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HomeMy WebLinkAboutR22- Economic Development CITY OF SAN BERNARDINO ORIGINAL ECONOMIC DEVELOPMENT AGENCY FROM: Emil A.Marzullo SUBJECT: North Arden Guthrie Redevelopment Project Study Interim Executive Director and Exclusive Right to Negotiate Agreement by and among the Redevelopment Agency of the City of San Bernardino, Home Depot U.S.A., Inc., and DATE: December 28,2010 Mark Development, Inc. (IVDA Redevelopment Project Area) Synopsis of Previous Commission/Council/Committee Action(s): On December 9,2010, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): - - ---------------------—-- ----- (Community Development Commission) Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the North Arden Guthrie Redevelopment Project Study and Exclusive Right to Negotiate Agreement by and among the Agency,Home Depot U.S.A.,Inc.,and Mark Development,Inc.(IVDA Redevelopment Project Area) Contact Person(s): Brian Turnbull Phone: (909)663-1044 Project Area(s): IVDA Redevelopment Project Area Ward(s): 7s' Supporting Data Attached: El Staff Report D Resolution(s) H Agreement(s)/Contract(s)❑Map(s)❑Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A Budget Authority: N/A Signature: Fiscal Review: Emil A.Marzullo,Interim Executive Director Lori Par i -Ti ,Inte: ief Financial Officer Commission/Council Notes: PAAgnduTomm D"ComiedonUAC 2011b1-10.11 Home Depot&Mmk DmelopmmMN As.eem skda COMMISSION MEETING AGENDA Meeting Date: 01//10/2011 Agenda Item Number: (�-ZZ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT NORTH ARDEN GUTHRIE REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT BY AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,HOME DEPOT U.S.A., INC.,AND MARK DEVELOPMENT, INC. (IVDA REDEVELOPMENT PROJECT AREA) BACKGROUND: The Redevelopment Agency of the City of San Bernardino ("Agency") is the owner of 17.43 acres of vacant property in the area bounded by Highland Avenue, Arden Avenue, 20'' Street and Guthrie Avenue in the area commonly known as the North Arden Guthrie Area. The site is the product of a land assembly project which combined 73 separate properties over the past 15 years. A future commercial development has been proposed for the site. During the past year, Agency Staff has worked with consultants and contractors to clear the site and prepare it for the proposed future commercial development. The final task in this process was removing the streets, curb and gutter and relocating the utilities. This work was completed in July, 2010. CURRENT ISSUE: On November 20, 2006, the Agency entered into a Redevelopment Project Study and Exclusive Right to Negotiate Agreement (the "2006 Agreement') with Home Depot U.S.A., Inc., to study the possibility of developing the site into a retail center to include several retail stores and restaurants and to be anchored by a Home Depot store. The 2006 Agreement expired as of November 20, 2008; however, Agency Staff has continued to negotiate with Home Depot U.S.A., Inc., and Mark Development, Inc. (the "Developers"), regarding the purchase and development of the property, Home Depot U.S.A., Inc., would purchase 8.93 acres and Mark Development, Inc., would purchase 8.50 acres. On September 9, 2010, the Developers made a presentation to the RDA Committee which showed the proposed design of the development and gave examples of future tenants for the outlying pads. The Developers estimate the project will create 250 construction jobs, 363 permanent jobs, $37,200,000 in gross sales, $1,458,000 in annual sales tax revenue and $30,000,000 in assessed valuation. . The Developer has negotiated a new Redevelopment Project Study and Exclusive Right to Negotiate Agreement (the "2011 Agreement'), and approval of this 2011 Agreement will provide for the following: • The Developers will develop the entire Site with a quality development to the satisfaction of the City and the Agency, with an estimated value of$30,000,000. • The Developers agree to pay $4.463M on Exclusive Right to Negotiate ("ERN") and $4.4M on Exhibit "D" for the Site. The Developers will also have to agree to comply with certain P:ASen&s\Comm Dev CommisslomCDC 2011\01-10-11 Home Depot&Mark Developmem ERN Agrecmmt Wiloc COMMISSION MEETING AGENDA Meeting Date: 01/10/2011 Agenda Item Number: Economic Development Agency Staff Report Home Depot&Mark Development ERN Agreement Page 2 covenants imposed by HUD related to the Section 108 Loan. No deposit is negotiated under the 2011 Agreement but the DDA will require the Developer to pay said deposit as attached in Exhibit "D" to the 2011 Agreement. The Developers will pay the sum of $50,000 to the Agency by way of a non-refundable deposit, which will be applied against the purchase price, should that event occur. • The 2011 Agreement is for a period of twenty-four(24)months with the possibility of a six (6) month extension to give sufficient time for the Environmental Impact Report to be completed and for a necessary zone change, from PCR (Public/Commercial Recreation) to CG-1 (Commercial General), to take place. The Agency will coordinate the California Environmental Quality Act(CEQA)process at the cost of the Developers. • All other project study and third (3`d)party costs are at the sole cost of the Developers. • It is estimated that the execution of a Disposition and Development Agreement between the Agency and the Developers shall occur within six (6) months of the approval of this 2011 Agreement. ENVIRONMENTAL IMPACT: This does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act ("CEQA"), which states that a "Project" means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. FISCAL IMPACT: There is no direct fiscal impact to the Agency at this time for the approval of the Redevelopment and Project Study Agreement except for the staff time and legal time incurred for the preparation and review of this agenda item and the subsequent preparation and review of the anticipated DDA. All Agency costs associated with the DDA will be set forth in the public hearing documentation to be submitted to the Commission upon the consideration by the Commission of the anticipated DDA at a later date when a public hearing is conducted on the price and terms of the sale of the property for the proposed development under the DDA. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. Emil A. Mamullo, n Executive Director PAgendas\Comm Dev Commies{en\CDC 2011W1-10-11 Home Depot@ Mark Development ERN Agreement SR don COMMISSION MEETING AGENDA Meeting Date: 01/10/2011 Agenda Item Number: ZZZ Entered Into Rec, at MCC/CDC Mtg: L o t/ by: Agenda ffem No: 1 RESOLUTION NO. ❑❑�N 2 RESOLUTION OF THE COMMUNITY DEVEL �D�SION OF 1) 1 3 THE CITY OF SAN BERNARDINO APPRO' RIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT 4 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE NORTH ARDEN GUTHRIE REDEVELOPMENT PROJECT 5 STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT BY AND 6 AMONG THE AGENCY, HOME DEPOT USA, INC., AND MARK DEVELOPMENT, INC. (IVDA REDEVELOPMENT PROJECT AREA) 7 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 8 9 community redevelopment agency duly created, established and authorized to transact business and 10 exercise its powers, all under and pursuant to the California Community Redevelopment Law 11 ("CRL"), codified under Division 24, Part 1 of the California Health and Safety Code commencing 12 at Section 33000 and is authorized to construct improvements located within the approved 13 redevelopment project areas in the City of San Bernardino ("City")) in accordance with the CRL; and 14 WHEREAS, the Inland Valley Redevelopment Project Area ("Project Area") displays 15 16 substantial and pervasive symptoms of blight and cannot be remedied by private parties acting 17 alone without community redevelopment assistance; and 18 WHEREAS, the Community Development Commission of the City of San Bernardino (the 19 "Commission"), as the governing board of the Agency, has authorized the Agency to assemble, 20 acquire real property and demolish blighted structures for community redevelopment purposes in 21 the Project Area- and 22 WHEREAS, on October 28, 2008, the Agency acquired the last of 73 properties located in 23 24 the North Arden Guthrie Area south of Highland Avenue between Arden Avenue to the east, 20`h 25 Street to the south and the alleyway adjacent to Guthrie Avenue to the west (the "Properties") 26 within the Project Area; and 27 WHEREAS, the 73 parcels, three streets and three alleyways, including all easements have 28 been converted into a single merged parcel; and P'\AgmdasUt lutimsUlxwlutions\2011\01-10-I 1 Home Deed North Arden Guthrie-Mark Development ERN CDC Reso.doc 1 WHEREAS,the Agency desires to sell and cause the development of the Property; and 2 WHEREAS, Home Depot U.S.A., Inc., and Mark Development, Inc. ("Developers"), desire 3 to enter into in a Redevelopment Project Study and Exclusive Right to Negotiate Agreement 4 ("Agreement')with the Agency; and 5 WHEREAS, the Developers plan to construct a commercial development which is 6 7 anticipated create 250 construction jobs, 363 permanent jobs, $37,200,000 in gross sales, 8 $1,458,000 in annual sales tax revenue and$30,000,000 in assessed valuation. 9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS 11 FOLLOWS: 12 Section 1. The information set forth in the above recitals of this Resolution is true and 13 correct. 14 Section 2. The Interim Executive Director of the Agency is hereby authorized by the 15 Commission to execute the Agreement on behalf of the Agency in substantially the form attached 16 hereto as Exhibit "A", together with such changes therein as may be approved by the Interim 17 Executive Director of the Agency, Agency Counsel and City Attorney. The Interim Executive 18 Director of the Agency or such other designated representative of the Agency is further authorized 19 to do any and all things and take any and all actions as may be deemed necessary or advisable to 20 effectuate the purposes of the Agreement ani non-substantive modifications to the 21 Agreement. 22 Section 3. This Resolution shall take effect from and after its date of adoption by this 23 Commission. 24 25 26 27 28 2 P:Ugendss VtaoWtionsVewiutiond2011A01-10-11 Home Depot Northd Guthrie-Mark Development ERN CDC ResoAm �� 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING 2 THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT 3 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE NORTH ARDEN GUTHRIE REDEVELOPMENT PROJECT 4 STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT BY AND AMONG THE AGENCY, HOME DEPOT USA, INC., AND MARK 5 DEVELOPMENT,INC. (IVDA REDEVELOPMENT PROJECT AREA) 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 7 Development Commission of the City of San Bernardino at a meeting 8 thereof,held on the day of 2011,by the following vote to wit: 9 Commission Members: Ayes Nays Abstain Absent 10 MARQUEZ 11 DESJARDINS 12 BRINKER 13 SHORETT 14 KELLEY 15 JOHNSON 16 MC CAMMACK 17 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 2011. 21 22 23 Patrick J. Morris, Chairperson Community Development Commission 24 of the City of San Bernardino 25 Approved as to Form: 26 27 By: Agency Counsel 28 3 P:\Agendes\Resolutions\ResoMims\2011\01-10-11 Home Depot Nonh Ardm Guthtie-My Development ERNCDCReso.doc ;r l EXHIBIT "A" 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PoAgendas\Resolutions\Resolutionst2011',01-10-11 Home Deem Nonh Arden Gutivie Mark Development ERN CDC Reso doc � a. Consider the redevelopment of the Project Concept Plan, including without limitation, the selection of the design of improvement elements as appropriate for the Project Concept Plan in addition to any commercial or retail elements of the Project Concept Plan; b. Review and provide the Project Concept Plan Study information described in Section 3 and submit an executed copy of the final form of the Project DDA to the Executive Director of the Agency on or before the end of the Negotiation Period (or such later date corresponding to an authorized extension of the Negotiation Period in accordance with Section 1); and C. Consult with the Agency and the Executive Director of the Agency on a regular basis and keep the Agency and the Executive Director of the Agency advised on the progress of the Developer in completing its obligations under this Agreement. 6. Agency Acknowledements. The Agency hereby acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the Developer or as an acceptance by the Developer of any offer or proposal from the Agency to purchase any merest in the Property. Any studies undertaken by the Agency not relating to the Property shall be the sole responsibility of the Agency. 7. Obligations of Agency. a. The Agency currently deems the disposition of the Property and the redevelopment of the Property for a feasible Project Concept Plan to be appropriate, and the Developer appears to be well qualified to undertake the task of planning the details for the acquisition of the Property. b. During the Negotiation Period, and subject to the Agency's compliance with the California Community Redevelopment Law ("CRL") and the Owner Participation Rules of the IVDA pursuant to the Redevelopment Plan regarding the rights of owners and tenants within the Project Area, the Agency shall negotiate exclusively with the Developer with respect to the Property during the Negotiation Period. The Agency shall not negotiate with any other person or entity regarding either the disposition of any of the Propeity or the redevelopment of the Project Concept Plan on the Property. The term "negotiate," as used herein, shall be deemed to preclude the Agency from accepting any other offer or proposal from a third party to either acquire from the Agency any interest in any of the Property (in whole or in part) or redevelop the Property, and from considering other redevelopment proposals for the Property with third persons or entities; provided, however, any person may submit to the Agency and the Agency may consider any proposal for the disposition and/or redevelopment of any lands adjacent to the Property and nothing shall preclude other persons from submitting proposals to the Agency for the redevelopment of the Property provided that the Agency merely accepts such proposals as documents submitted to a public agency as public records and shall be prohibited from negotiating the sale of the Property to such persons as provided herein. 7 P agendasUpnda AOachmentsUgenda Attachments\Agrmis-Amend2011\01-10-11 Home Depot Exclusive Right TO Negotiate Agrmment(Mark D wlopmatt).doc ^� I RESOLUTION NO. COPY 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF 3 THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT 4 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE NORTH ARDEN GUTHRIE REDEVELOPMENT PROJECT 5 STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT BY AND 6 AMONG THE AGENCY, HOME DEPOT USA, INC., AND MARK DEVELOPMENT,INC. (IVDA REDEVELOPMENT PROJECT AREA) 7 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 8 9 community redevelopment agency duly created, established and authorized to transact business and 10 exercise its powers, all under and pursuant to the California Community Redevelopment Law 11 ("CRU), codified under Division 24, Part 1 of the California Health and Safety Code commencing 12 at Section 33000 and is authorized to construct improvements located within the approved 13 redevelopment project areas in the City of San Bernardino ("City") in accordance with the CRL; and 14 WHEREAS, the Project Area displays substantial and pervasive symptoms of blight and 15 cannot be remedied by private parties acting alone without community redevelopment assistance; 16 17 and 18 WHEREAS, the Community Development Commission of the City of San Bernardino (the 19 "Commission"), as the governing board of the Agency, has authorized the Agency to assemble, 20 acquire real property and demolish blighted structures for community redevelopment purposes in 21 the Inland Valley Redevelopment Project Area("Project Area"); and 22 WHEREAS, on October 28, 2008, the Agency acquired the last of 73 properties located in 23 24 the North Arden Guthrie Area south of Highland Avenue between Arden Avenue to the east, 20th 25 Street to the south and the alleyway adjacent to Guthrie Avenue to the west (the "Properties") 26 within the Project Area; and 27 WHEREAS, the 73 parcels, three streets and three alleyways, including all easements have 28 been converted into a single merged parcel; and 1 P:UBendesVtewlu[ionsutewlutions\2011�1-10.11 Home Depot North Arden Guthrie-Mvk Developmwrc ERN CDC Rew.doc 1 WHEREAS,the Agency desires to sell and cause the development of the Property; and �j 2 WHEREAS, Home Depot U.S.A., Inc., and Mark Development, Inc. ("Developers"), desire 3 to enter into in a Redevelopment Project Study and Exclusive Right to Negotiate Agreement 4 ("Agreement")with the Agency; and 5 WHEREAS, the Developers plan to construct a commercial development which will create 6 7 250 construction jobs, 363 permanent jobs, $37,200,000 in gross sales, $1,458,000 in annual sales 8 tax revenue and$30,000,000 in assessed valuation. 9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS 11 FOLLOWS: 12 Section 1. The information set forth in the above recitals of this Resolution is true and 13 correct. C14 Section 2. The Interim Executive Director of the Agency is hereby authorized by the C 15 Commission to execute the Agreement on behalf of the Agency in substantially the form attached 16 hereto as Exhibit "A", together with such changes therein as may be approved by the Interim 17 Executive Director of the Agency and Agency Counsel. The Interim Executive Director of the 18 Agency or such other designated representative of the Agency is further authorized to do any and all 19 things and take any and all actions as may be deemed necessary or advisable to effectuate the 20 purposes of the Agreement, including making non-substantive modifications to the Agreement. 21 Section 3. This Resolution shall take effect from and after its date of adoption by this 22 Commission. 23 24 25 26 ® 27 28 2 PAAgendee\R=Mi=TZr0luuamA201 M-10.11 Home DeW North Arden Cudnie-Mark D topmem ERN CDC Reeo.doo I RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING 2 THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT 3 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE NORTH ARDEN GUTHRIE REDEVELOPMENT PROJECT 4 STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT BY AND AMONG THE AGENCY, HOME DEPOT USA, INC., AND MARK 5 DEVELOPMENT,INC. (IVDA REDEVELOPMENT PROJECT AREA) 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 7 Development Commission of the City of San Bernardino at a meeting 8 thereof,held on the day of , 2011,by the following vote to wit: 9 Commission Members: Ayes Nays Abstain Absent 10 MARQUEZ — 11 DESJARDINS — 12 BRINKER — 13 SHORETT — C14 KELLEY — 15 JOHNSON — 16 MC CAMMACK — 17 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 12011. 21 22 23 Patrick J. Morris, Chairperson Community Development Commission 24 of the City of San Bernardino 25 Approved as to Form: 26 ti.... 27 By: y Agency o 1 28 3 P:Wpndas\4olutionsV4solutionsl 0111 1-10-11 Home Depot NoM Moo Guthrie-Mask Development ERN CDC R Aoc 1 EXIIIBIT "A" 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 P NgendesaesolutionsV esolutions\011\01-10-11 Home Depot North Arden Guthrie-Mark Dewlop rent FAN CDC Rean.doe REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT (ARDEN GUTHRIE HOME DEPOT COMMERCIAL PROJECT) This Redevelopment Project Study and Exclusive Right to Negotiate Agreement is dated as of January 10, 2011 (this "Agreement"), and is entered into by and among Home Depot U.S.A., Inc., a Delaware corporation("Home Depot"), the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency") and Mark Development, Inc., a California corporation("MDI"). Home Depot and MDI are collectively referred to herein as the"Developer." RECITALS A. The Agency desires to encourage and effectuate the redevelopment of certain real property located within the area commonly referred to as the North Arden Guthrie Area of the City of San Bernardino (the "City") and comprising approximately 17.43 acres, generally bounded by Highland Avenue, Arden Avenue, 20 Street and Guthrie Avenue that is depicted on the "Study Area Map" attached hereto as Exhibit "A" and is legally described on Exhibit "A-1" attached hereto (the"Property"); and B. The Property lies within the Redevelopment Project Area of the Inland Valley �► Development Agency (the "Project Area"), and is subject to the Project Area's governing redevelopment plan (the "Redevelopment Plan") and its Rules for Owner Participation as adopted by the Inland Valley Development Agency ("IVDA"); and C. The Agency is the fee owner of the Property; and D. The Property is generally underutilized vacant land with all building structures and infrastructure having been demolished, and the Property in both its prior condition and present condition contributes to the blight that has existed within the Project Area since the date of the adoption of the Redevelopment Plan to this date; and E. The project concept plan (defined herein as the "Project Concept Plan") involves the Property, and contemplates and proposes the purchase by the Developer from the Agency of the Property. The Developer will negotiate with the Agency for the Property. If an Agreement is reached between the Developer and the Agency, it shall be documented by a Project Disposition and Development Agreement (the "Project DDA"). The Project Concept Plan contemplates a commercial and retail center with a Home Depot store of approximately 137,000 square feet as the major anchor tenant and such other complimentary retail and commercial uses including sit-down restaurants (collectively,the "Shopping Center"); and F. The Property is situated within the Project Area of the IVDA, a joint powers authority, which was formed pursuant to Health and Safety Code Sections 33492.40, et seq., as a local redevelopment authority under the federal military base reuse laws for the purpose of 1 P.Agendas\Agenda AnwhmemsWgenda Attachments\Agrmts-Amend 2011\01-10-11 Home Depot Excursive Right To Negotiate Agreement(Mark Development). o assisting in the conversion and civilian reuse of the former Norton Air Force Base and the elimination and prevention of blight affecting other lands within a three (3) mile radius of the boundaries of the former Norton Air Force Base; and G. The IVDA, the City and the Agency have entered into an agreement entitled the "2003 Redevelopment Cooperation Agreement," dated as of October 8, 2003 (the "Redevelopment Cooperation Agreement"), pursuant to which the IVDA has delegated to the Agency the right, power and authority to act for and on behalf of the IVDA for the purposes of exercising the redevelopment powers of the IVDA within a portion of the Project Area; and H. The Agency is entering into this Agreement, without limitation, to foster the community economic development goals and objectives of the Agency and the City, including the elimination and the spreading of blight, as the same relates to the Project Area, and the Agency has designated the area to be included for such study purposes to be Property; and I. The Developer proposes developing the Shopping Center as generally depicted on the site plan attached hereto as Exhibit eB" (the "Site Plan"). Home Depot is interested in purchasing a portion of the Property as depicted on the Site Plan and labeled as the "HD Parcel." MDI is interested in purchasing a portion of the Property as depicted on the Site Plan and labeled as the "MDI Parcel." The Agency and the Developer acknowledge that the Site Plan is attached for illustrative purposes only and the actual development of the buildings in the Shopping Center are subject to modification by the parties hereto. Home Depot has represented to the Agency as an inducement for the obtaining of this Agreement from the Agency,that, based upon the facts as �..- presently known to Home Depot, Home Depot intends to pay $2,288,000 for the HD Parcel. MDI has represented to the Agency as an inducement for the obtaining of this Agreement from the Agency, that, based upon the facts as presently known to MDI, MDI intends to pay $2,175,600 for the MDI Parcel. The HD Parcel and the MDI Parcel comprise the entire 17.43 acres that make-up the Property, and the purchases are all subject to the final terms and conditions of the Project DDA, if approved by the Agency; and J. In connection with the preparation of the Project DDA and prior to consideration of the approval of such Project DDA, the Agency will prepare and circulate an initial study (the "Initial Study") in accordance with the California Environmental Quality Act of 1970, as amended("CEQA"); and K. Based upon information furnished by the Developer to the Agency together with further investigations conducted by the Agency, the Developer is qualified to assist the Agency to undertake the study of and plans for a coordinated and economically sustainable redevelopment project in the Project Area, including the Property, which will require further specific study, evaluation and planning by the City and the Agency, as applicable, of appropriate and feasible community redevelopment program alternatives; and L. The Developer and the Agency believe it is appropriate for the Agency, in consultation with the Developer, to review by agency staff(the "Agency Staff') those studies, reports and investigations conducted by the Developer as the Project Concept Plan Study costs (collectively, the "Project Concept Plan Study Costs") as part of a program for the study of 2 P:IAgendn\Agende Attad me skASwAa Attwbmms\Agt Amend 2911101-10.11 Home Depot Exclusive Right To Nege fete Agreement(Mark Development)doe feasible redevelopment programs for the Property, subject to the terms and conditions as set forth below. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES SET FORTH HEREIN, THE DEVELOPER AND THE AGENCY HEREBY AGREE,AS FOLLOWS: 1. The Negotiation Period and the Term of Agreement, Deposit. a. The rights and duties of the parties established by this Agreement shall commence following the approval of this Agreement by the governing body of the Agency after such time as this Agreement has been fully executed by the parties (such date being the "Effective Date"). This Agreement will continue in effect until a date which is twenty-four (24) months from the Effective Date unless such date shall have been first extended as authorized under Section Lb.(2) or this Agreement is otherwise terminated as provided in Section Lb. or l.c. Such time period during which this Agreement shall be in effect(including any extensions of time approved by the Agency)is referred to as the "Negotiation Period." b. This Agreement shall automatically terminate, without further notice or action, and be of no further force or effect twenty-four (24) months following the Effective Date, unless prior to that time: (1) the parties execute the Project DDA, as described below, which will include, without limitation, other relevant community redevelopment covenants acceptable to the Agency and such other terms and conditions mutually acceptable to the parties, in which case this Agreement shall terminate on the effective date of the Project DDA; or (2) the parties each agree to extend the term of this Agreement in writing to a specific date not later than six (6) months after the scheduled termination date, subject to the Executive Director of the Agency first making a finding through reasonable discretion that satisfactory progress is being made by the Developer to complete the Project DDA as set forth in Section 3. C. This Agreement can be terminated prior to the twenty-four (24) months following the effective date only if a party terminates this Agreement as provided under Section 2.c., Section 20 or Section 21, as applicable. d. Home Depot and the Agency previously entered into that certain Redevelopment Project Study and Exclusive Right to Negotiate Agreement, dated as of November 20, 2006 (the "Original ERN"). Home Depot and the Agency confirm that the Original ERN has expired by its terms and is no longer in force or effect. In addition, any other documents that may have been executed by Home Depot and the Agency in connection with the Original ERN are similarly deemed to be of no further force or effect. The Developer and the Agency agree that the purchase and development of the Property shall be governed by the terms of this Agreement until such time as the Project DDA is executed. In connection with the Original ERN, Home Depot delivered to the Agency a check in the amount of$58,000 ("Original ERN Payment"). Home 3 P'.\Agendas\Agenda Anachmenta\Agenda Attachments\Agrmts-Amend 2011\01-10-11 Nome Npot Exclusive Right To Negotiate Agreement(Mark pevelopmen).doc Depot acknowledges that the Original ERN Payment has been received by the Agency as partial consideration for the Agency having been precluded from offering the Property as owned by the Agency at that time and which is identified herein as the Property, to other prospective purchasers and developers. Home Depot acknowledges that the Original ERN Payment is non- refundable to Home Depot, shall be retained by the Agency and is not applicable towards the purchase price for the HD Parcel. 2. Developer Acknowledgments. a. The Developer hereby acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the Agency or an acceptance by the Agency of any offer or proposal from the Developer to convey any interest in the Property to the Developer. Any studies relating to the Property and the Project Concept Plan that may hereafter be undertaken by the Developer, in its sole discretion, shall be the sole responsibility of the Developer and shall not be deemed to be undertaken for the benefit of the Agency or the City. b. The qualifications and identity of the Developer are of particular concern to the Agency. The Agency has relied on these qualifications and identity in entering into this Agreement with the Developer. During the term of this Agreement, no voluntary or involuntary successor-in-interest of the Developer shall acquire any right or power under this Agreement. The Developer shall not assign all or any part of this Agreement or any rights hereunder, without the prior written approval of the Executive Director of the Agency (for purposes hereof the term "Executive Director of the Agency" shall mean the "Executive Director of the Agency" or such other title for the person who is then acting as the chief executive staff official of the Agency, or his/her duly delegated representative), which approval shall not be unreasonably withheld, provided that the Developer can demonstrate to the reasonable satisfaction of the Executive Director of the Agency that the assignee has the financial capability and the experience necessary to develop the project to the same standard of quality that would have been undertaken by the Developer. Notwithstanding the foregoing, each Developer, respectively, shall have the right to assign this Agreement and its rights hereunder; provided, however, MDI's right of assignment shall be limited to an entity, which controls, is controlled by or is under common control with the MDI or its principals, members or affiliates. C. Each Developer shall promptly notify the Agency in writing of any and all changes whatsoever in the identity of the business entities and individuals in control of such Developer, as well as any and all material changes in the interest or the degree of control of such Developer by any such party, of which information such Developer or any of its partners or officers have been notified or may otherwise have knowledge or information. Upon the occurrence of any material change in interest or control, whether voluntary or involuntary, in membership, ownership, management or control of a Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved in writing by the Executive Director of the Agency, prior to or subsequent to such change (after the Developer has received reasonable notice and an opportunity to cure such change to the reasonable satisfaction of the Executive Director of the Agency), the Agency may terminate this Agreement by serving written notice of such termination, referencing this Section, on an individual 4 P WgendasWgenda AuachmentsWgenda AuachmentMUmts-Amend 2011\01-10-11 Home Depot Exclusive Right To Fegotia�e Agreement(Mark Development)doc Developer. In such event, Home Depot or MDI, as the case may be, shall continue as the sole Developer of its respective portion of the Property. 3. Proiect Concept Plan Study. a. As soon as practical following the Effective Date, the Developer shall retain the services of a firm or firms of community redevelopment planning, engineers, architects, financial consultants, land use planners and environmental consultants to produce all necessary reports, studies and environmental documentation and other investigations, surveys and reports appropriate in connection with development of the Shopping Center (the "Project Concept Plan Study") and the evaluation of the Project Concept Plan proposed by the Developer and for the processing of all entitlements required to be obtained from the City together with the required environmental review and processing. All third party costs incurred by each Developer as part of the preparation of the Project Concept Plan Study shall be paid solely by such Developer in accordance with Section 4 of this Agreement. The Agency shall undertake compliance with all requirements of CEQA including the preparation of the Initial Study based upon the Project Description and Project Concept Plan provided by the Developer. The Developer shall aid the City in the identification of appropriate CEQA consultants and each entity comprising the Developer shall pay for its respective share of the cost of those consultants based on land area (i.e., Home Depot's share is 51% and MDI's share is 49%). b. The Developer may mutually modify the description of the Project Concept Plan at any time;provided,however,that substantial modifications of the Project Concept Plan shall: (i) be subject to the acceptance and approval of the Executive Director of the Agency which approval shall not be unreasonably withheld, conditioned or delayed; and (ii) depending on the nature of such a modification, a suitable modification of the environmental and other elements of the Project Concept Plan Study as modified may also be indicated. The Agency and/or the Executive Director of the Agency may request that the Developer consider modifications to the description of the Project Concept Plan from time-to-time. The final form of each such modification shall be subject to the reasonable approval of the Executive Director of the Agency and each Developer. C. The Agency shall, on a best efforts basis during the course of the Project Concept Plan Study, consider the specific terms and conditions of redevelopment assistance which the Developer may propose to include in the Project DDA; provided, however, that the Agency reserves the sole and absolute discretion to accept, reject or modify any such proposed term or condition to the Project DDA and to approve or reject the Project DDA in its sole and absolute discretion. C 5 P'.Wgeodas\Agenda AnachmemsWgende Attachmwtsl gmts-Amend 301M-1611 Home Depot Exclusive Right To Negotiate Ageemem(Mink Develapmen°.doc d. All third-parry consultants, if any, retained and paid for by the Agency to review any study, report or document prepared by or on behalf of the Developer as part of the Project Concept Plan Study shall be subject to the sole control and direction of the Agency. The work product of any such person shall be the property of the Agency. The Agency shall have the right to use and republish such work product for any purpose subject to the reasonable consent of Developer. e. The Developer in consultation with the Agency shall prepare a proposed conceptual development plan for the Project Concept Plan,to include,without limitation: (1) proposed land use categories on a parcel-by-parcel basis, including proposed zoning and general plan changes, if any, necessary to accommodate the Project Concept Plan to accommodate the intended commercial development on the Property; and (2) proposed time schedule and cost estimates for the development and proposed public and private infrastructure upgrades, proposed publicly owned facilities, public improvements, public infrastructure and private development. The conceptual development plan for the Project Concept Plan as described above may be revised from time-to-time in accordance with a schedule of preparation and revisions as may be mutually approved by the parties. 4. Proiect Concept Plan Study Costs. For the purposes of this Agreement, "Project Concept Plan Study Costs" shall mean and refer to the costs and expenses of third party consultants who are engaged by the Developer under written contract to undertake one or more elements of the Project Concept Plan Study including the environmental review and processing and the preparation of all required studies and reports in furtherance of the entitlements to be requested by the Developer from the City or the Agency. Project Concept Plan Study Costs shall include third party costs incurred by the Developer in connection with the preparation or submission of any information relating to the Project Concept Plan on which any element of the Project Concept Plan Study may be based, including civil engineering expenses, traffic consultant fees, architectural fees, financial consultants, accounting fees and similar expenditure items. In addition to the Project Concept Plan Study Costs incurred and paid by the Developer, Home Depot, MDI and the Agency shall each bear its own fees and costs for legal services, consultants and other service providers which such party engages. 5. Obligations of the Developer. During the Negotiation Period, the Developer shall proceed diligently and in good faith to perform the following: 6 ,\Ageod.$ gVnde A ohmeim\AgeM A hm B\Agtmo- M 2011\01-10.11 Nome Depot Exclusive Right To Negotiate Agreement(Mark Development)Coe a. Consider the redevelopment of the Project Concept Plan, including without limitation, the selection of the design of improvement elements as appropriate for the Project Concept Plan in addition to any commercial or retail elements of the Project Concept Plan; b. Review and provide the Project Concept Plan Study information described in Section 3 and submit an executed copy of the final form of the Project DDA to the Executive Director of the Agency on or before the end of the Negotiation Period (or such later date corresponding to an authorized extension of the Negotiation Period in accordance with Section 1); and C. Consult with the Agency and the Executive Director of the Agency on a regular basis and keep the Agency and the Executive Director of the Agency advised on the progress of the Developer in completing its obligations under this Agreement. 6. Agency Acknowledgments. The Agency hereby acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the Developer as an acceptance by the Developer of any offer or proposal from the Agency to purchase any interest in the Property. Any studies undertaken by the Agency not relating to the Property shall be the sole responsibility of the Agency. 7. Obligations of Agency. �— a. The Agency currently deems the disposition of the Property and the redevelopment of the Property for a feasible Project Concept Plan to be appropriate, and the Developer appears to be well qualified to undertake the task of planning the details for the acquisition of the Property. b. During the Negotiation Period, and subject to the Agency's compliance with the California Community Redevelopment Law ("CRL") and the Owner Participation Rules of the IVDA pursuant to the Redevelopment Plan regarding the rights of owners and tenants within the Project Area, the Agency shall negotiate exclusively with the Developer with respect to the Property during the Negotiation Period. The Agency shall not negotiate with any other person or entity regarding either the disposition of any of the Property or the redevelopment of the Project Concept Plan on the Property. The term "negotiate," as used herein, shall be deemed to preclude the Agency from accepting any other offer or proposal from a third party to either acquire from the Agency any interest in any of the Property (in whole or in part) or redevelop the Property, and from considering other redevelopment proposals for the Property with third persons or entities; provided, however, any person may submit to the Agency and the Agency may consider any proposal for the disposition and/or redevelopment of any lands adjacent to the Property and nothing shall preclude other persons from submitting proposals to the Agency for the redevelopment of the Property provided that the Agency merely accepts such proposals as documents submitted to a public agency as public records and shall be prohibited from ^^ negotiating the sale of the Property to such persons as provided herein. 7 P:UgevdeslAgevda Avachmente�Agenda AttuhmeoteUgtmu-AmeM 2011W1-10.11 Home Depotacluuve Right io Negmfem Agreenwm(Mark Developmem).o C. Notwithstanding any other provision of this Agreement, during the Negotiation Period, the Agency shall not be precluded from furnishing, to persons or entities unrelated to the Developer, information in the possession of the Agency relating to the redevelopment of any other land owned or controlled by the Agency in close proximity to the Property. Consideration of the redevelopment of the Project Area under the terms of the Redevelopment Plan shall remain in the sole and exclusive purview of the Agency. The Agency may also provide any other information in its possession that would customarily be furnished to persons requesting information from the Agency concerning its activities, goals and matters of a similar nature, or as required by law to be disclosed upon request. 8. Aaencv Cooperation. During the Negotiation Period,the Agency shall: a. Within five (5) business days after the Effective Date, the Agency shall deliver to the Developer copies of all due diligence materials in its possession, including without limitation, copies of all title, survey, ad valorem tax statements, and environmental, geotechnical, permitting, approval and development materials or studies. b. Use its best efforts to provide appropriate comment to the Developer with respect to one or more conceptual development plans, as may be proposed by the Developer for the Project Concept Plan, and the redevelopment of the Property, including, but not limited to, conceptual plans or studies of the vacation, realignment or abandonment of public property, rights-of-way and facilities, the installation and improvement of public improvements and environmental evaluation of the Project Concept Plan. C. Provide the Developer with limited access to the Property during the Negotiation Period for the purpose of conducting customary due diligence investigations thereon, including environmental investigations of the subsurface or any structure thereon. These rights will be subject to the terms and conditions of a separate environmental investigation and inspection license agreement in the form attached hereto as Exhibit"C". d. Use its best efforts to provide the Developer with information or copies of studies performed or to be performed relative to the Project Area. e. Use its best efforts to formalize the Project DDA with the Developer, wherein the Agency will include within the Project DDA a transfer to the Developer of the Property for the total purchase price of$4,463,600.00 subject to compliance with the CRL and public hearing and notice requirements pursuant to the CRL. f. Use its best efforts to assist the Developer in obtaining the entitlements necessary to develop the Project Concept Plan on the Property. g. Use its best efforts to utilize Agency Staff personnel to expedite compliance under CEQA for the Project Concept Plan in addition to the CEQA compliance for any zoning changes, �,.,. adoption of a specific plan if required by the Developer, general plan amendments and all other 8 P: �p.d.s\Agnb Amh.a. Vn Atwh m\Agmte eM zolM]4- 1 I Home Depot Erdwi,Ri&To NndM.Agr M(M+kneIp.n).a« entitlements necessary for the development of the Project Concept Plan on the Property, suggested by the Developer in its proposed conceptual development plans or at any other time during the Negotiation Period. 9. Negotiation of Project DDA. During the Negotiation Period, the Agency and the Developer shall negotiate diligently and in good faith to prepare and attempt to enter into a Project DDA. The parties shall exercise best efforts to complete discussions relating to the final terms and conditions of the Project DDA and such other matters, as may be mutually acceptable to the parties for the redevelopment of the Project Concept Plan on the Property, prior to the expiration of the Negotiation Period, but neither parry, after such diligent and good faith negotiations, shall be bound by any term or provision of this Agreement to complete any such negotiations or to execute any final Project DDA. The Project DDA shall contain the general terms set forth in Exhibit"D"attached hereto. 10. Consideration for this Agreement and Reservation of Rights. In consideration for the Agency's entering into this Agreement, the Developer will undertake its obligations under this Agreement and provide the Agency with copies of all studies and reports and other non-confidential or non-attorney-client privileged information generated by the Developer or its consultants regarding the Project Concept Plan or the Property. Notwithstanding the foregoing, the Developer shall provide all information required under Section 3. in its entirety as set forth therein and in accordance with Section 12. All information as may be provided by the Developer to the Agency which is of a confidential nature shall be subject to the provisions of Section 12 which provides that the Agency agrees to maintain the confidentiality of any financial and/or proprietary information of the Developer that is exempt from disclosure as a Public Record pursuant to Government Code Sections 6254.15 and 6255. The parties agree that, if this Agreement terminates for any reason,the Agency fails to extend the Negotiation Period or the Project DDA is not finally approved by the Agency for any reason, neither parry shall be under any further obligation to the other party regarding the disposition, acquisition,reuse,redevelopment or development of the Project Concept Plan or the Property. 11. Planning and Design, Related Acknowledgments of the Parties. Certain development standards and design controls for the Project Concept Plan may be established between the Developer and the Agency in negotiation of, or in the final form of, the Project DDA, but it is understood by both parties that the Project Concept Plan and the redevelopment of the Property must conform to the City's development, design and architectural standards. The Agency Staff shall use best efforts to cooperate with the Developer's professional associates in providing information and assistance in connection with the Developer's preparation of drawings, plans and specifications. Nothing in this Agreement shall be considered approval of any plans or specifications for the Project Concept Plan or the Property, itself,by either the Agency or the City. 9 P;tAgendniAgendn At h.m,�Ageevda Ane b.m \Awr A---d 2011\0410.11 Home Depot Exclusive Right io Negotiate Agreement(Mark Development)one 12. Developer Financial Disclosures. Each Developer acknowledges that it may be requested to make certain confidential financial disclosures to the Agency, its staff or legal counsel, as part of the financial due diligence investigations of the Agency relating to the potential disposition of the Property to such Developer. The parties recognize that such financial disclosures may contain sensitive information relating to other business transactions of a Developer, that the disclosure of such information to third parties could impose commercially unreasonable and/or anti-competitive burdens on a Developer and, correspondingly, diminish the value or fiscal benefit that may accrue to the Agency upon the disposition of the Property to a Developer, if the terms for such disposition are mutually agreed upon. Accordingly, the Agency agrees to maintain the confidentiality of any of the Developer's financial and/or proprietary information that is exempt from disclosure as a Public Record pursuant to Government Code Sections 6254.15 and 6255. In the event that the Agency refuses to disclose records at the request of a Developer, such Developer shall indemnify, defend, and hold harmless, including payment of attorneys' fees, the City and the Agency from any action, lawsuit or other proceeding initiated to obtain access to documents that may be deterrnined to be exempt from disclosure pursuant to the applicable provisions of the Public Records Act. 13. Nondiscrimination. Each Developer shall not discriminate against nor segregate any person, or group of persons on account of race, color, creed, religion, sex, marital status, handicap, national origin, sexual orientation, or ancestry in undertaking its obligations under this Agreement. 14. Compliance with Law. Each Developer acknowledges that the Project DDA, if mutually agreeable terms are established, may require such Developer (among other things) to carry out the construction of certain improvements in conformity with all applicable laws, including all applicable planning and zoning laws, environmental planning and safety laws and federal and state labor and wage laws that will require the payment of the prevailing wage rates all as shall be further set forth in the Project DDA. 15. Required Approvals. No Project DDA between the parties shall have any force or effect, nor shall the Agency be deemed to be a party to any agreement for the disposition of any real or personal property to the Developer, until the terms and conditions of the Project DDA are considered and approved by the governing body of the Agency, following the conclusion of a noticed public hearing, as required by the CRL. 16. Press Releases. The Developer agrees to discuss any press releases it may propose relating to the Property with the Executive Director of the Agency or his/her designee, prior to publication, to 10 PAAeeMulAeeada Aft h..mAApitca Attechimmma ,gitnt+Amend 2011M4()0.11 Home DWet Exclusive Right To Negotiate Agreement(Muk Developmen).dac assure accuracy and consistency of the information. The Agency shall not issue press releases or make public disclosure of information concerning the Property or the Developer's proposals (unless the Developer has consented thereto)except as may be required by applicable law. 17. Notices. All notices required hereunder shall be presented in person (such as hand delivery or recognized overnight couriers (e.g., UPS or FedEx), by fax or by First Class certified or registered United States mail with return receipt requested. Notice by personal service or certified or registered mail shall be deemed effective upon delivery. All notices sent by facsimile shall be deemed to have been received upon machine confirmation (by the receiving party's facsimile machine) of receipt, but if the party receives the notice after 5:00 p.m., then the date of receipt shall be the next judicial day after the date of receipt. Any party may change their address for receipt of notice by notifying the other parties in writing. TO HOME DEPOT: Home Depot U.S.A., Inc. Atm.: Erika Strawn, Senior Attorney 3800 West Chapman Avenue Orange, California 92868 Tel: (714) 940-3620/Fax: (714) 940-3632 Home Depot U.S.A., Inc. Atm.: Jeffrey Hardman, Real Estate Manager 3800 West Chapman Avenue Orange, California 92868 Tel: (714)940-3662/Fax: (714) 940-3579 and Robert H.Nagle Nagle Law Group, P.C. 4530 East Shea Boulevard, Suite 140 Phoenix,Arizona 85028-6065 Tel: (602) 595-6951/Fax: (602)445-9306 TO MIDI: Mark Development, Inc. Attn: Mr. Mark Sandoval 111 North Fifth Street, Suite 8 Redlands, California 92373 Tel: (909)335-0330/Fax: (909) 335-7127 TO THE AGENCY: Redevelopment Agency of the City of San Bernardino Attention: Emil A. Marzullo, Interim Executive Director 201 North"E" Street, Suite 301 © San Bernardino, California 92401 Tel: (909) 663-1044/Fax: (909) 663-2294 11 P WgendasWgenda Ana<hmemsWgenda Amchments\Agrmts-Amend 2011\01-10-11 Home Depot Exclusive Right To Negotiate Agreement(Mark De,I ..t).d. I I 18. Acceptance of Agreement by the Developer. Each Developer shall acknowledge its acceptance of this Agreement by delivering four (4) counterpart executed copies of this Agreement signed by an authorized party on behalf of the Developer to the Agency. The delivery by the Developer to the Agency of the executed counterpart copies of this Agreement shall be completed either prior to or within thirty (30) calendar days following the approval of this Agreement by the Agency's Board or thereafter this Agreement shall have no further force and effect with respect to any parry. 19. Authority This Agreement may be executed in counterparts, and when fully executed by the parties, each such counterpart shall be deemed to be one original document. Each signatory to this Agreement represents and warrants that he or she has the authority to execute this Agreement on behalf of the principal whom he or she purports to represent. 20. Optional Termination by Developer and Agency. Provided the Developer is not in default, the Developer may, in its sole and absolute discretion, exercise an election to suspend the Project Concept Plan Study, and thereafter this Agreement shall terminate and the parties shall be mutually released from any further obligations hereunder; provided, however, that the Developer gives thirty (30) calendar days' prior written notice to the Agency. Notwithstanding the foregoing, in the event MDI elects to terminate its �,. obligations as a Developer hereunder, Home Depot, at its sole and absolute election, may take the place of MDI hereunder by delivering written notice to the Agency within thirty (30) calendar days after receipt of a termination notice issued by MDI. Provided the Agency is not in default, the Agency may in its sole and absolute discretion exercise an election to suspend the Project Concept Plan Study, and this Agreement shall terminate and the parties shall be mutually released from any further obligation hereunder thirty (30) calendar days following written notice by the Agency to the Developer. 21. Defaults and Breach—General. a. Failure or delay by any party to perform any material term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if the party who is otherwise claimed to be in default by the other party cures, corrects or remedies the alleged default within thirty (30) calendar days after receipt of written notice specifying such default such party shall not be deemed to be in default hereunder. b. Any failure or delay by a parry in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with such a default. C. In the event that a default of any party may remain uncured for more than thirty (30) calendar days following written notice, as provided above, a "breach" shall be deemed to have occurred unless such party who is alleged to be in default is in the process of diligently 12 P p,ende pmchn¢nbUgeMa AtmnhmevtalAgtmts Amend 2011101-10.11 Home Depot Exclusive Right To Negotiate Agreement(Mark Development).doc prosecuting the cure of such default, such cure was commenced immediately upon receipt of `~ notice as above set forth and such breach cannot be cured within said thirty (30) calendar days even though the cure was commenced in a timely manner. d. In the event of a breach, the party who is not in default shall be entitled to seek any other appropriate remedy by initiating legal proceedings. The successful party in any such legal proceeding shall be entitled to recover its reasonable attorneys' fees as an element of its damages, either as part of such legal proceedings or in a separate legal action to recover such attorneys' fees. e. In the event that a breach has occurred under this Section 21, the party who is not then in default may terminate this Agreement by serving the other party with a written notice of termination, and thereafter the Agreement shall terminate thirty (30) calendar days following the date of service of the notice of termination on the other party. £ The obligations of Developer hereunder are not joint and several. Enforcement against a"Developer" shall be pursued solely against the party in default hereunder. 22. Governina Law, Venue. The parties hereto acknowledge that this Agreement has been negotiated and entered into in the State of California. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of California. Further, the parties to this Agreement hereby agree that any legal actions arising from this Agreement shall be filed in California Superior Court, in the Court of San Bernardino, Central District. 23. Partial Invalidity. If any term, provision or portion of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision or portion thereof to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 24. No Intent to Create Third Party Beneficiaries. The parties intend that the rights and obligations under this Agreement shall benefit and burden only the parties hereto, and do not intend to create any rights in, or right of action to or for the use or benefit of any third party, including any governmental agency, who is not one of the parties to this Agreement. 13 P:\Agendes\Apnda Amnhmems\Agenda Anacbmems\Agrmts-Amend 2011\01-10-11 Home Depot Exclusive Right To Negotiate Agreement(Mark Development).doc 25. Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of the time for performance of any obligation or act to be performed herein shall be deemed to be an extension of the time for performance of any other obligation or act to be performed under this Agreement. 26. Entire Agreement. This Agreement (including all Exhibits attached hereto) is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein. This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall constitute a single instrument. 27. Time of Essence. Except as provided in Section 20 of this Agreement, time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof and that failure to timely perform any of the terms, conditions, obligations or provisions hereof by any party shall constitute a default under this Agreement by the party so failing to perform subject to such failure to timely perform being waived by the non-defaulting party at their sole option and discretion. 28. Construction. Headings at the beginning of each section, paragraph and subparagraph are solely for the convenience of the parties and are not a part of this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all parties had prepared the same. Unless otherwise indicated, all references to Sections are to this Agreement. All Exhibits referred to in this Agreement are attached hereto and incorporated herein by this reference. [Signatures on Following Page] P;Ugadu\Agenda Anwhmen \Apada AR hma skAge Amcd201l�1-10-11 Home Depmacluvve RigM To Negodwe Agm MOAuk Developmem)doc IN WITNESS WHEREOF,the undersigned have executed this Agreement on the dates indicated next to each of their signatures as appear below. DEVELOPER: Home Depot U.S.A., Inc., a Delaware corporation Dated: By: Name: Its: Mark Development, Inc., a California corporation Dated: By: Name: Its: AGENCY: Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Date: l �l �� By: !i Emil A. Marz 310, Executive Director Approved as to Form and Legal Content: Agency Counsel 15 pMAgendes\Agenda Attachments�Agmda Amchmmts\Agsmt Ames 2011\01-10-11 Home Depot Exclusive Right To Negotiate Agreemem(M kDevelopmem),doc EXHIBIT "A" Study Area Map [See Attached 1 Page] a�11 I!{Ii{ I�{ pit� t } !1 �+53!!�LI�! 1{8 i{�II'I{�!{'i II� :!{•!1 � I 1:1 Vi °• Sul E. I e I t +p I ! It Ills t 1 I�•t EF([Iao{ II{ �p tli{ 6 jib I• i{I I l�Ee PSveE Bt.IE t �E(s {I 1!!yl pp t tt•t ;!�L �� �i 19.4 I' gtt ihl;t�.r111 1 III 1{II{� t! {illi e! {It co Ia @�+a§ {,IIIlIItg! I ••• (illy :: �Egi .�I H Q 7 al • r {- {rin tlt t •iI. I;� �ollElrttl{I �il1{ hills 9!I 8, i1�I �'W �U pl�er3 t" W I'� � ��I � • 8 w. Its ___ _ QLU 5411 . .i. , • . a • a a . • . . _ Z v a ifs i �' • � • ti • I • s • I • i .1 • � a 1 i i _ J L � c ■ s s s n x e i EXHIBIT "A-1" LEGAL DESCRIPTION OF PROPERTY PARCEL NO. 1: Lots 22 to 54 inclusive of Tract No. 6898 in the City of San Bernardino, County of San Bernardino, State of California, as per Plat recorded in Book 88 of Maps, Pages 34 and 35 PARCEL NO. 2: Lots 1 to 40 inclusive of Tract No. 7106 in the City of San Bernardino, County of San Bernardino, State of California, as per Plat recorded in Book 90 of Maps,Pages 61 and 62 PARCEL 3: That portion of Lot 6, Block 3, as shown on the map of West Highlands, recorded in Book 5 of Maps, Page 77, described as follows: Beginning at the northwesterly corner of Lot 9, Tract 7106, as per map recorded in Book 90 of Maps, Page 62, in said recorder's office, thence easterly along the north line of said Lot 9 a distance of 120 feet to the west line of a 20 foot alley as shown on said Tract 7106; thence along said west line north 0 degrees 31 minutes 24 seconds 16.63 feet; thence north 64 degrees 07 minutes 32 seconds west 132.65 feet to an intersection with that certain 20 foot radius curve concave southeasterly in the northwesterly corner of that certain parcel of land designated as"not a part' on said map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; .. thence southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the east line of said Dumbarton Avenue 60 feet wide as shown on said map, thence southerly along said east line of Dumbarton Avenue to the point of beginning. PARCEL 4: That portion of Lot 6,Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the map of West Highlands, recorded in Book 5 of Maps, Page 77, in the office of the County Recorder of said County,described as follows: Commencing at the northwesterly corner of Lot 8, Tract 71096, as per map recorded in Book 90 of Maps, Pages 61 and 62, in the office of the County Recorder of Said County; thence South 89° 43' 56" East along the northerly line of said Lot 8 a distance of 0.10 feet to the Point of Beginning; thence continuing along the northerly line of said Lot 8 a distance of 119.91 feet to the east line of a 20 foot alley as shown on said Tract 7106;thence along said east line North 00° 31'19" West 30.56 feet to the beginning of a 100 foot radius curve, concave easterly; thence along said curve through a central angle of 22°32'37" a distance of 39.35 feet; thence North 22'01'18" East 25.49 feet to the beginning of a 60 foot radius curve, concave westerly; thence along said curve through a central angle of 22°52'39" a distance of 23.96 feet to the southwesterly right of way line as shown on California Department of Highway's Right of Way Map No. 423013;thence along said southwesterly right of way line South 64°07'32"East 107.16 feet; thence along said right of way line, South 02°07'57" East 68.72 feet to the Point of Beginning. Contains 10,602 square feet, more or less. EXHIBIT `B" SITE PLAN [See Attached I Page] MR�B B� :: R = t RRR��39� �� s•rE=..f.. q�}f f yglYSy a BB 1+ 8~ /�� 1R�PS� Ea S�d P� 1^• i ®EtS � \Ra9A� f t YY� � ^_e li�� �•� �7! —5���� _ \�1 == E° eP=a• a e p�{ g67 i : ��I€ e6 ! FE E3fFlYBX otill�.e l�[!tlE�1� 9+ _p its a E:.11�3f i i i i i B , p•1�lp j [ i rf ' i6 E � I rl � ! i B li co -----------�OIi7lE@I6------J — EXHIBIT "C" TEMPORARY LICENSE AGREEMENT Recital Upon acceptance of the terms and conditions of this TEMPORARY LICENSE AGREEMENT (this "License") dated as of , 2010, is entered into by and among the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), Home Depot U.S.A., Inc., a Delaware corporation ("Home Depot'), Mark Development, Inc., a California corporation ("MDI") (Home Depot and MDI are herein collectively the "Developer"), at the place as indicated in this License, the Developer shall have a right to utilize certain lands owned by the Agency, for the purpose of conducting surveying and environmental assessments of the property, commencing on the Effective Date of that certain Exclusive Right to Negotiate ("ERN"), between Developer and the Agency, and expiring two years thereafter(the"Period"). Terms and Conditions 1. Definitions. Certain words and phrases used in this License shall have the meanings described below: • "Agency Property" means and refers to the real property comprising approximately seventeen and 43/100 (17.43) acres of land located between Highland Avenue to the north, 2e Street to the south, Arden Avenue to the east and Newcombe Avenue to the west in the City of San Bernardino, California and legally described on Exhibit"A"attached hereto. • "City"means and refers to the City of San Bernardino. • "Participant'means the Developer and its authorized representatives and agents. 2. License. The Agency hereby grants to the Developer the right to use the Agency Property during the Period for the purpose of conducting any or all of necessary physical investigation activities in, on, over or under the Agency Property, including, but not limited to, survey work and environmental assessments, and for no other purpose unless expressly authorized in writing by the Interim Executive Director of the Agency. The Developer shall be responsible for any illegal disposal of waste products from any vehicle parked on the Agency Property or by any Participant during the term of this License and shall defend, indemnify and hold harmless the Agency and the City from any claims, losses or damages, including environmental restoration and other environmental laws and regulations, C-1 caused by a Participant, during the term of this License. The Developer shall return the Agency Property to the Agency in its original condition. This License does not create any possessory interest in the Property nor does it create any landlord tenant relationship between the Agency with the Developer, but this License is merely granting to the Developer the right to use the Property in the limited manner as provided herein. 3. Safety Safety is the primary consideration and the Developer shall take all necessary steps to assure that each condition that may be imposed by the City related to the use of the Agency Property is implemented and strictly enforced. The Developer shall abide by the orders and directions of all state and local government agencies having authority over the temporary use of the Agency Property, including, but not limited to, orders and directives concerning unsafe conditions or practices on the Agency Property. The Developer shall comply with all orders and duties of the City in the course of their activities. 4. Insurance. The Developer and the Agency are legally insured or self-insured, as applicable, for their respective financial and performance obligations created by this License. 5. Indemnification. (a) The Developer shall indemnify, defend (if requested by the Agency and/or the City), and hold harmless the Agency and the City, their officials, officers, employees, agents, volunteers, representatives and successors against any and all liability, demands, claims, costs, liens, losses, damages, lawsuits, recoveries, settlements and expenses (including interest, penalties, reasonable attorneys' fees, accounting fees, expert witness fees, costs and expenses), known or unknown, contingent or otherwise arising out of, or in any way related to any use of, or entry onto, the Agency Property by the Developer under this License, including environmental damages and hazardous substance remediation caused by the Developer. The duty of the Developer to defend and indemnify, created by this License, shall remain in full force and effect despite any allegations that the Agency or the City or any of their officers, directors, managers, employees or agents is solely negligent, partially negligent, jointly negligent, or otherwise at fault, or somehow contributed to cause any claim, damage or loss. The indemnity and defense obligations created by this License shall survive expiration or termination of this License until all such potential claims are resolved and/or barred by applicable statutes of limitation. Pursuant to the obligations set forth in this Section 5(a), the Developer agrees to reimburse the City and the Agency for any costs and attorneys' fees that the City or the Agency may be required by a court to pay as a result of actions by the Developer under this License, but such participation shall not relieve the Developer of its obligation under this condition. The costs, salaries, and expenses of the City Attorney and employees of his office shall be considered as "attorneys' fees" for the purpose of this condition. C-2 (b) In the event approval of this License is legally challenged, the Agency will promptly notify the Developer in writing of any claim, action, or proceeding and shall terminate this License within ten (10) calendar days after the date of delivering such notice to Developer (the "Notice Period"), subject to the further provisions of this Section 5. Once notified, the Developer may either (i) prior to the expiration of the Notice Period, agree to defend, indemnify and hold harmless the City, the Agency, any departments, agencies, divisions, boards or commission of either the City or the Agency as well as predecessors, successors, assigns, agents, directors, elected officials, officers, employees,representatives and attorneys of either the City or the Agency from any claim, action or proceeding against any of the foregoing persons or entities, or (ii) take no action so as to allow for the termination of this License. In the event Developer agrees to indemnify the Agency as set forth in this Section 5(b), the Developer agrees to reimburse the City and the Agency for any costs and attorneys' fees that the City or the Agency may be required by a court to pay as a result of such action, but such participation shall not relieve the Developer of its obligation under this condition. 6. Damage to Agency Property. The Developer shall cause to be repaired or replaced, at its own expense, any and all damage to the Agency Property, including any environmental contamination that occurs on the Agency Property by the Developer, where such damage is caused by a Participant who may be on the Agency Property for any purpose connected with the related activities. 7. Liens. The Developer shall not suffer or permit any liens to stand against the Agency Property, or any part thereof, by reason of any work, labor, services or materials done for, or supplied to the Developer or a Participant. If any such lien shall at any time be filed against the Agency Property, the Developer shall cause such lien to be discharged of record no later than thirty (30) calendar days after written notice is received by the Developer from the Agency. 8. No Assignment Delegation. The Developer may not assign or delegate any of its rights or obligations under this License. 9. Surrender. On the cancellation, expiration or termination of this License, the Developer shall peaceably and quietly leave and surrender the Agency Property and release all of its rights as arise under this License. In the event the ERN is terminated by either party, this License shall automatically terminate. 10. Hazardous Materials. The Developer is specifically prohibited from storing, using and/or disposing of any Hazardous Material on or at the Agency Property. As used herein; the words "Hazardous C-3 Materials" shall mean any hazardous toxic or radioactive substance, material, matter of waste a� which is or becomes regulated by any federal, state or local governmental restriction or requirement and shall include but not be limited to asbestos, petroleum products and"Hazardous Substances" and "Hazardous Wastes" as defined in the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") as amended 42 U.S.C. 9661, et seq. The Developer shall indemnify, defend and save harmless the Agency, its directors, officers, employees, agents, and representatives from and against any and all liability, loss, claims and damages, including environmental damages caused by or related to Hazardous Materials and costs of clean-up and remediation used by the Developer or a Participant, or arising out of the activities of the Developer or a Participant, including, without limitation, any disposal from waste tanks on motor vehicles, discharges from portable restroom facilities, motor vehicle fuels or oils spilled on or to the Agency Property by any Participant during the term of this License. 11. Notices. Notice pursuant to this License shall be given in writing by delivery service (such as FedEx or UPS), United States mail (postage prepaid), or confirmed by FAX and addressed to the parties hereto as follows: TO HOME DEPOT: Home Depot U.S.A., Inc., a Delaware Corporation Attn.: Erika M. Strawn, Senior Attorney 3800 West Chapman Avenue Orange, California 92868 Phone: (714) 940-3620 Fax: (714) 940-3632 TO MDI: Mark Development, Inc. Attn: Mr. Mark Sandoval 111 North Fifth Street, Suite 8 Redlands, California 92373 Tel: (909) 335-0330/Fax: (909) 335-7127 TO THE AGENCY: Redevelopment Agency of the City of San Bernardino Attn.: Emil A. Marzullo, Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 Phone: (909) 663-1044 Fax: (909) 663-2294 C-4 WHEREFORE, the authorized representatives of the Agency and the Developer are authorized to execute this License and have executed this License as of the date indicated below, and this License is dated as of the date set forth in the introductory paragraph hereof. AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency Counsel ACCEPTANCE OF LICENSE The undersigned officer of Home Depot U.S.A., Inc. hereby accepts this License on the terms and conditions as set forth herein. Dated: By: Its: The undersigned officer of Mark Development, Inc., hereby accepts this License on the terms and conditions as set forth herein. Dated: By: Its: C-5 EXHIBIT "A" TO LICENSE AGREEMENT Legal Description of Agency Property PARCEL NO. 1: Lots 22 to 54 inclusive of Tract No. 6898 in the City of San Bernardino, County of San Bernardino, State of California,as per Plat recorded in Book 88 of Maps,Pages 34 and 35 PARCEL NO.2: Lots 1 to 40 inclusive of Tract No. 7106 in the City of San Bernardino, County of San Bernardino, State of California,as per Plat recorded in Book 90 of Maps,Pages 61 and 62 PARCEL 3: That portion of Lot 6, Block 3, as shown on the map of West Highlands, recorded in Book 5 of Maps,Page 77, described as follows: Beginning at the northwesterly corner of Lot 9, Tract 7106,as per map recorded in Book 90 of Maps, Page 62, in said recorder's office, thence easterly along the north line of said Lot 9 a distance of 120 feet to the west line of a 20 foot alley as shown on said Tract 7106;thence along said west line north 0 degrees 31 minutes 24 seconds 16.63 feet; thence north 64 degrees 07 minutes 32 seconds west 132.65 feet to an intersection with that certain 20 foot radius curve concave southeasterly in the northwesterly corner of that certain parcel of land designated as "not a part" on said map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; thence southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the east line of said Dumbarton Avenue 60 feet wide as shown on said map, thence southerly along said east line of Dumbarton Avenue to the point of beginning. PARCEL4: That portion of Lot 6, Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the map of West Highlands, recorded in Book 5 of Maps, Page 77, in the office of the County Recorder of said County, described as follows: Commencing at the northwesterly corner of Lot 8, Tract 71096, as per map recorded in Book 90 of Maps, Pages 61 and 62, in the office of the County Recorder of Said County; thence South 891 43' 56" East along the northerly line of said Lot 8 a distance of 0.10 feet to the Point of Beginning; thence continuing along the northerly line of said Lot 8 a distance of 119.91 feet to the east line of a 20 foot alley as shown on said Tract 7106; thence along said east line North 001 31'19" West 30.56 feet to the beginning of a 100 foot radius curve, concave easterly; thence along said curve through a central angle of 22 132'37" a distance of 39.35 feet; thence North 22°01'18" East 25.49 feet to the beginning of a 60 foot radius curve, concave westerly; thence along said curve through a central angle of 22°52'39" a distance of 23.96 feet to the southwesterly right of way line as shown on California Department of Highway's Right of Way Map No. 423013; thence along said southwesterly right of way line South 64°07'32" East 107.16 feet; thence along said right of way line, South 02 107'57"East 68.72 feet to the Point of Beginning. Contains 10,602 square feet,more or less. C-6 EXHIBIT "B" TO LICENSE AGREEMENT Depiction of Caltrans Property Ptn. Wsit Highlands, Y.B. 5/77 ulf r s,.n•.Ymo an -0S T i � —XYHN � -H♦If! � B ®-e a Be B :®.7 • + ® ov ® off ® ,• i p 1 • ® ® ® ® v® y 6.7 ,6 ON 2 L , E 4D 11 2! 0 �• ® J® T e ♦ aC ' •® ® ® 8 8 j _ ® ® ® ® ® 1 IS J. 1 I ,I I • f ® II 1 I • � I I I, II I,.I N I I 9 1 I � ..I 1 I Y•I I 1 u... � 116 T 1 I I It 6 I 1 1 1 I I 1 1 •I T 1 • al arum n..I,ni u.lu6 66 1♦I.-,I AuY1 ',W., MWI tl•..ni..IYL,.I. R♦IIJ.1 6 4,. 31 ok It�i Iry�11 R ttl II.IuJ 4.Ilfl,,.1.IIIIbIf l.l...IAj. �. IYmO, 0.mff C'/ EXHIBIT "D" TERMS OF PROJECT DDA • Home Depot desires to purchase approximately 8.93 acres (51%) of the Property. • MDI desires to purchase 8.5 acres (49%) of the Property. • Upon approval of the Agreement, the (a) Project DDA shall be prepared by the Agency outlining the respective obligations of all parties, (b) Home Depot shall prepare a draft REA (as defined below) and a Development Agreement (as defined below). • Aggregate purchase price shall be $4,463,600 (the "Purchase Price"). Home Depot's share of the Purchase Price shall be $2,288,000 and MDI's share of the Purchase Price shall be $2,175,600. • Home Depot agrees to deposit $50,000 ("Earnest Money") into Escrow with Lawyers Title Insurance Company ("Title Company"), which is non-refundable following expiration of the Inspection Period (as defined below), but applicable to Home Depot's share of the Purchase Price. • In the event MDI is unable to fulfill the obligations of the Project DDA, the Development Agreement or the REA, the Agency shall either assume the responsibilities of MDI or assign MDI's rights to a new development company approved by Home Depot, in Home Depot's sole and absolute discretion,or, at Home Depot's sole option,to Home Depot. • Timelines in the Project DDA shall commence upon the later of(a) execution of the Project DDA, (b) execution of the Development Agreement, or (b) conceptual approval of the REA (the"Commencement Date"). • Home Depot and MDI shall each have 180 calendar days after the Commencement Date (the "Inspection Period")to conduct due diligence. • Home Depot and MDI shall each have the right, at its election, to extend the Inspection Period for 2 periods of 60 calendar days each by notice to the Agency and the other party on or before the last day of the Inspection Period or the then current extension thereof, as the case may be. • Home Depot and MDI shall each have the right, in its sole and absolute discretion, to terminate the Project DDA as to such entity for any reason on or before the expiration of the Inspection Period. • Home Depot and MDI shall each have 18 months after the expiration of the Inspection Period, as may be extended (the "Entitlement Period") within which to pursue all "Entitlements" necessary or desirable to construct, occupy and operate (i) for Home Depot, a prototypical Home Depot Home Improvement Store, and (ii) for MDI, additional retail �., buildings as shown on the Site Plan (collectively, the "Project") upon terms and conditions acceptable to such part, in its respective sole and absolute discretion. The Entitlement Period D-1 shall be extended by 6 months if either Home Depot or MDI has made commercially reasonable efforts to obtain all the approvals necessary to construct the proposed development. In the event that Home Depot requests the Entitlement Period be extended for 6 months, Home Depot agrees to deposit an additional $50,000 into Escrow with the Title Company, which is non-refundable following expiration of the Entitlement Period, but applicable to Home Depot's share of the Purchase Price. The Entitlement Period shall be automatically extended in the event that either parry is engaged in any legal litigation over the Project. The "Entitlements" shall include, without limitation: (i)producing, with the help of city staff, a comprehensive site design and elevations, and sign program that are similar to those found in a first class shopping center of this nature. (ii) rezoning and variances necessary to permit the construction (which includes any and all building permits and approvals from all of the utility companies or agencies that are required to construct the Project)and operation of the Project at the respective party's sole cost and expense. • The Agency and Developer shall cooperate and use commercially reasonable efforts to process entitlements for the Project and to obtain all applicable zoning and other required approvals to permit (i) the construction of approximately 70,000 square feet of general retail buildings on the MDI Parcel, and (ii) a 107,000 square foot Home Depot building with an approximate 30,000 square foot garden center (final size to be determined by final approved site plan) on the HD Parcel, including the sale of typical home improvement items found in Home Depot stores nationally, and incidental rights to (a) stage and temporarily store merchandise around the perimeter of the building, (b) unload product off of flatbed trucks, (c) sell Christmas and other seasonal items in the parking lot, (d) have rights to display products from the front sidewalk, and (e) if allowed by the City, have the right to sell food for on premises consumption both indoors and outdoors in an area not to exceed 1,000 square feet per food sales area • Each Developer shall pay for processing of the entitlements unique for its respective use. • If a Developer has not obtained all entitlements for its portion of the Property within 48 months from the Commencement Date, such Developer shall have the option to cancel the Project DDA with respect to its portion of the Project. • The Closing on the Property shall be subject to receipt by a Developer of all necessary building permits. • Each Developer shall have until the expiration of the Inspection Period to examine a survey of and title to the Property and to notify the Agency of any objectionable matters. The Agency shall have until 10 calendar days following receipt of a Developer's objections to cure the same to the satisfaction of such Developer or to agree in writing to do so at Closing. In the event the Agency is unable to cure any objections to the satisfaction of a Developer, such Developer shall have the right to (i) take title to its portion of the Property despite the existence of such matter, or(ii)terminate its obligations under the Project DDA. • The closing shall be held within 45 calendar days (the "Closing") after any and all Entitlements have been received for the Project. At Closing, the Agency shall (a) convey fee simple title to the respective portions of the Property by grant deed, subject only to those D-2 exceptions to title accepted by such Developer, (b) cause possession of the Property to be delivered to the Developer unoccupied, free of any right of possession or claim to right of possession by any party other than Developer, (c) deliver the Property in a rough graded condition with all utilities from previous structures removed with re-compaction of acres where utilities were removed and with all environmental conditions remedied and/or mitigated, if and as required by the terms of the Project DDA. • The Developer and Agency acknowledge that the timelines for each Developer under the Project DDA may not run concurrently. • Home Depot anticipates closing its existing store located at 1055 West 215` Street on or before January 31, 2014; provided, however, Home Depot shall be under no obligation to close such store and will not provide a covenant that such store will be closed. • At Closing, the Agency shall be responsible for: (i) the Agency's attorneys' fees; (ii)all recording and transfer taxes and tax collection fees; (iii) all recording fees on recordable documents; (iv)the basic premium for a standard owner's title policy (a "Title Policy"); and (v) all"greenbelt", "roll-back"and other deferred taxes. • At Closing, each Developer shall be responsible for: (i) such Developer's attorneys' fees; (ii) any endorsements to its Title Policy; and (iii)the cost of any examinations, test, studies and investigations of the Property performed by or on behalf of such Developer. • Home Depot shall draft a restriction and easement agreement ("REN). The REA will contain certain restrictions and obligations governing the development and operation of the Project, including, without limitation, a restriction prohibiting any portion of the MDI Parcel from being used as home improvement center or for any business which sells, displays, leases, rents or distributes certain items or materials, singly or in any combination detailed in the REA. An excerpt is attached as "Schedule 1". The REA shall also include general use restrictions encumbering the Project, which contain Home Depot's standard list of prohibited and objectionable uses. Further, the REA shall contain provisions which provide for seasonal sales areas; parking and vehicle and pedestrian access easements; critical access drives; self-help rights; remedies on default; prohibitions against the use and disposal of hazardous substances; maximum building areas; height restrictions on improvements constructed within the Project; possible "no build" areas or view corridors required to protect visibility of improvements; restrictions on the location and size of outlots or outparcels within the Project and the height of improvements constructed thereon; and such other matters commonly addressed in similar agreements affecting retail shopping centers of similar class in the market area. • Home Depot shall draft a development agreement (the "Development Agreement") governing the Agency's responsibilities for certain demolition and minimal site work, Home Depot's construction of off-site improvements and Home Depot/MDI's obligations for sharing soft costs during the Inspection Period, Entitlement Period and during post-Closing design and construction of the off and on-site work. During the Inspection Period, a predevelopment budget shall be prepared and the required holdback amount by the Agency shall be estimated to be deposited in a joint escrow with the Title Company for its pro rata D-3 share of the estimated soft costs, permits, fees, and construction costs necessary to complete demolition work that the Agency began, but has not completed and is requesting be completed by Home Depot, pursuant to an escrow agreement between Home Depot, the Agency and the Title Company (the "Escrow Agreement"). After the Project is entitled, a further holdback deposit by the Agency pursuant to the Development Agreement shall be estimated to pay for the design and development of all plans, for plan check fees and any other costs related to the approval of any and all plans necessary to construct the off and on- site work and extension of all utilities required to build the Project, and the release of the funds to Home Depot shall be made via progress payments as the work is completed, as governed by the Development Agreement and Escrow Agreement. In the event the Agency sells the MDI Parcel to MDI, or another party, then such party shall reimburse the Agency at its Closing for all holdbacks or amounts disbursed to Home Depot by the Title Company pursuant to the Escrow Agreement. Further, MDI shall deposit with the Title Company the estimated funds to complete the Project. The scope of the work provided by the Agency shall be: 1. Demolition of all existing improvements/infrastructure above and below grade and all clearing and rough grading of the Property pursuant to Home Depot's requirements. The Agency shall maintain site in compliance with all NPDES requirements. 2. Impact fees shall be negotiated and will be fixed in the Project DDA. 3. Utilities of a sufficient size and capacity to meet Home Depot criteria shall be brought to the Property line at such locations determined by Home Depot. • Home Depot shall be responsible for the construction of its own building at its own cost. MDI shall be responsible for the construction of its buildings at its own cost. • Home Depot shall not covenant that it will construct a building nor will it covenant to open or operate. Home Depot shall guarantee completion of its building once construction has started. The Agency shall furnish to Home Depot evidence that its existing loans have been modified to eliminate any form of a covenant by Home Depot to build, open or operate. If Home Depot has not started construction of the Home Depot building within 24 months after Closing, the Agency shall have the option but not the obligation to re-purchase the Home Depot site at the same price. If for some reason Home Depot decides not to move forward with the Project,then Home Depot agrees that it will forfeit all plans, reports and studies,that Home Depot has prepared for the Project to the Agency, at no cost to the Agency. • If Hazardous Substances are determined to be present on the Property (other than Hazardous Substances introduced by a Developer),the Agency shall take all steps necessary to promptly remove or otherwise abate all such Hazardous Substances in accordance with all applicable requirements up to an amount of$500,000. The Agency and Developer will approve any remediation of hazardous materials affecting the operation or development of the Property. If cost of remediation exceeds $500,000 to the Agency, and the Agency elects not to pay for the overage, the Agency shall have the right to terminate the Project DDA unless either or both Developers agree to assume the cost of such overage. The Agency shall be responsible for cost associated with any environmental remediation not caused by Home Depot and MDI. D-4 Schedule 1 to Exhibit D 5. RESTRICTIONS ON USE 5.1 Home Improvement Store Restrictions: No portion of the Shopping Center other than the HD Parcel shall be used for a home improvement center or for any business which sells, displays, leases, rents or distributes the following items or materials, singly or in any combination: lumber, hardware, tools, plumbing supplies, pool supplies, electrical supplies, paint, wallpaper and other wallcoverings, window treatments (including draperies, curtains and blinds), kitchen or bathrooms or components thereof (including tubs, sinks, faucets, mirrors, cabinets, showers, vanities, countertops and related hardware), windows, hard and soft flooring (including tile, wood flooring, rugs and carpeting), siding, ceiling fans, lawn and gardening and garden nursery supplies, equipment (including, without limitation, lawnmowers) and products, artificial and natural plants, outdoor cooking equipment and accessories,patio furniture and patio accessories, Christmas trees, indoor and outdoor lighting systems and light fixtures, cabinets and unfinished and finished furniture, kitchen and household appliances, closet organizing systems, pictures or picture framing, interior design services, or other products generally sold in a retail home improvement center, except for the incidental sale of such items. An "incidental sale of such items" as to any occupant is one in which there is no more than the lesser of(i) five percent (5%) of the total Floor Area of such business, or (ii) 1,000 square feet of sales and/or display area,relating to such items individually or in the aggregate. 5.2 Shopping Center Restrictions: (a) No portion of the Shopping Center other than the HD Parcel shall be used for non-retail use or for any of the following purposes: a surplus store; gun range; the sale of guns as a primary use; car wash facility; a warehouse; an animal kennel; theater, auditorium, sports or other entertainment viewing facility (whether live, film, audio/visual or video); bowling alley; skating rink; fitness center, workout facility, gym, health spa or studio, or exercise facility; restaurants which derive more than 25% of their gross sales from alcohol sales; business office usage (defined as any office that does not provide services directly to a consumer); other than incidental in connection with non-prohibited uses, retail office usage (defined as any office which provides services directly to consumers, including but not limited to financial institutions, real estate, stock brokerage and title companies, travel and insurance agencies, and medical, dental and legal clinics). (b) No portion of the Shopping Center shall be used for any of the following purposes: a flea market or business selling so-called "second hand" goods (the term "second hand" shall mean stores which sell good primarily as a service to the public rather than to a retail customer for a profit); cemetery; mortuary; any establishment engaged in the business of selling, exhibiting or delivering pornographic or obscene materials; a so-called "head shop'; off-track, betting parlor;junk yard; recycling facility or stockyard; motor vehicle or boat dealership, repair shop (including lubrication and/or service center) that stores vehicles outdoors overnight, a body and fender shop, or motor vehicle or boat storage facility (neither the foregoing restriction nor anything else in this Agreement to the contrary shall preclude the owner of the HD Parcel to undertake the sale or rental of delivery vehicles and trailers to its customers as part of its home D-5 i improvement business); a mini-storage or self-storage facility; a laundromat or dry-cleaning facility (but this shall not be deemed to prohibit nominal supportive facilities for on-site service oriented to pickup and delivery by the ultimate consumer or so-called "green technologies" that are environmentally friendly); a bar,tavern or cocktail lounge; a discotheque,dance hall, comedy club, night club or adult entertainment facility; billiard or pool hall; massage parlor, game parlor or video arcade (which shall be defined as any store containing more than three (3) electronic games); a beauty school, barber college, reading room, place of instruction or any other operation catering primarily to students or trainees and not to customers (but shall specifically not prohibit a school which is incidental to a primary retail purpose); office usage other than incidental in connection with non-prohibited uses; industrial, residential or manufacturing uses, school or house of worship. (c) Without the prior written consent of Home Depot, the following shall not be allowed to operate in the Shopping Center or Common Area, except as otherwise permitted in this Agreement: traveling carnivals, fairs, auctions, shows, kiosks, booths for the sale of fireworks, sales by transient merchants utilizing vehicles or booths and other promotions of any nature. Except as otherwise permitted in this Agreement, in the event that unauthorized Persons, including without limitation tenants or invitees of tenants occupying Buildings now or at any future time located in the Shopping Center, utilize the parking area for other than temporary parking by customers while shopping in the Shopping Center, Developer shall, at its sole expense, upon written request by Home Depot, take whatever action as shall be necessary to prevent said unauthorized use. (d) No portion of the Shopping Center shall be used for a business or use which creates strong, unusual or offensive odors, flumes, dust or vapors; emits noise or sounds which are objectionable due to intermittence, beat, frequency, shrillness or loudness; creates unusual fire, explosive or other hazards, or materially increases the rate of insurance for any other parcel, owner or occupant; provided, however, the operation of a typical Home Depot home improvement store shall not be deemed to be in violation of this Section 5.2(d). (e) No oil development operations, oil refining, quarrying or mining operations of any kind shall be permitted or in any portion of the Property, nor shall oil wells, tanks,tunnels,or mineral excavation or shafts be permitted upon the surface of any portion of the Property, or within five hundred (500) feet below the surface of any portion of the Property. No derrick or other structure designed for use in boring for water, oil, natural gas or other minerals shall be erected,maintained or permitted on any portion of the Shopping Center. (f) No portion of the Common Area shall be used for the sale, storage or display of merchandise or food; provided, however, that (i) the display of delivery vehicles for sale and/or rental to its customers as part of the owner of the HD Parcel's home improvement business shall be permitted, and (ii)the sale of merchandise by the owner or occupant of the HD Parcel shall be permitted from the parking lot located on the HD Parcel. (g) For purposes of this Agreement, all service areas shall be the sole exclusive property of the owners of the buildings associated with such areas and each owner D-6 thereof shall have the exclusive right to use such areas for whatever purpose such owner deems appropriate, including, without limitation,the sale and display of merchandise. (h) For purposes of this Agreement, persons who are not owners or occupants engaging in the following activities in any portion of the Shopping Center will not be considered to be permittees under this Agreement; (i) exhibiting any placard, sign, or notice that does not advertise an existing business in the Shopping Center; (ii) distributing any circular, handbill, placard, or booklet promoting an existing business in the Shopping Center; (iii) soliciting memberships or contributions for an existing business in the Shopping Center; (iv) parading, picketing, or demonstrating; and (v) failing to follow regulations relating to the use of the Shopping Center. This Agreement is not intended to, and does not, create or impose any obligation on a party to operate, continuously operate, or cause to be operated a business or any particular business in the Shopping Center or on any portion of the Property. D-7