subleases; and to make copies of any or all Subleases. Tenant shall make all records speci lied in the notice available at the time specitied in the notice. iI' reasonable. and at the place where the records are to be kept pursuant to this Section 11.2. All information so obtained by thc Agency shall bc treated as conlidential except in any litigation or arbitration proceedings bet\veen thc Agency and Tenant or the Agency and any Subtenant. concessionaire or licensee and except. further. that the Agency may divulge the information to a prospective buyer or encumbranccr of the Site or of the Agency's interest in the Lease or to a governmental agency or employee thereof demanding the information. The primary purpose of such audit right of the Agency shall be for the purpose of verifying the amount of Minimum Sales Tax that are reported for purposes of determining the benelits received by the Agency for the entering into of the Agreement and this Lease and to verify the manner and procedures for use of the Infrastructure Funds and the Site Development Grant 11.3 Partial Year. A "Calendar Year" shall be considered to begin on the first day of January of the year in which the Improvements are open for business and each subsequent anniversary date of the beginning of the first Calendar Year. Partial years preceding the lirst Calendar Year and following the last full Calendar Year of the term of this Lease shall be included in and with the nearest whole Calendar Year. 11.4 Minimum Sales Tax. Agency is entering into this Lease based on Tenant's assurances that the Improvements to be operated by the Tenant will generate substantial revenue from the sales of automobile fuel, supplies and other items as are typically found in a convenience store. The Tenant covenants that the Improvemeqts shall generate minimum taxable sales transactions for the generation of local sales tax revenues (the "Minim~m Sales Tax") during the term of the Lease Term. Specifically, pursuant to the Minimum Sales Tax Covenant (Exhibit "H" to the Agreement) the Tenant covenants to generate Minimum Sales Tax in amount of Five Million Dollars ! 4845-0847-0272.1 19 P \Agendas\Agenda AlladllT1enls\Agnms.Amend :005\05-01-10 EI Paseu-Lt.:ase Agrmtdoc ($5.000.000) for each and every year of operation of the Project during the Term of this Lease including 'any extension of Lease Term as set forth herein. 11.5 Minimum Assessed Valuation. Agency is entering into this Lease based on Tenant's assurances. pursuant to the Aureement and the Minimum Assessed Valuation Covenant (Exhibit "G"). that the b Improvements to be operated by the Tenant shall be assessed by the Assessor of the County of San Bernardino. for general property tax purposes. at a minimum assessed value of Two Million Five Hundred Thousand Dollars and No Cents ($2.500.000.00) (the "Minimum Assessed Value"). 11.6 Extension of the Lease Term. Tenant shall have the right to extend the Lease Term upon written notice given to the Agency thirty (30) days prior to the termination of the Lease Term so long as Tenant generates Minimum Sales Tax from the Improvements for the preceding five (5) years of the Lease Term. which in the aggregate total Thirty Four Million Seven Hundred One Thousand Five Hundred Five Dollars and No Cents ($34.701.505.00) and so long as the Improvements to be operated by Tenant shall be assessed by the Assessor of the County of San Bernardino. for general property tax purposes. for the preceding live (5) years of the Lease Term. which in the aggregate total a rl.linimum assessed value of Twelve Million Five Hundred Thousand Dollars and No Cents ($12.500.000.00). Thereafter, Tenant may extend any Extension Term upon written notice given to the Agency thirty (30) days prior to the termination of such Extension Term so long as Tenant is not in default under any of the terms of this Lease. ARTICLE XII TAXES AND ASSESSMENTS 12.1 Taxes and Assessments. 12.1.1 Payment of Taxes. Tenant agrees to pay and discharge as they become due, promptly and before delinquency, all taxes, assessments, rates, charges. license fees, municipal liens, levies, excises or imposts, whether general or special, or ordinary or extraordinary, of every name, nature, and kind whatsoever, including all governmental charges of whatsoever name, nature, or kind, which may be levied, assessed, charged, or imposed, or may become a lien or charge on the real property leased hereunder, or any part thereof, the leasehold of Tenant herein, the Site described herein, any building or buildings, or any other improvements now or hereafter thereon, or on Tenant's estate hereby created which may be a subject of taxation, or on Agency by reason of its ownership of the fee underlying this Lease, during the entire term hereof, saving and excepting only those taxes hereinafter in this Section 12.1 specifically excepted. / 12.1.2 Payment of Special Assessments. Specifically and without in any way limiting the generality of the foregoing, Tenant shall pay any and all special assessments or levies or ! 4845-0847-0272.1 20 P\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 El Paseo-Lease Agrmt..doc charges nlade by any municipal or political subdivision for local improvements. and shall pay the same in cash as they shall fall due and before they shall become delinquent and as required by the act and proceedings under which any such assessments or levies or charges are made by any municipal or political subdivision. If the right is given to pay either in one sum or in installments. Tenant may elect either mode of payment and its election shall be binding on the Agency. If by making an election to pay in installments. any of the installments shall be payable after the termination of this Lease or any extended term thereot: the unpaid installments shall be prorated as of the date of termination. and amounts payable after said date shall be paid by the Agency. 12.1.3 Proration of Taxes. All payments of taxes of special assessments shall be prorated at commencement and expiration of the Lease term or any extended term thereof. 12.1.4 Contest of Taxes. I l' Tenant shall in good faith desire to contest the validity or amount of any tax. assessments. Icvy. or other governmental charge herein agreed to be paid by Tenant. Tenant shall be permitted to do so. and to defer the payment of said tax or charge. the validity or amount of which Tenant is so contesting. until final determination of the contest. by giving to the Agency written notice thereof prior to the commencement of any contest, which shall be at least 15 days prior to delinquency. and by protecting the Agency on demand by a good and sufficient surety bond against any tax. levy. assessment. tate or governmental charge, and from any costs. liability. or damage arising out ofa contest. 12.1.5 Rebates. ^ny ami all rebates on account. of taxes. rates. levies. charges. or assessments required to be paid and paid by Tenant under the provisions of this Lease shall belong to Tenant. and the Agency will. on the request of Tenant. execute any receipts, assignments, or other acquittances that may be necessary in order to secure the recovery of the rebates. and will pay over to Tenant any rebates that may be received by the Agency. 12.1.6 Proof of Compliance. Once in each calendar year during the term of this Lease, or any extended term thereot: Tenant shall obtain and deliver to the Agency receipts or duplicate receipts or copies thereof for all taxes. assessments and other items required hereunder to be paid by Tenant. 12.1.7 Exemptions. Tenant's obligation to pay taxes ~hall not include income, gift, franchise, estate, inheritance, succession, capital levy, or transfer tax levied or assessed against the Agency, if any, by federal, state, or other governmental agency. 12.2 Personal Propertv Taxes. Site Users, and each of them, agree to pay before delinquency all personal property taxes assessed against personal property of each of them in or about the Site at any time during the term of this Lease or any extended term thereof. ARTICLE XIII / INSURANCE ! 4845-0847.027'2.1 21 PlAgendas\Agenda AttachmentslAgrmts-Amend 2005\05-01-10 El Paseo-lease Agrml..doc l~.l Insurance. I 13.1.1 Site Users, and each of them, agree, at all times during the term of this Lease and any extended term thereof, and at such Site User's sole expense, to maintain Commercial General Liability Insurance (including Premises-Operations coverage, Contractual Liability coverage for the indemnity provisions of this Lease, Products-Completed Operations Hazards coverage, Personal Injury and Death coverage, and public liability insurance coverage), property damage insurance, and Garage Keepers insurance, insuring the Site User and Site User's employees against all bodily injury, property damage, personal injury and other loss arising out of the use and occupancy of the Site and the business operated by such Site User, or any other occupant on the Site, including appurtenances to the Site and sidewalks fronting thereon, including the sidewalk area used for pedestrians or vehicular travel entering or leaving the Site. The insurance requircd hereunder shall have a minimum combined single limit of liability of not less than ONE MILLION DOLLARS ($1,000,000), a general aggregate limit of TWO MILLION DOLLARS ($2,000,000), and property damage limit of not less than FIVE HUNDRED THOUSAND ($SOO,OOO). The Agency shall be named as an additional insured under every such policy of insurance, and every policy shall contain cross-liability endorsements. 13 .1.2 Tenant, at all times during the term of this Lease and any extended term thereof and at Tenant expense, shall maintain on the Improvements on the Site, insurance against loss or damage by tire and by any peril included within tire and extended coverage insurance for ninety percent (90'Yo) of the full replacement value of the Improvements. If any boilers or other pressure vessels or systems are hereafter installed on the Agency Property, boiler and machinery insurance with a minimum limit of ONE MILLION DOLLARS ($1,000,000) per occurrence and insuring Tenant against all liability assumed by it under this Lease, as well as liability imposed by law, shall be carried and maintained by Tenant at Tenant's expense. Any policy or policies described in this subsection shall name the Agency as an additional insured, and the policy shall contain cross-liability endorsements. 13.1.3 The term "full replacement value" of the Improvements on the Site as used herein, shall mean the actual replacement cost thereof from time to time less exclusions provided in the normal tire insurance policy. In the event either party believes 'that the full replacement value (that is to say, the then replacement cost less exclusions) has increased, it shall have the right, but except as provided below, only at intervals of not less than three (3) years, to have the full replacement value redetermined by the insurance company which is then carrying the largest amount of standard tire and extended coverage insurance carried on the Site (hereinafter referred to as "major carrier"). The party desiring to have the full replacement value so redetermined by the major carrier shall forthwith on submission of the determination of the major carrier give written notice thereof to the other party hereto. The determination of the major carrier shall be final and binding on the parties hereto, and Tenant shall forthwith increase the amount of the insurance carried pursuant to this Lease as the case may be to the amount so determined by the major carrier. Said ctetermination shall be binding until superseded by agreement between the parties hereto or by a subsequent redefermination by a major carrier, as defined herein. Each party shall pay one-half of the fee, if any, of the major carrier. If during anyone-year period Tenant shall have made improvements to the premises, the Agency may have the "full ! 4845-0847-0272.1 22 r'A~endas\Agenda Altachments\Agrmls-Amend 2005\05-01-10 El P"seo-Lease Agrmtdoc replacement value" redetermined at any time after the improvements are made. regardless of when the '''full replacement value" was last determined. The term "full replacement value" of trade tixtures. equipment. and merchandise. as used herein. shall mean the actual replacement cost thereof ti"Olll time to time. In the event either pmiy believes that the full replacement value has increased or decreased. it shall have the right to have the replacement value redetermined as provided above. 13.1.4 [Reserved] 13.1.5 Tenant further agrees at all times during the Lease Term and any extended term thereof. and at Tenant's sole expense. to keep all of Tenant's personal property. including trade ti:\lures and equipment and all merchandise of Tenant or any Subtenant that may be on the Site from time to time. insured against loss or damage by fire and by any peril included within fire and extended coverage insurance for an amount that will insure the ability of Tenant and its subtenants. if any. to fully replace the trade tixtures. equipment and merchandise. 13.1.6 Site Users. and each of them. further agree to maintain in effect throughout the Lease Term. or any extended term thereof. Workers' Compensation insurance in accordance with California Law, and employers' liability insurance with a limit of 110t less than ONE MILLION DOLLARS ($1,000,000) per employee and TWO MILLION DOLARS ($2.000,000) per oecurrence. 13.1.7 All of the policies of insurance referred to in this Lease shall be written by companies authorized to do business in California and rated "'B+/Vll"' or better in "Best's Insurance Guide"'. Site Users, and each of them. agree to pay all of the premiums therefor and deliver said policies, or certitied copies thereof. including all endorsements and amendments thereof. to the Agency. In the event of the failure of a Site User either to procure said insurance in the names herein called for within ten (10) days after the commencement of this Lease and thereafter at least tifteen (15) days prior to the expiration of any policy, or to pay the premiums therefor when required, or to deliver said polieies or certiticates thereof, to Agency at least ten (10) days before the same become effective, the Agency shall be entitled, but shall have no obligation. to procure said insurance and pay the premiums for same. Any premiums paid by Agency shall be repaid by such Site User to Agency within fiftten (15) days of written notice from Agency, and failure to repay the same shall carry with it the same consequence as failure to pay any installment of rent. Each insurer referred to in this Section shall agree, by endorsement on the policy or policies issued by it, or by independent instrument furnished to Agency, that it will give the Agency thirty (30) days' written notice by registered mail before the policy or policies in question shall be altered or cancelled. 13.1.8 In the event that Agency determines, in Agency's reasonable judgment, that the limits of the public liability, property damage, or products liability insurance then carried by Site User are materially less than the amount or type of insurance typically carried by owners or tenants of properties located in San Bernardino, California, which are similar to and operated for similar purposes as the Site, Agency ~ay elect to require Tenant to increase the amount of specific coverage, change the type of policy carried, or both. If Agency so elects, Tenant shall be notified in writing of the specific change in policy amount or type required and shall have ! 4845-0847-02712.1 23 P\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo.Lease Agrml.doc thirty (30) day~ after the date of Ag~ncy" s no:ice to etfect the change in ~mount or type of policy. Any adjustment pursuant to thIs subsection may be made not more otten than every two (:2) years unless otherwise agreed by Agency and Tenant. 13. I. 9 Any policy required hereunder shall contain an endorsement waiving the insurer's right of subrogation against Agency. 13. I. I 0 Notwithstanding anything to the contrary contained within this Lease, the Tenant's obligation to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by the Tenant; provided, however, that the coverage atforded the Agency will not be reduced or diminished or otherwise be ditferent from that which would exist under a separate policy or policies meeting all of the requirements of this Lease by reason of the use of a blanket policy of insurance, and provided further that the requirements of this Article XIlI are othenvise satisfied. ARTICLE XIV INDEMNIFICATION 14.1 Indemnification. Tl::nant agrl::es to indemnify. defend, protect, and hold Agency free and harmless from and against any and all claims, liability, loss. damage. actions or causes of action, costs and expenses (including attorneys' fees) arising from or in connection with any act. omission, or negligence of Tenant, any and all Subtenants, or the employees. invitees, agents, licensees of any of them, or any use of or activities on or about the Site. excluding any claims, liability, loss, damage, actions or causes of action. costs and expenses (including attorneys' fees) arising from or in connection with Agency's willful misconduct. The indemnitication or defense provided by Tenant is independent of any insurance available to the Tenant. Agency shall be entitled to recover reasonable attorney fees and court costs incurred in enforcing the indemnification and defense . clauses. The indemnification and defense clauses shall survive the expiration or earlier termination of this Lease until all claims against Agency involving any of the indemnitied matters are fully, finally, and absolutely barred by applicable staMes of limitations. The duty of Tenant to defend Agency is separate and independent of Tenant's duty to indemnify the Agency. The duty to defend includes claims for which the Agency may be liable without fault or strictly liable. The duty to defend applies regardless of whether the issues of negligence, liability, fault, default, or other obligation on the part of Tenant or the Agency have been determined, but only so long as any claim alleges a loss arising out of the Tenant's performance of its obligations under this Lease or Tenant's actual use of the Site. It is the express intention of the parties that either party may seek declaratory relief, summary adjudication or summary judgment in San Bernardino Superior Court regarding Tenant's duty to defend the Agency at any stage of any claim or suit. ARTICLE XV / CONDEMNA TION ! 4845.0847.02712.1 24 P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-0t~IO El Paseo-Lease Agrmt..doc 15.1 Definitions. I The following ddinitions apply in construing provisions of this Lease relating to a taking of or damage to all or any part of the Agency Property or Improvements or any interest in them by eminent domain or inverse condemnation: "Taking" means any taking or damaging, including. without limitation. severance damage. change of grade, taking possession. or damage to remaining property of the Agency and Tenant bv eminent domain or by inverse condemnation or for any public or quasi-public use. A transfer of title may be either a transfer resulting from the recording of a tinal order in condemnation or a voluntary transfer or conveyance to the condemning agency or entity under threat of condemnation. in avoidance of an exercise of eminent domain, or while condemnation proceedings are pending. The taking shall be considered to take place as of the earlier of (i) the date actual physical possession is taken by the condemner, or (ii) the date on which the right to compensation and damages accrues under applicable law. "Total taking" means the taking of the fee title to all the Agency Property or the Improvements, or a taking of the entire leasehold estate of Tenant. which shall be considered to exclude any 01'1'- site improvements effected by Tenant to serve the Agency Property or the Improvements on the Agency Property. "Substantial taking" means the taking of so mueh of the Agency Property or Improvements so that (a) in the reasonable judgment of the Agency a reasonable amount of rcconstruction would not make the Ageney Property and Improvements either (i) a practical improvement and reasonably suited for Tenant's continued occupancy for the uses and purposes for which the Agency Property are leased hereunder, or (ii) reasonably efticient or economic for Tenant's use, or (b) the income from all Subleases payable to Tenant after the taking shall be less than one hundred twenty percent (120%) of all rent, additional rent, and other monetary obligations of Tenant under this Lease. "Partial taking" means any taking of the fee title to the Agency Property and Improvements that is not either a total or a substantial taking. "Notice of intended taking" means any notice that a reasonably prudent person would interpret as expressing an existing intention of taking as distinguished from a mere preliminary inquiry or proposal. It includes but is not limited to the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a notice of intent to take, in writing, containing a description or map of the proposed taking reasonably defining the extent of the taking. In the case of inverse condemnation, notice is considered to have been received (i) by Tenant when Tenant receives knowledge of any fact or circumstance that would lead a reasonable person to conclude that a taking by inverse condemnation has occurred or might reasonably be expectled to occur, and (ii) by the Agency when the Agency has received a written communication (excluding communicalions of a generalized informational nature not relating specifically to inverse condemnation of the Agency Property) that the Agency Property is being taken by inverse condemnation, t 4845-0847-0272.\ 25 P \Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrmt doc I "Award" means compensation paid for the taking whether pursuant to judgment or by agreement or otherwise. 15.2 Giving Notice. The party receiving any notice of the kinds specified below shall promptly give the other party notice of the receipt, contents. and date of the notice received: 15.2.1 Notice of intended taking; 15.2.2 Service of any legal process relating to condemnation of the Agency Property or Improvements: 15.2.3 Notice in connection with any proceedings or negotiations with respect to such a condemnation; or 15.2.4 Notice of intent or willingness to make or negotiate a private purchase, sale. or transfer in lieu of condemnation. ' 15.3 Independent Taking. The Agency and Tenant shall each have the right to represent its respective interest in each proceeding or negotiation with respect to a taking or intended taking and to make full proof of its claims. No agreement, settlement, sale, or transfer to or with the condemning authority shall be made without the consent of the Agency and Tenant. The Agency and Tenant each agree to execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. 15.4 Substantial Taking. If the taking is substantial as defined in Section 15.1, above, Tenant may, by notice to the Agency given within ninety (90) days after Tenant receives notice of intended taking, elect to treat the taking as a substantial taking. If Tenant does not so notify the Agency, the taking shall be deemed a partial taking. A substantial taking shall be treated as a total taking if (a) Tenant delivers possession to the Agency within ninety (90) days after determination that the taking was a substantial taking, and (b) Tenant is not in default under the Lease and has complied with all provisions concerning apportionment of the award. If these conditions are not met, the taking shall be treated as a partial taking. 15.5 Total Taking. On a total ta~ing, all sums, inch;.ding, without limitation, damages and interest, awarded for the fee or the leasehold or both shall be deposited promptly with the Agency and shall be distributed and disbursed in the following order and priority: ! 4845-0847-0212.\ 26 P:\A!j:endas\Agenda Attachmenls\Agrmts-Amend 2005\05-01-10 El Paseo-Lease Agrml..doc 15.5.1 All real and personal property taxes constituting a lien on the Agency Property I and Improvements. 15.5.2 To the Leasehold Mortgagees. the amount due under the Leasehold Mortgages. 15.5.3 To the Agency a sum equal to the fair market value of the Agency Property taken valued at its highest and best use as unimproved land exclusive of Improvements and unburdened by this Lease and all Subleases. 15.5.4 To the Agency any expenses or disbursements (including attorneys' fees) reasonably paid or incurred by or on behalf of the Agency for or in connection with the condemnation proceedings. 15.5.5 To Tenant the expenses or disbursements (including attorneys' fees) reasonably paid or incurred by or on behalf of Tenant for or in connection with the condemnation proceedings. 15.5.6 The balance, if any. to Agency. 15.6 Partial Takin!1:. 15.6.1 Effect on Minimum Rent; Term. On a partial taking. this Lease shall remain in full lorce and effect. covering the remaining Agency Property, except that if the rent payable under this Lease during the Lease Term shall not be reduced however the rent payable during any Extension Term shall be reduced in the same ratio as the fair market value of the portion of the Agency Property taken (excluding Improvements then in existence but deducting expenses of collection. including any attorneys' fees of the Agency and Tenant and restoration costs). 15.6.2 Award. On a partial taking, all sums, including damages and interest, awarded for the fee title or the leasehold or both, shall be deposited with the Agency and shall be distributed . and disbursed in the following order of priority: (a) To Tenant, the cost of restoring the Improvements, provided that such amounts shall be held by the Agency and applied in the same manner as proceeds of insurance under Section 6.8.7, and to the Subtenants, the amount assessed or awarded for their removal or relocation, plus any amount awarded for detriment to their business. (b) To the Leasehold Mortgagee a sum equal to the amount necessary to reduce the then principal balance so that the ratio of the principal balance to fair market value of the property encumbered by the Leasehold Mortgage remains the same after the taking as it was before the taking. · / C . (c) To the Agency a sum equal to the laIr market value of the Agency Property taken valued at it highest and best use as unimproved land exclusive of Improvements and unburdened by this Lease and all Subleases. ! 4845-0847-0272.1 27 P:\A~endas\Agenda Anachments\A.grmts.Amend 2005\05-01.10 EI Paseo.Leasc AgrmLdoc (d) To th~ Agency any ~xp~ns~s or disbursem~nts (including attorneys' fees) r~asonably and necessarily incurred or paid by or on behalf of the Agency for or in connection with the condemnation proceedings. (e) To Tenant any expenses or disbursements (including attorneys' fees) reasonably and necessarily incurred or paid by or on behalf of Tenant for or in connection with the condemnation proceedings. (t) The balance, if any, to Agency. 15.7 Temporarv Taking. 15.7.1 Effect on Rent: Term. On a temporary taking, the term of this Lease shall not be reduced or affected in any way and Tenant shall continue to pay the rent in full without diminution. deduction. offset. reduction. or abatement. and (to the extent that Tenant is prevented from doing so by any lawful order of the condemning authority). Tenant shall continue to perform and observe all of the other covenants. conditions, and agreements of this Lease to be perform~d or observed by Tenant as though such temporary taking had not occurred. 15.7.2 Award. On a temporary taking. any and all awards and payments made for the temporary use of the whole or any part of the Agency Property, including, without limitation. damages and interest. shall be paid to the Agency and the Agency shall pay over to Tenant. subject to the provisions of the following sentence, such awards and payments less (i) that portion of said awards or payments that. in the Agency's sole and arbitrary judgment, will be required to be expended on the termination of this period of temporary use in order to restore the Agency Property as nearly as may be practicable to the condition in which the same were prior to such temporary taking, (ii) any amounts required to be paid in order to cure any event of default, or event or occurrence. which, with notice of the passage of time, would constitute an event of default. irrespective of whether the period of curing the same, if any, has expired, and (iii) the . Agency's reasonable costs and expenses, including, without limitation, reasonable experts' and attorneys' fees and disbursements, incurred in the Agency's determination of the amounts described in clause (i), above. If a temporary taking is for a period extending beyond the then current term of this Lease, the sums payable for such temporary taking shall be apportioned between the Agency and Tenant in the same ratios, respectively, that that part of the entire period of such temporary use falling after the expiration date of the then current term hereof, and that part falling before said expiration date bear to the entire period of temporary use. Tenant's share hereof shall be reduced in the manner set forth in the first sentence of this Section 15.7.2 if the conditions therein are applicable. ARTICLE XVI DEFAULT AND REMEDIES ,. 16.1 Event of Default ! 4845-0847-0272.1 28 P \Agendas\Agenda Allachmenls\Agrmls.Amend 2005\05-01-10 El Paseo.Lease AgrmLdoc I Each of the following events shall be a default by Tenant ("Event of Default".) and a breach of this Lease. 16.1.1 Abandonment. Abandonment or surrender of the Agency Property or of the leasehold estate. The Agency Property shall be deemed vacated if the Improvements are not operated for a period of seven consecutive days for any reason other than a closure for major repairs or renovation. Acts of God. casualty. war or insurrection. strikes or labor disputes, or other matters beyond the reasonable control of Tenant. 16.1.2 Failure to Pav Rent. Tenant shall at any time be in default hereunder as to any monetary obligation hereunder. which for all purposes and proceedings shall be deemed rent (" Rent"'): provided, however. that such default shall have continued for a period of ten (10) days. 16.1.3 Failure to Perform. Tenant shall be in default if any of its other promises. covenants. or agreements contained in this Lease including. but not limited to, the Minimum Sales Tax Covenant set forth in section 11.4 herein. the Minimum Assessed Valuation Covenant set forth in section 11.5 herein. and such default shall continue for 'thirty (30) days after written notice thereof ti'OITI the Agency to Tenant. 16.1.4 Judicial Process. The subjection of any right or interest of Tenant or any member of Tenant in, to or under this Lease to attachment, execution, or other levy, or to seizure under legal process when the claim against Tenant is material. ifnot released within ninety (90) days. 16.1.5 Receiver. If not released within sixty (60) days, the appointment of a receiver to take possession of the Site or Improvements. or of Tenant's or any member of Tenant's interest in. to. and under this Lease. the leasehold estate or of Tenant's operations on the Site for any reason, including, without limitation, assignment for benefit of creditors or voluntary or involuntary bankruptcy proceedings. but not including receivership pursuant to administration of the estate of any deceased or incompetent Tenant or of any deceased or incompetent individual member of Tenant. 16.1.6 Bankruptcy. An assignment by Tenant for the benetit of creditors; or the voluntary tiling by Tenant or the involuntary filing against Tenant of a petition, other court action or suit under any law for the purpose of (i) adjudicating Tenant a bankrupt, (ii) extending time for payment, (iii) satisfaction of Tenant's liabilities, or (iv) reorganization, dissolution, or arrangement on account of, or to prevent, bankruptcy or insolvency; provided, however, that in the case of an involuntary proceeding, if all consequent orders, adjudications, custodies, and supervisions are dismissed, vacated, or otherwise permanently stayed or terminated within 90 days after the filing or other initial event, then Tenant shall not be in default under this Section 16.1.6. ~ 16.2. Remedies on Default. / t 4845-0847-027'2.1 29 P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2005\05-01-10 El Paseo-Lease AgrmtJoc 16.2.1 Right to Terminate. In the event of any default by Tenant the Agency. in additiontb any other remedies available to the Agency at law or in equity, shall have the option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such intention to terminate. No notice of any kind, including a notice of default, given by the Agency to Tenant shall constitute a termination of this Lease unless expressly so stated in the notice. In the event the Agency deets to terminate this Lease, then the Agency may recover from Tenant: (a) At the time of award, any outstanding and unpaid rent at the time of such termination: plus (b) At the time of award of the amount by which the unpaid rent after termination until the time of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus (c) At the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (d) Any other amount, including court costs, necessary to compensate the Agency for all the detriment proximately caused by Tenant's failllre to perform its obligations under this Lease: and (c) At the Agency's election., such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California and fcderallaw. 16.3 Reentrv on Agency Property. In the event of any default by Tenant, the Agency shall also have the right, with or without terminating this Lease, to reenter the Agency Property and to remove all persons and property from the Agency Property. Property removed may be stored in a public warehouse or , elsewhere at the cost of and for the account of Tenant. 16.4 Continuation of Lease. The Agency may elect in the event of a default by Tenant to continue this Lease in full force and effect and to collect rent as it becomes due under this Lease. In such event, the Agency may enter on and relet the Agency Property or any part thereof to a third party or third parties for such term or terms and at such rental or rentals and on such other terms and conditions as the Agency in its sole discretion may deem advisable and shall have the right to make alterations and repairs to the Agency Property. Tenant shall be liable for all the Agency's costs in reletting, including but not limited to remodeling costs required for the reletting. In the event the Agency relets the Agency Property, Tenant shall pay all rent due under and at the times specified in this Lease, less any amoupt or amounts actu~lly received by the Agency from the reletting. 16.5 Application of Rent from Reletting. ! 4845-0847-0272.1 30 P.\A~endas\Agcnda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrml__doc In th~ ~v~nt that th~ Ag~ncy ~kcts to relet all or a portion of the Ageney Property followingl a default by Tenant. th~n rent received by the Agency from the reletting shall be applied: first. to the paYI11~nt of any ind~btedness other than r~nt due her~und~r from Tenant to the Agency: second. to th~ paYI11~nt of any cost of th~ rel~tting: third. to th~ paym~nt of th~ cost of any alt~rations and repairs to the Agency Property: fourth. to th~ paym~nt of rent du~ and unpaid und~r this Lease. The residue. if any. shall be held by the Agency and applied in paym~nt of future rent as the sam~ may b~com~ due and payable hereund~r. Should that portion of rent rec~ived from th~ reletting during any month. which is appli~d to th~ payment of rent h~reunder, be less than the rent payable during that month by Tenant hereunder, then Tenant shall pay such deticiency to the Agency immediately on demand therefor by the Agency. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to the Agency. as soon as ascertain~d. any costs and ~xp~ns~s incurred by th~ Agency in such reletting or in making such alt~rations and r~pairs not covered by th~ rent receiv~d from th~ rel~tting. 16.6 Other Ri!.!hts of the A!.!encv. No act of the Ag~ncy. including but not limited to the Agency's entry on the Agency Propaty. efforts to relet th~ Agency Property. or maintenance of the Agency Prop~rty, shall be construed as an ekction to terminate this Lease unl~ss a written notice of such intention is given to Tenant or unkss the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding the Ageney clection to continue the lease in full force and effect aft~r a default by tenant and to relet the Ageney Property, the Agency may at any time after such rcl~tting ~lect to terminate this Lease for any such debult. 16.7 Agencv's Ri!.!l1t to Cure. After expiration of the applicable time for curing a particular default, or before the expiration of that time in the event of emergency or other condition which if not remedied by the curing of the default could materially and adversely affect the Agency's right or security under this Lease. the Agency may at the Agency's election, but is not obligated to. make any payment required of Ten ant under this Lease, or perform or comply with any covenant imposed on Tenant under this Lease, and the amount so paid plus the reasonable cost of any such performance or compliance, including. without limitation. attorneys' fees and disbursements. plus interest on this sum at the then maximum interest rate permitted by law from the date of payment. performance. or compliance (herein called act). shall be deemed to be additional rent payable by Tenant with the next succeeding installment of rent. No such act shall constitute a waiver of default or of any remedy for default or render the Agency liable for any loss or damage resulting from any such act. 16.8 Right of Subtenants. The possession of any Subtenant of Tenant shall not be disturbed following a termination of this Lease or a foreclosure of any mortgage (or assignment in lieu thereof) provided the Subtenant is not then in default undef its Sublease with Tenant and provided the Subtenant agrees in writing to attorn to the Agency, the Leasehold Mortgagee, or the assignee of either. ! 4845-0847-0212.1 31 P \Agendas\Agenda Attachlllel1ls\A~nnts-Amel1d Z005\05-0 1-1 0 Ell'aseo-Lcase Agrlll! doc 16.9 Ri!.!hts of Leasehold Mort!.!a!.!ee , 16.9.1 Ri!.!i1t to Cure. The Agency. on providing Tenant any notice of: (i) default under this Lease. or (ii) the termination of this Lease, or (iii) a matter on which the Agency may predicate or claim a default. shall at the same time provide a copy of such notice to every Leasehold Mortgagee who shall have given the Agency written notice specifying its name and address. No such notice by the Agency to Tenant shall be deemed to have been duly given unless and until a copy thereof has been so provided to Leasehold Mortgagee. From and after the date such notice has been given to Leasehold Mortgagee, Leasehold Mortgagee shall have the same period. after the giving of such notice on it. for remedying any default or acts or omissions that arc the subject matter of the notice or causing the same to be remedied, as is given Tenant after the giving of the notice to Tenant to remedy, commence remedying. or cause to be remedied the defaults or acts or omissions that are the subject matter of the notice. The Agency shall accept such performance by or at the instigation of such Leasehold Mortgagee as if the same had been done by Tenant. Tenant authorizes Leasehold Mortgagee to take any such action at Leasehold Mortgagee's option and does hereby authorize entry on the Agency Property and the Improvements by the Leasehold Mortgagee for such purpose. 16.9.2 Notice to Leasehold Mort!.!cH.;ee. Anything contained in this Lease to the contrary notwithstanding. if any default shall occur that entitles the Agency to terminate this Lease, the Agency shall have no right to terminate this Lease unless. following the expiration of the period of time, if any, given Tenant to cure th(;default or the act or omission that gave rise to the default, the Agency shall notify Leasehold Mortgagee of the Agency's intent to so terminate at least thirty (30) days in advance of the proposed effective date of the termination if the default is capable of being cured by the payment of money. and at least forty-tive (45) days in advance of the proposed effective date of the termination if the default is not capable of being cured by the payment of money ("Termination Notice"). The provisions of Section 16.9.3 below shall apply i L during this 30-day or 45-day Termination Notice Period, Leasehold Mortgagee shall: (a) notice. and Notify the Agency of the Leasehold Mortgagee's desire to nullify the (b) Payor cause to be paid all rent, additional ~nt, and other payments then due and in arrears as specified in the Termination Notice to the Leasehold Mortgagee and which has become due or may become due during the 30-day period, and (c) Comply in good faith, with reasonable diligence and continuity, with all non-monetary requirements of this Lease then in default and reasonably susceptible of being complied with by the Leasehold Mortgagee, provided however, that the Leasehold Mortgagee shall not be required during the 45-day period to cure or commence to cure any default consisting of Tenant's failure to satisfy and discharge any lien, charge, or encumbrance against the Tenant's interest in this Lease or the Agency Property or Improvement; junior in priorijY to the lien of the Mortgage held by Leasehold Mortgagee. 16.9.3 Procedure on Default. ! 4845.0847.0272.1 32 P-\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrm!..doc (a) [1' the Agency shall elect to terminate this Lease by reason of any default of Tenant. and Leasehold Mortgagee shall have proceeded in the manner provided for by subsection (a) of this Section 16.9. the specitied date for the termination of this Lease as tixed by the Agency in its Termination Notice shall be extended for a period of six (6) months. provided that such Leasehold Mortgagee sha[L during this six-month period: (I) Pay or cause to be paid. the rent. additional rent. and other monetary obligations of Tenant under this Lease that have become due and as the same become due. and continue its good faith efforts to perform all of Tenant's other obligations under this Lease. excepting (A) obligations of Tenant to satisfy or otherwise discharge any lien. charge, or encumbrance against Tenant's interest in this Lease or the Agency Property or the Improvements junior in priority to the lien of the mortgage held by Leasehold Mortgagee and (8) past non-monetary obligations then in default and not reasonably susceptible of being cured by Leasehold Mortgagee; and (2) Take steps to acquire or sell Tenant's interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means and prosecute the same to completion with due diligence. (b) lfat the end ot'the six-month period the Leasehold Mortgagee is complying with subsection 16.9.3(a), above, this Lease shall not then terminate, and the time for completion by Leasehold Mortgagee of its proceedings shall continue so long as Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold Mortgagee proceeds to complete steps to acquire or sell Tenant's interest in this Lease by foreclosure of the Leasehold Mortgage and by other appropriate means with reasonable diligence and continuity. Nothing in this subsection (b) of this Section 16.9.3. however, shall be construed to require Leasehold Mortgagee to continue such foreclosure proceedings after the default has been cured. If the default shall be cured and Leasehold Mortgagee shall discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if Tenant had not defaulted under t~is Lease. (c) If Leasehold Mortgagee is complying with subsection (a) of this Section 16.9.3, on the acquisition of Tenant's estate herein by Leasehold Mortgagee or its designee or any other purchaser at a foreclosure under the Leasehold Mortgage (hereafter the "Purchaser") and the discharge of all liens, charges, and encumbrances against the Tenant's interest in this Lease or Agency Property and the Improvements that the Tenant is obligated to satisfy and discharge by reason of the terms of this Lease, this Lease shall continue in full force and effect as if Tenant had not defaulted under this Lease. (d) ~ Any Purchaser (who may, but need not be, the Leasehold Mortgagee) who acquires Tenant's interest in thif Lease at a foreclosure sale, or who otherwise acquires Tenant's interest from the Leasehold Mortgagee or by virtue of a Leasehold Mortgagee's exercise of its remedies, shall be deemed to have agreed to perform all of the terms, t 4845-0847-0212.1 33 P:\Agendas\Agenda Auachmenls\Agrmts-Amend 2005\05-01-10 El Pasco-Lease AgrmLdoc covenants. and conditions on the part of the Tenant to be performed hereunder from and atler the date of the purchase and assignment, but only for so long as the Purchaser or Leasehold ivlortgagee is the owner of the leasehold estate. If the Leasehold l'vlortgagee or Purchaser shall become holder of the leasehold estate and if the Improvements on the Agency Property shall have been or become materially damaged on, before, or after the date of the purchase and assignment, the Leasehold Mortgagee or Purchaser shall be obligated to cause restoration only to the extent of the net insurance proceeds received by the Leasehold Mortgagee or Purchaser by reason of such damage. However. should the net insurance proceeds be insufficient for the restoration to the extent required by this Lease and should the Leasehold Mortgagee or its designee choose not to fully reconstruct the Improvements to the extent required by this Lease. such failure shall constitute an event of default under this Lease that shall give the Agency the right to terminate this Lease after 30 days prior written notice to Leasehold Mortgagee or Purchaser. (e) Leasehold Mortgagee or other acquireI' of the leasehold estate of Tenant pursuant to Foreclosure. assignment in lieu of foreclosure or other proceedings may, on acquiring Tenant's leasehold estate, without further consent of the Agency, sell and assign the leasehold estate on such terms and to such persons and organizations as are acceptable to Leasehold Mortgagee or acquireI' and thereafter be relieved of all obligations under this Lease: provided that such assignee has delivered to the Agency and its written agreement to be bound by all of the provisions of this Lease. (t) Notwithstanding any other provisions of this Lease, any sale of this Lease and the leasehold estate hereby created in any proceedings for the foreclosure of the Leasehold Mortgage, or the assignment or transfer of this Lease and of the leasehold estate hereby created in lieu of the foreclosure of the Leasehold Mortgage shall be deemed to be a permitted sale, transfer, or assignment of this Lease and of the leasehold estate hereby created. 16.9.4 New Lease. In the event of the termination of this Lease as a result of Tenant's default, the Agency shall. in addition to providing the notices of default and termination as required by Section 16.9.3, provide Leasehold Mortgagee with prompt written notice that the Lease has been terminated, together with a statement of all sum3 that would at that time be due under this Lease but for such termination, and of all other defaults, if any, then known to the Agency. The Agency agrees to enter into a new lease ('"New Lease") of the Agency Property with Leasehold Mortgagee or Purchaser for the remainder of the term of this Lease, effective as of the date of termination, at the rent and on the terms, covenants, and conditions (but excluding requirements that are no longer applicable or that have already been fulfilled) of this Lease, provided: (a) Leasehold Mortgagee shall make written request on the Agency for the New Lease within sixty (60) days after the date Leasehold Mortgagee receives the Agency's Termination Notice of this Lease given pursuant to this Section 16.9.4. l / (b) Leasehold Mortgagee or Purchaser shall payor cause to be paid to the Agency at the time of the execution and delivery of the New Lease, any and all sums that , 4X45-0X47-0212.1 34 P ':\gendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrmu.toc would at the time of execution and delivery thereof be due pursuant to this Lease but for su~h termination and, in addition thereto, all reasonable expenses, including reasonable attorneys' fees, that the Agency shall have incurred by reason of such termination and the execution and delivery of the New Lease and that have not otherwise been received by the Al!ency from Tenant. On the execution of the New Lease, the Agency shall allow to '- "' .... "' the Tenant named therein as an offset against the sums otherwise due under this subsection or under the New Lease, an amount equal to the net income derived by the Agency from the Agency Property during the period ti'om the date of termination of this Lease to the date of the beginning of the Lease term of the New Lease. In the event of a controversy as to the amount to be paid to Landlord pursuant to this subsection, the payment obligation shall be satistied if the Agency shall be paid the amount not in controversy. and Leasehold Mortgagee or its designee shall agree to pay any additional sum ultimately determined to be due plus interest at the then maximum legal rate and this obligation shall be adequately secured. (c) Leasehold Mortgagee or Purchaser shall agree to remedy any of Tenant's defaults of which Leasehold Mortgagee was notitied by the Agency's Notice of Termination and which are reasonably susceptible of being so cured by Leasehold Mortgagee or its designee. (d) The Leasehold Mortgagee or Purchaser, as Tenant under any such New Lease. shall be liable to perform the obligations imposed on the Tenant by the New Lease only during the period such person has ownership of such leasehold estate. 16.9.5 Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing herein contained shall require Leasehold Mortgagee or Purchaser as a condition to its exercise of right hereunder to cure any default of Tenant not reasonably susceptible of being cured by Leasehold Mortgagee or Purchaser, including, without limitation, the default referred to in Section 16.1.6 of this Lease relating to bankruptcy and insolvency and any other Sections of the Lease that may impose conditions of default not susceptible to being cured by Leasehold Mortgagee or Purchaser. in order to comply with the provisions of Sections 16.5.2 or 16.5.3, or as a condition of entering into the New Lease provided for Section 16.5.4. 16.9.6 No Merger. So long as any Leasehold Mortgage is in existence, unless all Leasehold Mortgagees shall otherwise expressly consent in writing, the fee title to the Agency Property and to the Improvements and the leasehold estate of Tenant therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of said fee title and said leasehold estate by the Agency or by Tenant or by a third party, by purchase or otherwise, unless such merger results from a default by Tenant, when the Leasehold Mortgagee or Leasehold Mortagees have been given an opportunity to cure and has failed to do so. 16.9.7 Methqd of Giving Notices. All notices given by the Agency to Leasehold Mortgagees shall be given by registered or certified mail, return receipt requested, addressed to the Leasehold Mortgagees at the address last specified in writing to the Agency by the Leasehold Mortgagee, and any such notice shall be deemed to have been given when so mailed. , 4845-0847-0272.1 35 P:\A~endas\A~enda Altachments\Agrmts-Amend 2005\O~.Ol.1O El Paseo.Lease Agrmldoc 1l9.8 Amendments to Lease. On the request of any Leasehold Mortgagee. the Agency agrees to execute any amendment to this Lease that does not. in the opinion of the Agency's counsel. adversely affect the Agency's rights hereunder. 16.6 A!.!encv's Debult. The Agency shall not be considered to be in default under this Lease unless (a) Tenant has given notice specifying the default and (b) the Agency shall have failed to promptly and diligently cure the default within ninety (90) days after the notice is given. plus any additional period that is reasonably required for the curing of the default if the default is not reasonably susceptible to being cured during this period. so long as the Agency continuously and diligently proceeds to cure the default. Tenant waives the protections of Civil Code Sections 1932 and 1933. Any judgment against the Agency shall be limited to. and satisfied only out ot: the Agency's interest in the Agency Property. Improvements. and this Lease. No money judgment shall be satisfied ti'om any other assets of the Agency. 16.7 Unavoidable Delav. Any prevention. delay. nonperformance. or stoppage duc to strikes. lockouts. labor disputes. riots. insurrcction. war. and othcr causcs beyond the reasonable control of cither party shall cxcuse nonperformance for a period of time equal to the period any such preventions. delay. nonpertixmance. or stoppage. provided. however. that the foregoing shall not excuse the Ltilure of Tenant to timely and completely perform the obligations imposed by this Lease for the payment of rent. 16.8 Waiver. No waiver of any default shall constitute a waiver of any othcr breach of default. whether of the same or any other covenant or condition. No waiver. benefit. privilege. or service voluntarily given or performed by either party shall give the other any contractual rigbt by custom. estoppel, or otherwise. The subsequent acceptance of rent pursuant to this Lease sball not constitute a waiver of any preceding default by Tenant othe~than default in the payment of tbe particular rental payment so accepted, regardless of the Agency's knowledge of the preceding breacb at the time of accepting the rent, nor shall acceptance of rent or any other payment after termination constitute a reinstatement, extension, or renewal of tbe Lease or revocation of any notice or other act by the Agency. 16.9 Attornev's Fees. If either party brings any action or proceeding to enforce, protect, or establish any right or remedy under this Lease, the prevailing party shall be entitled to recover reasonable attorneys' fees, expenses and c~sts. / ARTICLE XVII t 4845-0847-0272.1 36 P\A~endas\Agenda Attachments\Agrmls-Amend 2005\05-01-10 EI Paseo-Lease Agrmu.loc SURRENDER OF AGENCY PROPERTY AND IMPROVEMENTS 17.1 Surrender. At the expiration or earlier termination of the Lease Term or any extended term thereot: Tenant shall surrender to the Agency tht: possession of the Agency Property and Improvements and deliver to the Agency a good and sufficient grant deed, in form acceptable for recordation conveying all of its right. title, and interest therein to the Agency. Tenant shall leave the surrendered Agency Property and Improvements and any other property of Tenant located thereon or contained therein in good and broom-clean condition except as provided to the contrary in provisions of this Lease on maintenance, repair, and removal of Improvements. All property that Tenant is required to surrender shall become the Agency's property on the expiration of or earlier termination of the Lease. All property that Tenant is not required to surrender or remove but which remains on the Agency Property after the expiration or earlier termination of the Lease shall be deemed abandoned and shall. at the Agency's election, become tht: Agt:ncy's propt:rty. 17.2 Failurt: to Surrender. If Tenant fails to surrt:ndt:r tht: Agt:ncy Property and Improvemt:nts at the expiration or sooner termination of, and in the manner rt:quired under this Lease, Tt:nant shall defend and indemnify the Agency from all liability and expense rt:sultingfrom tht: delay or failure to surrender, including, without limitation, claims made by any succt:eding tenant founded on or resulting from Tenant's t~lilure to surrender. ARTICLE XVIII OPTION TO PURCHASE AGENCY PROPERTY 18.1 Tenant's Option to Purchase the Agency Property. Tenant shall have the option to purchase the Agency Property (the "Option"), or any portion thereof owned by the Agency at the time the Option is eltercised by Tenant upon written notice to the Agency of the intent to exercise the Option and subject to the conditions set forth in this Article XVIII. 18.2. Exercise of Option to Purchase the Agency Property. Tenant shall have the right to exercise the Option at any time on or after the twentieth (20th) anniversary of this Lease so long as the following conditions have been met: 18.2.1 Tenant or its assignees and successors is not in default of any of the terms of this Leasei and / 18.2.2 Tenant is not in default under any Mortgage; and ! 4845-0847-0272.1 37 P \A~t:lldas'Agenda Attachmellts\Agrll1ls.Amend 2005\05-01-10 E] Paseo-Lcase Agrmtdoc 18.2.3 Tenant is not in default under any Sublease for any portion of the Site: and , 18.2.4 The Tenant has generated Maximum Sales Tax for the immediately prior five (5) years in excess of Thirty-Five Million Dollars ($35,000,000) in accordance with Section 11.4, herein. I S.3 Purchase Price. The purchase price shall be equal to the greater of (i) the amount of the Bond proceeds that were used and applied by the Agency, including the Infrastructure Funds and the Site Development Grant and any other amounts used for the acquisition of the Property and the relocation of tenants and demolition of structures, together with interest thereon at a rate equal to that of the rate of interest on the Bonds, in furtherance of the acquisition of the Agency Property and the site preparation in anticipation of the construction of the Improvements thereon or (ii) the appraised fair market value determined by a qualified MAl appraiser mutually agreed upon by the Agency and the Tenant as of the date that the sale of the Site is expected to occur. 1 S.4 Escrow. If Tenant exercises the Option, escrow for the purchase and sale shall be opened jointly by the parties with ("Escrow Holder"), or such other escrow company mutually acceptable to the parties, within five days of Tenant's notice to the Agency electing to purchase the Agency Property. Each party shall execute escrow instructions in a form appropriate to complete the purchase and sale of the Agency Property and shall deposit the same with Escrow Holder. The escrow instructions shall provide the following: 18.4.1 Escrow shall close within ninety (90) days after the date of Tenant's notice to the Agency electing to purchase the Agency Property. 18.4.2 Each party shall deposit such funds and instructions as are necessary to complete the purchase and sale as of said date. 18.4.3 Each party shall pay one half of the escrow fee. 18.4.4 The Agency shall pay for any documentary transfer tax on the Agency Quitclaim Deed. 18.4.5 Each party shall pay such other charges and fees commonly paid by buyer and seller in a purchase apd sale of real estat5 in San Bernardino County. 18.4.6 The Agency shall provide, at its cost, a CLTA Owner's policy of title insurance with liability in the amount of the purchase price showing title to the Agency Property vested in , 4845-0847-0212.1 38 P:\Agendas\Agenda Attachments\Agrmu.Amend 2005\05.01-10 EI Paseo-Leasc Agrml..doc Tenant. subject only to nondelinquent real property taxes and assessments plus those exceptions to title in lexistence as of the date hereof or which may result from Tenant's actions, consent, or use of the Agency Property during the term hereof. Tenant may request an AL TA Owner's extended policy, but the difference in cost between the AL T A policy and the CL T A policy shall be paid by Tenant. 18.5 Effect of Purchase on Lease. Except for any conditions, restrictions, covenants, and/or easements specifically set forth in this Lease or the Agency Quitclaim Deed, this Lease and Tenant's obligations under this Lease shall terminate as of the close of escrow for the Agency Property, which shall be the date on which the Agency Quitclaim Deed is filed for record by the Escrow Holder. 18.6 Condition of the Agencv Property. Tenant acknowledges and agrees that it shall have had the right to inspect and investigate the Agency Property during the Lease Term. Tenant shall accept the delivery of possession to the Agency Property on the close of escrow in an "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" condition. Tenant further agrees and represents to the Agency that Tenant shall have conducted and completed (or waived the completion) of all of its independent investigation of the condition of the Property prior to exercising the Option. Tenant hereby acknowledges that it shall rely solely upon its own investigation of the Agency 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 Agency Property. Tenant is not relying on any statement or representation by the Agency relating to the condition of the Agency Property unless such statement or representation is specifically contained in this Lease. Without limiting the foregoing, the Agency makes no representations or warranties as to whether the Agency Property presently complies with environmental laws or whether the Agency Property contains any hazardous substance. Furthermore, to the extent that the Agency has provided Tenant with information relating to the condition of the Agency Property, including intormation and reports . prepared by or on behalf of the City, 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 Lease, Tenant, on behalf of itself and its successors and assigns, waives and releases 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 Agency 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 Agency Property including, without limitation, any claims under or on account of (i) CERCLA and similar statutes ~nd any regulations"Promulgated thereunder or (ii) any other environmental laws. ! 4845-0847-0212.1 39 P\A!!cndas\Agenda AUachments\Agrmts-Amend 2005\05.01.10 EI Pasco-lease Agrml.,doc Tenant expressly waives any rights or benefits available to it with respect to the foregoing release Ul~der 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 atTect a settlement. By exercising the Option, Tenant acknowledges that it fully understands the foreaoing and with this understanding, nonetheless elects to and does assume all risk for elaims e ~~ ~ known or unknown, described in this Section 18.6 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 KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HA VE MA TERIALL Y AFFECTED' HIS SETTLEMENT WITH THE DEBTOR." 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 Tenant: The provisions of this Section 18.6 shall survive the close of escrow. ARTICLE XIX GENERAL PROVISIONS 19.1 Notice Requirements. As used in this Lease, notice includes, but is not limited to, the communication of any notice, request, demand, approval, statement, report, acceptance, consent, waiver, or appointment. No notice of the exercise of any option or election is required unless the provision giving the election or option expressly requires notice. Unless the provisions of this Lease on rent direct otherwise, rent shall be sent in the manner provided for giving notice or as directed by notice from the Agency. 19.1.1 Writil}g. All notices must be in writing; provided that no writing other than the check or other instrument representing ~he rent payment itself need accompany the payment of rent. ! 4845-0847-0272.1 40 P-\Agendas\Agenda AUachmenls\Agrmls-Amend 2005\05-0 t -10 EI Paseo.Lease Agrnll..doc 19.1.2 Deliverv. Notice is considered given either (a) when delivered in person to the person intended named below, or (b) deposited in the United States mail in a sealed envelope or container, either registered or certitied mail, return receipt requested. postage and postal charges prepaid, addressed by name and address to the party or person intended as follows: TENANT: EI Paseo Petroleum, LLC 27403 Ynez Road, Suite 218 Temecula, CA 92591 Attention: Managing Member AGENCY: Redevelopment Agency of the City of San Bernardino 200 North "E" Street, Suite 301 San Bernardino, California 9240 I Attention~ Executive Director 19.1.3 Chan!..!:e of Recipient or Address. Either party may, by notice given at any time or from time to time, require subsequent notices to be given to another party or an officer or representative, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. 19.1.4 Notice bv Subtenants. Each Sublease of the Improvements or the Site shall contain a provision that unless a copy of the notice is delivered to the Agency pursuant to this Section no notice regarding an alleged default of Tenant shall be valid. Tenant shall deliver to the Agency a copy of any notice from a governmental entity received by Tenant regarding any alleged violations of Laws or from any person allegedly entilled to give notice under any conditions, covenants, or restrictions binding or affecting the Site. 19.2 Estoppel Certificates. At any time and from time to time, within twenty-one (2 I) days after notice of request by either party, the other party shall execute, acknowledge, and deliver to the requesting party, or to such other recipient as the notice shall direct, a statement certifying that this Lease is unmodified and in full force and effect, or, if there have been modifications, that it is in full force and effect as modified in the manner specified in the statement. The statement shall also state the dates to which the rent has bflen paid in advanc~ The statement shall be such that it can be relied on by any other auditor, creditor, commercial banker, and investment banker of either party and by any prospective purchaser or encumbrancer of the Site or of all or any part or parts of Tenant's or the Agency's interests under this Lease. Tenant's failure to execute, acknowledge, and deliver, on ! 4845-0847-02702.1 41 P:\Agendas\Agenda Attachments\Agrmts-Amend 2005\05.01-10 EI Paseo-Lease Agrrnt..doc request. the statement described above within the specified time shall constitute acknowledgment by Tenant to all persons entitled to rely on the statement that this Lease is unmoditied and in full force and effect and that the rent has been duly and fully paid to and including the respective due dates immediately preceding the date of the notice of request and shall constitute a waiver. with respect to all persons entitled to rely on the statement. of any debults that may exist before the date of the notice and shall be an Event of Dct~lLllt. 19.3 Dele~ation. Tenant may at Tenant's election delegate performance of any or all covenants to anyone or more Subtenant. or subtenants of Subtenants. and the performance so delegated shall be deemed Tenant's performance. This provision shall not be considered to permit or to broaden the right of assignment or subletting beyond the provisions of this Lease relating to assignment and subletting. 19.4 No Merger. Ifboth the Agency's and Tenant's estates in the Site or the Improvements or both become vested in the same owner, this Lease shall nevertheless not be destroyed by application of the doctrine of merger except at the express election of the owner and with the written consent of all Leasehold Mortgagees. 19.5 Gender. The neuter gcnder includes the lCminine and masculine. the masculine includes the feminine and neuter. and the feminine includes the neuter. and each includes corporation. partnership, or other legal entity when the context so requires. 19.6 Plural. The singular number includes the plural and vice versa whenever the context so requires. 19.7 Exhibits. All exhibits to which reference is made in this Lease are incorporated in the Lease by the respective references to them, whether or not they are actually attached. 19.8 Entire A~reement. This Lease contains the entire agreement between the parties. No promise, representation, warranty, or covenant not included or referred to in this Lease has been or is relied on by either party. Each party has relied on its own examination of this Lease, the counsel of its own advisors, and the warranties, representations, and covenants in the Lease itself and those referred to in this Lease. / 19.9 Invaliditv. ! 4845-0847-0272.\ 42 P \Agendas\Agenda Anachments\Agrmts-Amend 2005\05-01-10 EI Paseo-Lease Agrmujoc Tl;e invalidity or illegality or any provision shall not affect the remainder of the Lease. 19.10 BindinQ on Heirs. Subject to the provisions of this Lease on assignment and subletting, each and all of the covenants and conditions of this Lease shall be binding on and shall inure to the benetit of the heirs, successors, executors, administrators, assigns, and personal representatives of the respective parties. 19.11 Holding Over. This Lease shall terminate without further notice at expiration of the Lease Term, or any extended term thereof. Any holding over by Tenant after expiration shall not constitute a renewal or extension or give Tenant any rights in or to the Agency Property except as otherwise expressly provided in this Lease. 19.12 Counterparts. This Lease, may be executed in two or more counterparts, each of which shall be an originaL but all of which shall constitute one and the same instrument. 19.13. Captions. The captions of the various Sections of this Lease are for the convenience and ease of reference only and do not define, limit, augment, or describe the scope, content, or intent of this Lease or of any part or parts of this Lease. 19.14 Time of Essence. Time is of the essence of this Lease. {SIGNATURES ON SUBSEQUENT PAGEl / , 4845-0847-0272.1 43 P\Agendas\Agenda Attachments\Agrmts-Amend 2005\05-01-10 EI Paseo.Lease Agrmt..doc I This Lease is cxecutcd hy the partics hercto as or the date lirst ahm'e \\Titten, AGEl'iCY: Rede\'elopment Agency oCthe City orSan Bernardino By: Gary Van Osdel Exccutive Director APPROYED AS TO FORM: By~~j/f2!~ Agenc y ounscl DEYELOPER: EI Paseo Petrokum, LLC By: Managing Memher / ! 484S-()S47-0r~,l 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ~",....,......., . . . . . . . ,'.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,". . . . . . . . . . . . . . . EXHIBIT "D" SITE PLAN P:\Agenda.s\Agenda Attachments\AgrmlS-Amend 2005\05-01-10 EI Pasco DDA .doc D - 1 'li .~l'\ I " .. ":1- tS . ... i~f ~ i~~l ~ ~ .. ani ,.. ,....~ ~ ~ ~ """ ~ ~ ~ ~ . :iE . ~ . ~~ u. s, I ">9-""-"'1 NOSYJON't' >CIKl 16gl6 '(,) Yln:mm ...n3'OH~3d 03SVd ,6; vaG -dO'E1AElG W'Vd UIJ. :ijJNM.O ~NIO'llne ueld "l!S I' · . . . . . dn:J ~ ~ ~ ~ ~ . $ .1. S \,? S S Or NONN],\'t?l~O;IO.~g~ 8 III;!! HSVMWJON't.lJ.l"lJYJftd/rrtlll3N d:1::1~~f1 Ii! ; ~ ~NElWdO'E1AElG ~~. 3 'VI:JHElWWO:J'~~d ~}~ I~ I: I: I: I~ j ! b 1:i I ~ J - I'j Iii ah ~ I77 en B!. jl II " lm~ ., ,~, ~' !~ i i! !! ~I ~ I ~~ni 'I ; ! h;~. ~ I'i ~ , ~'o'l' ~ ii! ~i ~ - d Cl I~h In ~ g: ~~HH ~ ~ N . . . !ur J~:1 ,'d-IJ ~~g.i! ~1~5P~ t:U!'t ~.~., ig B"i~~t ,D8'~'. .~. Ie; .- a.... '-'X .. ~~~~I1~ nM~1 7 II ~~ aa .. !!! ~~ ~tj :tt! :1 m iM U d~ it ~j~lg. H 1 .~ I ~~ 1 ;, i 1 'lJ0I _~ ... : ll_1 ~ ~ iH~ ~ iii j'"uu" I .0 I____________________________L_ 1 -- i I ' , I I ' , I I ' , I I ' , I I .~'" -_..,. , , I I ' , I I ' , I I ' , I I ' , I I ' , I I ' , I J_________-;: - r'~ . t IS a~nJds I!' r: ~ I ,!l E . ., ill ~l t , ~ i ! i i , I , I i i , I i , I , I ___________ ______________,_ --- (99 A,YMH9IH SNWJ. ,V:)) la.uIS'IIS r , I ~. ! I L-- I . , ~ ;; . , " ~ I i , " I !~~~;: ;;1; ~!~!3 711~. ;19" ~~ wi"".. t!,&a~. ~ I '(" !~ _ 1 ,,, d{ ~ I 1 J ::: ;,IIJ , . I", I I L.... 0 ii\ 01.2%'" ~ uu ~ ~~ I" I ~ " ~ ~ I ~ ~a. R:) uu <(<( .,.. 0" ~o ~ ~ Ii .; .. .. .. ., .. .. ..nM "'.. i it . . .(.( ! ! inii e .. .. . E :; . . ~ : f 0: .." ::! . 0: " f .. .. <( EXHIBIT "E" RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North E Street, Suite 301 San Bernardino, CA 92401 Attn: Executive Director (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO NOTICE OF DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND EL P ASEO PETROLEUM, LLC (Mt. Vernon Corridor Redevelopment Project Area) TO ALL INTERESTED PERSONS: PLEASE TAKE NOTICE that El Paseo Petroleum, LLC, a California limited liability company (the "Developer") and the Redevelopment Agency of the City of San Bernardino (the "Agency"), have entered into an agreement entitled "Disposition and Development Agreement" dated as of January 10,2005 (the "Agreement"). A copy of the Agreement is attached hereto, in its entirety, for the purposes of recordation. It is also on file with the Secretary of the Agency as a public record of the Agency and is available for inspection and copying by all interested persons in accordance with applicable law. [SIGNATURES ON NEXT PAGE} [NOTARY REQUIRED} 1 P:\Agendas\Agenda Attachments\05-01.IO EI Paseo-5th and MI. Vernon Notice of Agnntdoc IN WITNESS WHEREOF, the Agency and the Developer have caused this Notice of Disposition and Development Agreement to be executed by their authorized officers whose signatures appear below: DEVELOPER: EL PASEO PETROLEUM, LLC, a California limited liability company Date: I )tV'Y\,L,(AA..t.;/ ;l. S' , 2005 f AGENCY: Redevelopment Agency of the City of San Bernardino Date: January _,2005 Judith Valles, Chairperson Community Development Commission, City of San Bernardino, Its governing board Date: January _,2005 Gary Van Osdel, Executive Director 2 P:\Agendas\Agenda Anachments\05-OI-IO EI Paseo-5th and MI_ Vernon Notice or Agmu..doc ALL-PURPOSE ACKNOWLEDGEMENT ~>; State of California c~ ' County of Urf c~)lcl f'" }ss. On ,,jOnU{) fit C>>~ c~c.1::')C: before me, k:~hr>.r/( ;/;? (""?,crc;/n ...... )'\rf) I a (NOTA 1) personally appeared 71f 170 r/I.J~ Andr"/";;liJQ SIGNf: (s Drpersonally known to me - OR - o proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Ji)'" ." , KiMBERLY' ~ 'GERDO .~ - Comm. # 1296234 (J) Ill. NOHRY P~8l1C - CALIfORNIA Orange County - ~ ;;;~;!'i'" March 5, 2005 T WITNESS my hand and official seal. ~' ',.~./ l \ 3, /. -- ~N ,U-t If" " /( ,":0- ..- . -- - -q '0 "'""~ OPTIONAL INFORMATION The information below is not required by law. However, it could prevent fraudulent attachment of this acknowl- edgement to an unauthorized document. CAPACITY CLAIMED BY SIGNER (PRINCIPAL) DESCRIPTION OF ATTACHED DOCUMENT o INDrVIDUAL o CORPORArE OFFICER TITLE OR TYPE OF DOCUMENT rlTLE(S) o PARTNER(S) o ATTORNEY-IN-FACT o TRUSTEE(S) o GUARDrAN/CONSERVATOR o OTHER: NUMBER OF PAGES DATE OF DOCUMENT OTHER o 1i RIGHT THUMBPRINT OF SIGNER c 1i D ~ '0 ~ '" SIGNER IS REPRESENTING: NAME OF PERSON(SI OR ENTITYOESJ APA 5/99 VALLEY.SIERRA. 800-362-3369 June 1,2005 June 15,2005 July 18,2005 August 4, 2005 August 31, 2005 EXHIBIT "F" SCHEDULE OF PERFORMANCE Pull all applicable building permits and commence any demolition and start offsite construction. Start actual onsite construction. Underground tanks and fuel island plumbing installed. Concrete work complete on convenience store and carwash foundations and slabs. Offsite improvements complete and asphalt paving complete on parking lot. Rough carpentry, plumbing, electrical and HV AC completed in the convenience store and carwash tunnel. Fuel island canopy installed. September 16, 2005 Convenience store and carwash tunnel are finished with drywall, painting stucco color cost, roofing, plumbing, electrical and HV AC. October 18, 2005 October 27, 2005 Fuel dispensers installed, carwash equipment installed, store fixtures installed and refrigeration equipment installed. Fuel delivered to fill tanks and complete all pressure testing. Store inventory delivered and stocking begins. November 1,2005 Final inspection and issuance of Certificate of Occupancy. Employee training begins. November 11, 2005 Store Grand Opening. 4837.8933-4784.1 1 EXHIBIT "G" FORM OF MINIMUM ASSESSED V ALUA nON COVENANT G - I P\Agendas\Agenda Allachmellts\Agnms-Amelld 2005\05-01-10 El Paseo DDA _doc EXHIBIT "G" Recording requested by, and when recorded, return to: Redevelopment Agency of the City of San Bernardino 201 North E Street, Suite 301 San Bernardino, CA 92401 Attn: Executive Director Free recording requested pursuant to Government Code Section 6103 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MINIMUM ASSESSED VALUATION COVENANT WHEREAS, the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, existing pursuant to California Health and Safety Code Sections 33100, et seq. (the "Agency"), and EL P ASEO PETROLEUM, LLC, a California limited liability company (the "Developer"), have entered into that certain Disposition and Development Agreement dated as of January 10, 2005 (the "DDA"), concerning certain real property situated in San Bernardino County, California, described in Exhibit "A", attached hereto and incorporated herein by this reference (the "Site"); and WHEREAS, as provided in Section 6.4 of the DDA, the Agency is authorized by the Developer to record this Minimum Assessed Valuation Covenant in the Official Records of San Bernardino; and WHEREAS, the Developer has completed the construction of the improvements. NOW THEREFORE, THE DEVELOPER COVENANTS AS FOLLOWS: The Developer covenants to and for the benefit of the Agency that, upon completion of the construction of the Improvements, the Site and the Improvements shall, collectively, be assessed by the Assessor of the County of San Bernardino, for general property tax purposes, at a minimum assessed value of Two Million Five Hundred Thousand Dollars and No Cents ($2,500,000.00) (the "Minimum Assessed Value"). If, upon completion of the construction of the Improvements, the Site and the Improvements are, collectively, assessed by the Assessor of the County of San Bernardino, for general property tax purposes, at a value less than the Minimum Assessed Value, the Developer shall pay to the 4837-2039-8848.1 Agency the dollar amount of the difference between the property tax revenues received by the Agency from the property taxes assessed against the Site and the Improvements and the amount of property tax revenues that would have been received from the property taxes assessed against the Site and the Improvements, if the Site and the Improvements were assessed at the Minimum Assessed Value. J. IN WITNESS THEREOF, the Developer has executed this Covenant as of tVY'~ :).5 ,2005. DEVELOPER: El Paseo Petroleum, LLC ~~ Richard D. Anderson Managing Member [NOTARY REQUIRED] 4837-2039-8848.1 ALL-PURPOSE ACKNOWLEDGEMENT State of Califomia County of ~i!e1."')ldc }ss. On, )on0WJ1.~. c9S.. c::JO.OS: before me, Vr(Y16e/ILct I (DATFl I \ personally appeared '21 (/Y( i{{j lj. ttp<7r/r:T''X,::J SIGNE Sl -) 1'-- (~r fr/O (NOTARY I ISI personally known to me - OR - D proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. l ... . 'KIMBERLY' R: ~G'ERDO H~ -Ill ~ Comm. # 1296234 Ul .. NOT ARY PUBLIC - CALIFORNIA Orange County - ~ ~~nm. Expi,,, March 5. 2005 T WITNESS my hand and official seal. OPTIONAL INFORMATION The information below is not required by law. However, it could prevent fraudulent attachment of this acknowl- edgement to all unauthorized document. CAPACITY CLAIMED BY SIGNER (PRINCIPAL) D INDIVIDUAL D CORPORATE OFFtCER DESCRIPTION OF ATTACHED DOCUMENT TITLE OR TYPE OF DOCUMENT TITLE(SJ D PARTNER(S) D ATTORNEY-IN-FACT D TRUSTEE(S) D GUARDIAN/CONSERVATOR D OTHER: NUMBER OF PAGES DATE OF DOCUMENT OTHER SIGNER IS REPRESENTING: NAME OF PERSONIS, OR ENTITY(lES) RIGHT THUMBPRINT OF SIGNER j c 0. .0 ~ a Q ,'" APA 5/99 VALLEY-SIERRA. ROO-362-3369 EXHIBIT "H" FORM OF MINIMUM SALES TAX COVENANT H - 1 P:\Agendas\Agenda Altachmellts\Agrmts-Amend 2005\05-01-10 EI Paseo DDA _doc EXHIBIT "H" Recording requested by, and when recorded, return to: Redevelopment Agency of the City of San Bernardino 201 North E Street, Suite 301 San Bernardino, CA 92401 Attn: Executive Director (Space Above Line Reserved For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MINIMUM SALES TAX COVENANT WHEREAS, the REDEVELOPMENT AGENCY . OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, existing pursuant to California Health and Safety Code Sections 33100, et seq. (the "Agency"), and EL PASEO PETROLEUM, LLC, a California limited liability company (the "Developer"), have entered into that certain Disposition and Development Agreement dated as of January 10, 2005 (the "DDA"), concerning certain real property situated in San Bernardino County, California, described in Exhibit "A", attached hereto and incorporated herein by this reference (the "Site"); and WHEREAS, as provided in Section 6.5 of the DDA, the Agency is authorized by the Developer to record this Minimum Sales Tax Covenant in the Official Records of San Bernardino; and WHEREAS, the Developer has completed the construction of the improvements. NOW THEREFORE, THE DEVELOPER COVENANTS AS FOLLOWS: The Developer covenants to and for the benefit of the Agency that, upon completion of the construction of the Improvements, the Site and the Improvements shall, collectively, generate in gross retail sales, as maintained by the State Board of Equalization, at an amount of Five Million Dollars ($5,000,000) for each and every year of operation of the Project pursuant to the Lease Agreement until the expiration of the Lease Agreement, including any extension of the Term of the Lease Agreement (the "Minimum Sales Tax"). If, upon completion of the construction of the Improvements, the Site and the Improvements are, collectively, as determined by the State Board of Equalization, at a value less than the Minimum Sales Tax, the Developer shall pay to the 4838-3738-0864.1 P:\Agendas\Agenda Altachments\Exhibits\2005\OS-OI-IO El Paseo-5th and Mt. Vernon Minimum Sales Tax Covenant (Exhibit H).doc City the dollar amount of the difference between the sales tax revenues actually received by the City and generated by the Improvements and the Site and the Improvements and the amount of sales tax revenues that would have been received from the sales taxes generated by the Improvements, if the Site and the Improvements were assessed at the Minimum Sales Tax. IN WITNESS THEREOF, the Developer has executed this Covenant as of January ~, 2005. DEVELOPER: EI Paseo Petroleum, LLC ~.~ '" . ~:;r;tY .~. Ri ard D. Anderson Managing Member [NOTARY REQUIRED] 4838.3738-0864.\ P:\Agendas\Agenda Anachments\Exhibits\2005\05-01-1O EI Paseo-5th and Mt Vemon Minimum Sales Tax Covenant (Exhibit H)_doc ALL-PURPOSE ACKNOWLEDGEMENT State of California }ss. County of(lver.~1 riG On ~) (Iii (lIS't\f~c;, dC(b before me, personally appeared?I(J70 rei.. 6. . r::mhf'f/( t 72. s'f?::t(io 1:tJ d er :'='"I"tcl 51 I ER(S) !7\ personally known to me - OR - o proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. .l~' KIMBERLY R. GERDO ~ - Comm. # 1296234 (J). NOT ARY PUBLIC. CALIFORNIA ~ Olang. C.unty My C.mm. E'pi,.. M",h 5. 2005 .. WITNESS my hand and official seal. OPTIONAL INFORMATION The information below is not required by law. However, it could prevent fraudulent attachment of this acknowl- edgement to an unauthorized document. CAPACITY CLAIMED BY SIGNER (PRINCIPAL) DESCRIPTION OF ATTACHED DOCUMENT o INDIVIDUAL o CORPORATE OFFICER TITLE OR TYPE OF DOCUMENT ITrLE(S) o PARTNER(S) o ATTORNEY-IN-FACT o TRUSTEE(S) o GUARDIAN/CONSERVATOR o OTHER: NUMBER OF PAGES DATE OF DOCUMENT OTHER SIGNER IS REPRESENTING: NAME OF PERSON(SJ OR ENTITY(/ES) RIGHT THUMBPRINT OF SIGNER w w ~ c ~ J 15 "- >" APA 5199 VALLEY.SIERRA. ROO.362.3369