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HomeMy WebLinkAboutR7- Economic Development ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION FROM: RONALD E. WINKLER SUBJECT: DOWNTOWN CINEMA Development Director COMPLEX DATE: October 29, 1996 001ply -------------------------------------------------- ----------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On July 10, 1995,the Community Development Commission approved an Exclusive Negotiating Agreement with Metropolitan Development. On February 5, 1996,the Community Development Commission approved a 180 day extension to the Exclusive Negotiating Ageement with Metropolitan Development. ------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): OPEN PUBLIC HEARING CLOSE PUBLIC HEARING (Mayor and Common Council) MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND MDA-SAN BERNARDINO ASSOCIATES,L.L.C.,PERTAINING TO THE DEVELOPMENT OF A MULTI-SCREEN CINEMA COMPLEX AND RELATED COMMERCIAL FACILITIES. Motion(s)Continued to Next Page... ------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Ronald E. Winkler Phone: 5081 Project Area(s): Central City North (CCN) Ward(s): One(1) Supporting Data Attached: ® Staff Report ❑ Resolution(s) ❑ Agreement(s)/Contract(s) ❑ Map(s) ❑ Ltr/Memo FUNDING REQUIREMENTS: Amount: $9,989,000 Source: Bond Proceeds. Section 108 Loan Budget Authority: Requested SIGNATURE: W Administrato Ronald E. inkier,Director Development ------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------------------------------------------------------------------------------ REW:lag:11-04-0 I.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/04/1996 J Res 96— 5_0 Agenda Item Numb r3 r1 REQUEST FOR COMMISSION/COUNCIL ACTION(S) Downtown Cinema Complex October 29, 1996 Page Number-2- --------------------------------------------------------------------------------------------- Recommended Motion(s)Continued: (Community Development Commission) MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND MDA-SAN BERNARDINO ASSOCIATES,L.L.C. PERTAINING TO THE DEVELOPMENT OF A MULTI-SCREEN CINEMA COMPLEX AND RELATED COMMERCIAL FACILITIES. -------------------------------------------Il--------------------------------------------------------------------- REW:lag:11-04-0I.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/04/1996 Agenda Item Number: �_ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ------------------------------------------------------------------------------------------------------------------ Downtown Cinema Complex On July 10, 1995, the Community Development Commission approved an Exclusive Negotiation Agreement (ENA) with Metropolitan Development for development of a multi-screen cinema complex at the northwest corner of 4" and"E" Streets. That agreement was subsequently extended on February 5, 1996. Since that time, Metropolitan Development has diligently worked toward securing the commitment of a theater operator, preparing a financing plan, site design and related work. A commitment to operate a 20-22 screen cinema under lease agreement has been secured with Cinema Star Luxury Theaters, Inc. The proposed operator is a southern California based company which owns 44 screen in San Diego and Riverside counties. Most recently, they opened a ten screen complex in Perris, California. In addition, a subsidiary company is developing a 12 screen complex in Guadalajara, Mexico together, with a 10 screen facility in Tijuana. Further background information on Cinema Star is attached. The proposed development in San Bernardino would entail 80,000 square feet of theater space with seating for 4500±, and 20 to 22 screens. Viewing auditoriums would seat 150 to 500 persons at one showing. Reclining amphitheater style seating, with all THX-Sound systems, will present a state-of-the-art facility. Adjacent to the Cinema, will be space for 20,000 square feet of restaurant and retail space. The Agency would provide up to 1700 off-site parking spaces on a non-exclusive basis in the surrounding area. The entire site encompasses 5.5 acres. Total development value is estimated in excess of$16 million. Based upon operating information on similar developments it is believed that 1.0 to 1.5 million patrons may be drawn to the complex annually. This represents a tremendous influx of retail buying power to the downtown area. Direct property tax increment to the Agency is estimated at $128,000 annually to start. Added to this is direct sales tax to the City projected at $65,000 annually from the development. Also, from information provided on the impact other cities have experienced, retail sales tax from the surrounding area could increase by as much as $8000,000 per year. Finally, 15 full-time and 90 part-time jobs are to be created. ------------------------------------------------------------------------------------------------------------------ REW:Iag:l 1-04-01.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/04/1996 Agenda Item Number: 0_ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Downtown Cinema Complex October 29, 1996 Page Number-2- --------------------------------------------------------------------------------------------- Total construction cost is estimated at $12,175,000 excluding land, fixtures and equipment. Construction financing would provide through a combination of private and public financing (HUD 108 Loan), Agency and developer equity. The financing structure is as follows: Bank Loan $3,600,000 First Trust Deed Agency(HUD 108) Loan $7,000,000 Second Trust Deed Agency Equity $1,324,575 Third Trust Deed Developer Equity $ 250,425* TOTAL $12,175,000 *Note: The developer is responsible for an additional$250,000 in equity contributions, if required. Added to the above, is an estimated $2.2 million in retail development costs and $2.3 million in theater fixture and equipment costs to be privately financed. Also, the Agency will provide an estimated $3,114,000 in land, relocation and demolition costs to the project. In return for its equity commitment, the Agency will receive an eight percent (8%) priority return annually, together with seventy-five percent (75%) of net project income after all costs, debt service and priority returns are paid. In addition, the Agency would gain seventy-five percent (75%) of sale or refinance proceeds after sales costs, loan and equity principal payments. Cc.respondingly, the developer will receive an eight percent (8%) preferred return on equity together with twenty-five percent (25%) of net cash flow, sale or refinance proceeds. A summary of the transaction, Agency/Developer responsibilities, cost to the Agency, land value to the project, etc., is provided in the Section 33433 report prepared by Keyser-Marston Associates and is attached. Also, attached is the Disposition and Development Agreement (DDA) between the Agency and Metropolitan Development which has been signed by the developer. It should be noted, a lease has been executed by both Metropolitan Development and Cinema Star Luxury Theater, Inc. In view of the above, staff recommends that the Common Council and Commission approve the attached resolutions. WNAL WI NKLER, Director Development Department ------------------------------------------------------------------------------------------------------------------ REW:lag:l1-04-0l.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/04/1996 Agenda Item Number: �_ K E Y S E R M A R S T O N A S S O C I A T E S I N C. ADVISORS IN: REAL ESTATE REDEVELOPMENT 500 SOUTH GRAND AVENUE, SUITE 1480 AFFORDABLE HOUSING LOS ANGELES,CALIFORNIA 90071 (� ECONOMIC DEVELOPMENT PHONE:213/622-8095 FAx: 213/622-5204 O ,175 FISCAL IMPACT E-MAIL: KMALA©KMAINC.COM INFRASTRUCTURE FINANCE VALUATION AND OCT /l ' I�G LITIGATION SUPPORT DEVELOPMENT DEPAPT`,1ENT LOS ANGELES RICHARD L.BOTTI CALVIN E.HOLDS,II KATHLEEN H.HEAD SAN DIEGO GERALD M.TRIMBLE ROBERT J.WETMORE MEMORANDUM PAUL C.MARRA SAN FRANCISCO A.JERRY KEYSER TIMOTHY C.KELLY KATE EARLE FUNK DENISE E.CONLEY TO: Mr. Ronald Winkler DEBBIE M.KERN San Bernardino Redevelopment Agency FROM: Keyser Marston Associates, Inc. SUBJECT: Metropolitan Development Agreement Health & Safety Code Section 33433 Report DATE: October 17, 1996 Pursuant to your request, Keyser Marston Associates, Inc. (KMA) has a prepared a summary report, in compliance with Section 33433 of the California Health and Safety Code, related to the Disposition and Development Agreement (DDA) between Metropolitan Development and the San Bernardino Redevelopment Agency. Should you have any questions, please call. GSH:tsp 96725.SB 19020.0002 SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 of the CALIFORNIA COMMUNITY REDEVELOPMENT LAW on a DISPOSITION AND DEVELOPMENT AGREEMENT by and between the SAN BERNARDINO REDEVELOPMENT AGENCY and METROPOLITAN DEVELOPMENT INTRODUCTION This summary report has been prepared for the San Bernardino Redevelopment Agency (Agency) pursuant to Section 33433 of the California Health and Safety Code. This report sets forth certain details of the proposed Disposition and Development Agreement (Agreement) between the Agency and Metropolitan Development (Developer) regarding a 5.5 acre site located within the block bordered by Fourth Street on the south, Fifth Street on the north, E Street on the east and F Street on the west (Site) in downtown San Bernardino. This report is organized into the following seven sections: A. Salient Points of the Proposed Agreement: This section includes a description of the development and the major responsibilities to be assumed by the Agency and the Developer. B. Cost of the Agreement to the Agency: This section outlines the total and net costs of the proposed Agreement to the Agency. C. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted Under the Redevelopment Plan: This section summarizes the value of the Site to be conveyed to the Developer at the highest use permitted under the Redevelopment Plan for Central City Redevelopment Project Area (Redevelopment Project). D. Estimated Reuse Value of the Interests to be Conveyed Determined Based on the Required Use and with the Conditions Covenants and Development Costs Required by the Proposed Agreement: This section summarizes the value of the Site determined at the use required by the proposed Agreement, recognizing the impact of the proposed Agreement's terms and conditions. E. Consideration Received and Comparison with the Fair Reuse Value: This section describes the compensation to be received by the Agency, and the reasons for any difference between the compensation and the fair reuse value. -7 K E Y S E R M A R S T O N A S S O C I A T E S I N C. F. Blight Alleviation: This section describes the existing blighting conditions on the Site, and an explanation of how the proposed Agreement will assist in alleviating the blighting conditions. G. Conformance with the AB 1290 Implementation Plan: The section identifies how the proposed Agreement will result in a development that fulfills goals and objectives established in the Agency's AB 1290 Five Year Implementation Plan. I. SALIENT POINTS OF THE PROPOSED AGREEMENT A. - Description of the Proposed Development The purpose of the proposed Agreement is to effect the development of a high quality multi screen cinema and retail complex (Project) located in the Redevelopment Project. Based upon a conceptual site plan provided to the Agency and the scope of development contained in the Agreement, the proposed Project would consist of an 80,000 square foot multi screen theater and 20,000 square feet of food and retail use. The Agency presently owns approximately 4.1 acres of the Site (Agency Parcels) and intends to purchase the remaining 1.4 acres (Remainder Parcels) from the current owners. The assembled and cleared Site will then be conveyed to the Developer. B.. Agency Responsibilities 1. Acquire the Remainder Parcels from the current owners. 2. Demolish the existing improvements, rough grade the vacant Site and bring all applicable utilities to the Site. 3. Prepare a Phase I environmental assessment of the Site and undertake remediation of any environmental conditions discovered on the Site. 4. Convey the cleared Site to the Developer in an as is physical condition. 5. Provide at least 1,700 non-exclusive parking spaces in reasonable proximity to the Site. 6. Provide Project financing in the form of a Second Trust Deed from proceeds of a HUD Section 108 Loan in the amount of $7 million (Agency Loan). The Agency Loan is to be fully amortized over a 20 year period. 2 K E Y S E R M A R S T O N A S S O C I A T E S I N C. 7. Provide Project financing in the form of a Third Trust Deed in the amount of $1,324,575 (Agency Contribution). The Agency will receive a priority return of 8% on the outstanding loan principal and 75% of the net Project income after all costs, debt financing payments and priority returns are made. The principal of this equity capital shall be repaid via the cash flow proceeds received as part of the 75% cash flow sharing. C. Developer Responsibilities 1. Purchase the Site from the Agency. 2. _ Assume all costs of planning, designing, developing and constructing all on-site improvements and building improvements on the Site. 3. Provide a Developer contribution of $250,425 towards the Project construction costs. The Developer will receive a priority return of 8% and 25% of the net Project income after all costs, debt financing payments and priority returns are made. 4. Contribute the first $250,000 of costs which exceed a Project Budget to be agreed upon by the Agency and Developer. To the extent Project costs exceed this $250,000, any additional costs will be paid by the Agency and the Developer proportionate to their equity contribution to the Project. 5. Pay to the Agency an in-lieu tax payment in an amount equal to the tax increment revenues which the Agency would have received on the Site, to the extent that the Developer fails to develop the Project in accordance with the terms and provisions and time frame provided in the Agreement. This payment would be made for each tax year during which the Project is not completed. Developer agrees to not file any assessment appeal on the Project. 11. COST OF THE AGREEMENT TO THE AGENCY The costs to be incurred by the Agency are comprised of land acquisition, construction of off-site improvements, demolition of the existing improvements and the provision of Project financing. The Agency costs have been identified as follows: 3 K E Y S E R M A R S T O N A S S O C I A T E 1 N C. Site Acquisition: Agency Parcels $ 1,450,000 Remainder Parcels 1,428,000 Relocation 36,000 Demolition 200,000 Subtotal Agency Costs $ 3,114,000 Project Financing: Agency Loan 7,000,000 Agency Contribution 1,325,000 Total Agency Costs $11,439,000 In order to meet it's obligations, the Agency is pursuing discussions with the property owners adjacent to the Site for the Project's use of existing parking structures. As of this date, this includes approximately 925 parking spaces in a structure owned by the State of California. This parking together with the 1581 parking spaces located in the public parking structure adjacent to City Hall will fulfill Agency parking obligations. Since the Developer is making an annual contribution to offset the incremental operating cost of this parking ($.75 per square ft. of gross building area) and this parking can be secured without a capital expenditure, there is no cost of parking. The Agency is presently unaware of any off site utility costs to be incurred given that sewer, water and electrical utility lines are already accessible to the Site. Therefore, no costs for utility connections are reflected in the estimated cost. In terms of revenues, while The Agency will receive no compensation for the land, the Agency will receive property tax increment revenues from the Site over the remaining term of the Central City Redevelopment Plan to the year 2021. In addition, the Agency will be entitled to 75% of all Net Profits generated by the Project (as defined by the Agreement). Given that these revenues will be received over a twenty six year period, it is necessary to project these revenues in net present value terms. Based upon information provided by the Agency, the projected net present value of the respective revenues is as follows: Land Sale Proceeds $ -0- Agency Loan (2nd TD Loan Repayment) 7,000,000' Tax Increment Revenue 1,737,000 Equity Participation (3rd TD Repayment) 1,809,000 Total Agency Revenue $10,546,000 As indicated above, the estimated Agency costs total $11,439,000. These costs are offset by the projected Agency revenues totaling $10,546,000. The resulting estimated net cost to the Agency is therefore $893,000. Discount rate is equal to borrowing rate. 4 KEYSER MARSTON ASSOCIATES 1 C. III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN The Site has the benefits of a central location in downtown San Bernardino. Given the location characteristics of the Site, retail use represents the highest and best use of the Site. Based upon an appraisal report prepared by Norlen Real Estate Company (February 4, 1996) for the Agency, the market value for unimproved land in downtown San Bernadino raised from approximately $6.75 to $13.50 per sq. ft. depending upon size, location and configuration. Based upon this range of values and taking into consideration the size and location of the site, it is concluded that the subject site has a value at it's highest and best use (retail) by $8 per sq. ft. or approximately $ 1.9 million. IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED BASED ON THE REQUIRED USE AND WITH THE CONDITIONS, COVENANTS AND DEVELOPMENT COSTS REQUIRED BY THE PROPOSED AGREEMENT The proposed Agreement limits development on the Site to an entertainment based commercial project, including a theater and retail / restaurant space of up to 20,000 square feet, in accordance with site plans approved by the Agency. The theater project is .benefited by the Agency Loan and the Agency Contribution which reduces the financing costs below that typical of such single purpose projects. However, in exchange for the financing, the Agreement allocates 75% of the net cash flow to the Agency. In regard to the retail and restaurant, the Developer is responsible for securing 100% of the required debt and equity. An analysis of the theater component suggests that, notwithstanding the benefits of the Agency financing, the Project will not generate a market rate of return that will justify the private investment required in the Project. Capitalizing the stabilized income results in a value of the completed theater of $12.7 million. Assuming no land cost the project costs are estimated at $12.2 million. Thus, after an assumed cost of sale and even with no land cost the development profit is a modest $100,000, of which the Developer is allocated 25% or $25,000. Typically, single purpose projects such as a theater would require a developer profit of 18% to 20% of project costs in order to justify the project. Using 18%, the theater alone should generate a profit of $2.2 million and the Developer's share would be $550,000, as compared to the estimated $25,000. 5 K E Y S E R M A R S TON AS S 0 C I A T E 7SN C. To offset the below profit margins on the theater, the Project includes up to 20,000 square feet of retail. The analysis of the economics of the retail component indicates that the profit margins for that component is above industry average. However, when both components are taken into consideration, the combined profit margin again, assuming the land has no value, is at, or near, profit margins required for a $14 million project. Thus given the economics of the entire Project, it is concluded that the reuse value of the subject sale is nominal, say $1.00. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE FAIR REUSE VALUE The reuse value has been determined to be $1.00, subject to the conditions and restrictions contained in the Agreement. This is at least equal to the consideration paid for the Site by the Developer. VI. BLIGHT ALLEVIATION The implementation of the proposed Agreement will result in the demolition of obsolete commercial structures on the Site, and an upgrade to the site improvements. The functionally obsolete commercial uses represent a blighting influence on the immediate area. The obsolete uses will be replaced with the development of a modern entertainment based commercial complex that will add to the commercial diversity of the downtown and bring hundreds of thousands of cinema patrons to the downtown. This in turn will be a major catalyst for further development. VII. CONFORMANCE WITH THE AB 1290 IMPLEMENTATION PLAN The Five Year Implementation Plan adopted by the Agency contains several broad operational goals and objectives. Among these are the following: 1. Creation of incentive programs for existing property owners to reinvest in their properties, including the utilization of Disposition and Development Agreements and Owner Participation Agreements. 2. Creation of viable housing options within the Redevelopment Project that span a range of incomes, including housing for the homeless and formerly homeless. 3. Creative implementation of catalyst projects which spur reinvestment on surrounding blocks. 4. Land acquisition for the creation of public facilities which serve both the immediate neighborhood and the community at large. 6 KEYSER MARSTON ASSOCIATES NC. 5. Enhancement of ceremonial streets which function as the focal points in their individual neighborhoods. 6. Continued preservation of historically significant structures. 7. Improvements to existing water and sewer lines, streets, sidewalks, parkways and lighting in the public right of way. 8. Continued participation in the enhancement of the public infrastructure system. 9. Acquisition and development of property to abate nuisance uses and provide for future development. The proposed Agreement will assist the Agency in meeting some of the objectives and goals of its Five Year Implementation Plan in the following ways: 1. The Agreement encourages a reinvestment and revitalization in the blighted block which encompasses the Site by the addition of a new entertainment based commercial complex. 2. The provision of the cinema, restaurant and food court will increase the variety of entertainment, shopping and dining options in downtown San Bernardino, providing a catalyst for additional reinvestment by private enterprise in the surrounding area. 3. The commercial center will help to create additional job opportunities in the community. Based on the preceding factors, the proposed Agreement is consistent with the adopted Five Year Implementation Plan. 96725.SNB 19020.0002 7 KEYSER MARSTON ASSOCIATESNC. July 10, 1996 To CinemaStar Shareholders: It is my pleasure to report to you another year of outstanding progress for CinemaStar Luxury Theaters. Attendance increased at all our theaters, a sign that movie patrons prefer the "CinemaStar difference"in quality and service. As described in more detail below, the Company is moving ahead with several projects that not only increase the size of our operations,but also continue to advance our image as an industry leader. F.SCAL 1996 FINANCIAL RESULTS Revenue for the year reached$11,524,740,compared with revenue of$10,045,581 in fiscal 1995. Our net loss narrowed to $638,585, or$.10 per share, compared with a loss of$2,086,418, or$.29 per share, in the prior year. Cash flow from operating activities was a positive$320,052,compared with negative cash flow from operations of$1,056,182 in fiscal 1995. Results for fiscal 1996 include approximately seven-and-a-half months of results from the Chula Vista 6 Theater, which was purchased by CinemaStar in August 1995. I'm pleased with the improvement shown by these results. Our revenues were up 14.7 percent,but total operating costs and expenses increased by only 6.2 percent. From an operations and financial standpoint,it is clear we have made significant accomplishments and are moving in the right direction. Our progress is supported by an analysis of all U.S. theater chains by the independent research organization Paul Kagan &Associates.Although we are smaller than the other chains, we ranked first in "total revenue per location" and both "number of admissions per screen" and"per location;" and second in"concession revenue per screen." NSW THEATERS,NEW OPPORTUNITIES In my report to you last year, I stated that CinemaStar planned to add 60 to 70 screens (to the existing 24 screens) over the next two to three years.We are well on our way to achieving that goal.The Company now operates 44 screens, with 42 more currently in development. The additions include the Chula Vista 6 Theater, which we purchased from United Artists, and our new flagship theater, the Ultraplex 14 in Riverside, California, which opened in late March 1996.A Grand Opening celebration, including a personal appearance by film legend Mickey Rooney along with other Hollywood celebrities,kicked off the theater's operations.The Ultraplex, which is already setting attendance records for the Riverside market, is truly a showpiece. It is the largest all-THX SOUND theater in North America, and the second largest in the world.The lobby, with marble floors and brass rails and fixtures,also includes the Star Loft with its gourmet coffee and dessert shop. In the coming months CinemaStar will open two 10-screen theaters—in Perris, California, and our second complex in Riverside, California.The latter is adjacent to the University of California, Riverside campus, and we will share use of three of the auditoriums with the school.This arrangement, which we believe is the first of its kind, allowed CinemaStar to gain favorable lease terms. We are very excited about two separate agreements we finalized just after the close of the fiscal year—to lease a 12-screen theater in Guadalajara,Mexico, and a 10-screen theater in Tijuana, Mexico. Our Mexican subsidiary,CinemaStar Luxury Theaters S.A. de C.V., will operate both complexes, and has teamed with prominent Mexican businessmen to finance the projects.These will be the only all-THX SOUND theaters in Latin America, and will effectively begin a new era in film exhibition in Mexico, which has a large and rapidly growing theater audience, but lacks theaters of the quality CinemaStar provides.We are currently evaluating additional theater sites throughout the country. -7 QUALITY,QUALITY,QUALITY Many years ago,the famous hotelier Conrad Hilton said the three keys for the success of his establishments were location, location, location.While I won't deny that where we place our theaters is important,the key ingredient to the success of a CinemaStar Luxury Theater is to provide the highest quality experience available to movie patrons. Our three keys are quality presentation, quality customer service, and quality comfort. Our commitment to quality and luxury ure that our rs achieve LucasFilm's THX SOUND staff to ens and maintain the highest levels of sound quality possible.All of the equipment used in the theaters—from the special high-backed, reclining seats, to the lighting, to the popcorn machines—is inspected regularly, and replaced if it is not up to our standards. The reason for the focus on quality and luxury is simple—we owe it to our customers.The films produced in Hollywood today are wonderful technical achievements, and they can be enjoyed to their fullest only if shown in the most advanced environment possible. If we give our customers anything less than that,then they have a reason to spend their entertainment dollar elsewhere. AN EXCITING FUTURE We have also taken a number of steps to improve the awareness of CinemaStar's securities, and to ensure that the investment community is well informed of our growth and potential.The number of"market makers" in our securities increased substantially, and now include one of the nation's largest full-service brokerage firms, and one of the largest firms specializing in trading of NASDAQ stocks. In December, we participated in a conference of the Regional Investment Bankers Association, where we made a presentation to managers of over 80 firms that invest and trade in securities of small companies. CinemaStar is also reaching out to investors and customers through the Internet. I invite you to check out our World Wide Web site at <www.cinemastar.conv for the latest information on films,the movie industry, and the Company. As a whole,the film exhibition industry continues to grow. Box office gross reached an all-time high of$5.5 billion in 1995; it was the third consecutive year of record box office receipts. I believe this trend will continue for a number of reasons.First, an afternoon or evening at the movies still is one of the greatest values in entertainment. Second,new sound and projection technology makes the "theater experience" far richer than what can be achieved by even the most expensive home theater.Finally, the film studios and distributors are producing more films and backing them with larger advertising and promotion budgets than ever before. The management and employees of CinemaStar take great pride in our theaters and the service we offer.We look forward to your continued support in the months and years ahead. Sincerely, John Ellison,Jr. President and Chief Executive Officer RECORDING REQUESTED BY: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO WHEN RECORDED MAIL TO: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 201 North "E" Street Third Floor San Bernardino, CA 92401 (Space above for Recorder's Use) DISPOSITION AND DEVELOPMENT AGREEMENT DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO and MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware Limited Liability Company TABLE OF CONTENTS ARTICLE I 1 SUBJECT OF AGREEMENT . . . . . . . . . . . . . . . - _ • 1 Section 1 . 01 . Purposes of Agreement . . . . . . . . . . • 1 Section 1 . 02 . The Project Area. . . . . . . . . . . . . . 1 Section 1.03. Parties to the Agreement. . . . . . . . . Section 1 . 04 . Prohibition Against Change in Ownership, Management and Control of Developer, for Assignment of Agreement. . . . . . . . . . 2 ARTICLE II 3 DISPOSITION OF PROPERTY . . . . . . . . . . . . . . . . 3 Section 2 . 01 . Purchase of Property. . . . . . . . . . . • 4 Section 2 . 02 . Developer' s Consideration. . . . . . . . • 4 Section 2 . 03 . Agency Assistance. . . . . . . . . . . . • 6 Section 2 .04 . Developer' s Obligations . . . . . . . . . • 7 Section 2 . 05. Agency Participation. . . . . . . . . . . 9 Section 2 . 06. Escrow. . . . . . . . . . . . . . . . . . Section 2 . 07 . Conveyance of Title and Delivery of 11 Possession. . . . . . . . . . . . . . 12 Section 2 .08 . Form of Deed. . . . . . . . . . . . . . . 12 Section 2 . 09. Condition of Title . . . . . . . . . . . 12 Section 2 . 10. Conditions for Close of Escrow. . . . . . Section 2 . 11 . Time and Place for Delivery of Documents to 18 Escrow. . . . * • • • • • • ' ' ' Section 2 . 12 . Recordation oftheGrant Deed and Other 18 Documents . . . . . . . . . . . . . . . . 19 Section 2 .13 . Title Insurance. . . . • • . . • . . 19 Section 2 . 14 . Taxes and Assessments . . . . . . . . . . Section 2 . 15. Zoning of the Property and 19 the Retail Parcel . . • . • • . . . . . . 19 Section 2 . 16. Condition of the Land. . . . . . . . . . Section 2 . 17 . Submission of Evidence of Financing 20 Commitments . . . . . . . . . . . . . . Section 2 . 18 . Representations And Warranties 21 of the Agency. . . . . . . - - Section 2 . 19. Representations and Warranties of the 23 Developer. . . . . . . . . . . . . . . ARTICLE III . . 24 DEVELOPMENT OF THE LAND . . . . . • . . . . 24 Section 3 . 01 . Development by Developer. . . . 36 Section 3 . 02 . Responsibilities of the Agency. . . . Section 3 . 03 . Taxes, Assessments, Encumbrances 37 and Liens . . . . • • • . . . . . . . . . 38 Section 3 . 04 . In Lieu Tax Payments/Tax Appeals . . . . . 38 Section 3 . 05. Prohibition Against Transfer. . • • . . . 39 Section 3 . 06 . Right of First Offer. . . . . . . . . . -i- r Section 3. 07 . Security Financing; Right of Holders . . . 41 Section 3 . 08 . Right of the Agency to Satisfy Other Liens on the Land after Conveyance of Title. . . . 45 Section 3 . 09. Certificate of Completion. . . . . . . . 45 ARTICLE IV 48 USE OF THE LAND . . . . • • . • • . • . • . • . . . . . . 4 8 Section 4 . 01 . Uses . . . . . . . . . . . . . . . . . . . 48 Section 4 . 02 . Reserved. . . . . . . . . . . . . . . . . Section 4 . 03 . Obligation to Refrain from 48 Discrimination. . . . . . . . . . . . . . Section 4 . 04 . Form of Nondiscrimination and 49 Nonsegregation Clauses . . . . . . . . . . Section 4 .05. Effect and Duration of Covenants . . . . . 50 ARTICLE V 50 DEFAULTS, REMEDIES AND TERMINATION . . . • • • . . . . . 50 Section 5. 01 . Defaults - General. . . . • • • . . . . . 51 Section 5. 02 . Legal Actions . . . . . . . . . . . . . . Section 5. 03 . Rights and Remedies are Cumulative. . . . 52 Section 5. 04 . Damages . . . . . . . . . . . . . . . . . 52 Section 5. 05. Specific Performance. . . . . . . . . . . Section 5. 06 . Rights and Remedies of Termination. . . . 52 Section 5. 07 . Right to Reenter, Repossess, 55 Terminate and Revest. . . . . . . . . Section 5. 08 . Limitation on Rights and Remedies After Issuance of Certificate of Completion. 58 Section 5. 09 . No Cross-Default . . . . . . . . . . . . 58 ARTICLE VI 58 GENERAL PROVISIONS . . . . Section 6. 01 . Notices, Demands and Communications 58 Between the Parties . . . . . . . . . . . Section 6. 02 . Conflict of Interest. . . . . . . . . . . 59 Section 6. 03 . Warranty Against Payment of Consideration for Agreement. . . . . . . • - Section 6. 04 . Nonliability of Agency Officials and 60 Employees . • • • • • • • . - Section 6. 05. Enforced Delay: Extension of Time of 60 Performance. . • • . . . • Section 6 . 06. Inspection of Books and Records . . . . . 61 Section 6 . 07 . Approvals . . . . . . . . . . . . . . . . 61 Section 6. 08 . Real Estate Commissions . . . . . . . . . 61 Section 6. 09. Indemnification. . . . . . . . . . . . . 61 Section 6. 10 . Release of Developer from Liability. . . 62 Section 6 . 11 . Attorneys ' Fees . . . . . . . . . . . . . Section 6 . 12 . Dispute Resolution. . . . . . . . . . . . 62 Section 6 . 13 . Effect . . . . . . . . . . . . . . . . . . 63 -ii- ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENT . . . . . . . . . . . 63 Section 7 . 01 . Entire Agreement. . . . . . . . . . . . . 63 ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION 64 Section 8 . 01 . Execution and Recordation. . . . . . . . 64 EXHIBIT "A" - SITE PLAN . EXHIBIT "A-1" - AGENCY PARCELS EXHIBIT "A-2" - REMAINDER PARCELS EXHIBIT "B" - SCOPE OF DEVELOPMENT EXHIBIT "C" - AGENCY NOTE (HUD Loan) EXHIBIT "D" - DEED OF TRUST (HUD Loan) EXHIBIT "E" - PROMISSORY NOTE (Agency Contribution) EXHIBIT "F" - THIRD DEED OF TRUST (Agency Contribution) EXHIBIT "G" - GRANT DEED EXHIBIT "H" - SCHEDULE OF PERFORMANCE EXHIBIT "I" - CERTIFICATE OF COMPLETION EXHIBIT "J" - PROJECT BUDGET EXHIBIT "K" - LEGAL DESCRIPTION EXHIBIT "L" - DEED OF TRUST (RETAIL PARCEL) -iii- x Glossary of Primary Defined Terms Page Defined Term Additional Agency Contribution . . . . . . . . . . . . . . . . . . . . . . . 27 Additional Developer Contribution . . . . . . . . . . . . . . . . . . 27 . . . . . . . 1-2 Agency 5 Agency Contribution . . . . . . . . . . . . . . . . . . . . • • • • . • . • 4 Agency Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Agency Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Agency Parcels . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Agency Priority Return . . . . . . . . . . . . . . . . . . . 1 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 CCR' s . . . . . . . . . . . . . . . . . . . . . . . 1 Central City Project Area . . . . . . . . . . . . . . . . . . . . 38 • . • Certificate of Completion . . . . . . . . . . . . . . . . . . . . . . . 1 City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Close of Escrow . . . . . . . . . . . . . . . . . . . . . . . Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 33.. .. 19 Common Area Parcel . . . . . . . . . . . . . . . . . . . . . . . . . 1 Community Redevelopment Law . . . . . . . . . . . . . . . • • . . . . .. ,, 35 Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . 33 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2 Developer . . . . . . . . . . . . . . . . . . . . . . . . . 8 Developer Advance . . . . . . . . . . . . . . . . . . . . . . 6 Developer Contribution . . . . . . . . . . . . . . . . . . . 6 Developer Priority Return . . . . . . . . . . . . . . . . . . . . . . . 8 Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . , , •. . . 12 Final Approval . . . • • • . • • • • . . . . . . . . • . . , . . , 17 Hazardous Substances . . . . . . . . . . . . . . . . . • 11 Intended Use . . . . . . . . . . . . . . . . . . . . . . • • . 33 Interest Sale Price . . . . . . . . . . . . . . . . . . . . . . . . _ .• • • • . 1 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Minor Field Changes . . . . . . . . . . . . . . . . . . . . • 35 Mortgage . . . . . . . . . . . . 7 Net Distributable Cash . . . . . . . . . . . . . 49 Notice of Revesting of Title . . . . . . . . . . . . . . • • • • 30 Parking Agreement . . . . . . . . . . . . . . . . . . . • . . . . 15 Permanent Financing . . . . . . . . . . . . . . . . . . . 9 Preliminary Title Report . . . . . . . . . . . . . . . . . . . . . . . 28 Pretransfer Costs . . . . . . . . . . . . . . . . . . . . . . . 28 Prevailing Wages . . . . . . . . . . . . . . . . . . . . . • • . • . . . . • _ 4 Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Project Account . . . . . . . . . . . . . . . . . . . . . 27 Project Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Punch-List . . . . . . . . . . . . . . . . . . . . . . , . . • . • •. . . 33 Purchase Notice . . . . . . . . . . . . . . . . . . . . . . . . . 3 Remainder Parcels . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Retail Parcel . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . , , 32 Right of First Offer . . . . . . . . . . . . . . . . . . . . . 32 Sale Notice . . . . . . . . . . . . . . . . . . . . . . . 5 Second Agency Note 2 State . . . . . 19 Theater Parcel . . . . . . . . . . . . . . . . . . . . . . 5 Third Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . 9 Title Company . . . . • • • • • • • • . • . . . . . . . . - -iv- --r_P i� SBEO\0001\DDA\METRO.8 10\29\96 400 law DISPOSITION AND DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into by and between the Redevelopment Agency of the City of San Bernardino (the "Agency") , and MDA-San Bernardino Associates, L.L.C. , a Delaware limited liability company (the "Developer") . The Agency and the Developer agree as follows: ARTICLE I SUBJECT OF AGREEMENT Section 1 . 01 . Purposes of Agreement. The purpose of this Disposition and Development Agreement (the "Agreement") is to effectuate redevelopment within the boundaries of the City of San Bernardino (the "City") by providing for the purchase and the redevelopment by the Developer of certain real property located within the duly established Central City Redevelopment Project Area of the City (the "Central City Project Area" ) , and which property is shown in the Site Plan attached hereto as Exhibit "A" and incorporated herein by reference (the "Land") . The purchase and the redevelopment of the Land by the Developer pursuant to this Agreement, and the fulfillment generally of the Agreement, are in the vital and best interests of the City, the Agency, and the health, safety, morals, and welfare of the City' s residents, and are in accord with the public purposes and provisions of applicable federal, state and local laws and requirements . Section 1 . 02 . The Project Area. The Central City Project Area was approved and adopted by the City Council of the City of San Bernardino by duly adopted ordinance in accordance with the provisions of the Community Redevelopment Law of the State of California (the "Community Redevelopment Law") - This Agreement shall be subject to the provisions of the Community Redevelopment Law. Sec ion 1 . 03 . Parties to the Agreement . a. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law, Health and Safety Code Section 33000, et sea. The principal office of the Agency is located at 201 N. "E" 1 Street, San Bernardino, California 92401-1507 . As used in this Agreement, the term "Agency" shall be deemed to include the Agency and any assignee and/or successor to the Agency or to its rights, powers and responsibilities under this Agreement. b. The Developer is MDA-San Bernardino Associates, L.L.C. , a Delaware limited liability company. The principal office of the Developer for purposes of this Agreement is located at 300 Continental Boulevard, Suite 360, E1 Segundo, CA 90245 (Telephone Number: (310) 416-1100) , and for purposes of Section 6. 01 hereof, any and all notices, demands or communications shall be sent to the Developer addressed to the attention of Jason Kamm. Prior to the incurrence of any obligations on behalf of the Agency under this Agreement and, in addition, on or before ten (10) calendar days prior to the close of escrow, as set forth hereafter, the Developer shall provide to the Agency satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer with the State of California (the "State") to transact business within the State, to hold title to the Land and to develop the Project, as hereinafter defined. Section 1 . 04 , Prohibition Against Change in Ownership Management and Control of Developer, for Assignment of Agreement. a. The qualifications and identities of the persons and entities comprising the Developer are of particular concern to the Agency. It is because of these qualifications and identities of the Developer that the Agency has entered into this Agreement with the Developer. No voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement, except as expressly set forth herein. b. Except as otherwise provided in this Agreement, the Developer shall not assign all or any part of this Agreement prior to the issuance of a Certificate of Completion applicable to all portions of the Land without the prior written approval of the Agency, which approval shall not be unreasonably withheld. C. The Developer shall promptly notify the Agency in writing of any and all changes whatsoever in the identity of the parties either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such party, of which information the Developer or any of its members, officers or 2 shareholders has been notified or may otherwise have knowledge or information. This Agreement may be terminated by the Agency and the Agency may declare Developer in default if there is any significant or material change, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the Agency at the time of such change, prior to issuance of a Certificate of Completion for the Property as hereinafter provided; provided, however, that: (i) the Agency shall first notify the Developer in writing of its intention to terminate this Agreement pursuant hereto, and (ii) the Developer shall have twenty (20) calendar days following the date of receipt of such written notice to commence and thereafter diligently and continuously proceed with the cure • of the default of the Developer under this Section 1 . 04 .c. , and (iii) the Developer shall submit evidence of the satisfactory completion of such cure to the Agency within thirty (30) calendar days following the receipt of such written notice in a form and substance deemed satisfactory to the Agency, in its reasonable discretion. Notwithstanding any language herein to the contrary, the Developer may assign its rights and obligations under this Agreement to an entity which is controlled and managed by the Developer or by the individuals who are the principals of the Developer as of the date of this Agreement, Rex Swanson and Jason Kamm, subject to - the written consent of the Agency which may not be unreasonably withheld. ARTICLE II DISPOSITION OF PROPERTY Section 2 . 01 . Purchase of Property. The Land which is the subject of this Agreement is comprised of several different parcels of land all as more fully shown on Exhibit "A" . The Agency currently owns those certain parcels shown on Exhibit "A-1" (the "Agency Parcels") . With respect to the remaining parcels as shown on Exhibit "A-2" (the "Remainder Parcels") , it is the intent of the Parties hereto that the Agency shall use best efforts to acquire said Remainder Parcels directly from the current owners thereof by negotiated purchase. The costs of acquiring the Remainder Parcels will be the sole responsibility of the Agency. Nothing contained in this Agreement shall require the Agency to pay a purchase price for any or all of the Remainder Parcels which it determines to exceed the fair market value thereof, or to undertake any action of condemnation. Unless 3 otherwise agreed to by the parties hereto, and except as provided in Section 3. 0l .bb. hereof, it is the intent of the parties that none of the development obligations of either the Developer or the Agency as set forth herein shall arise until such time as fee title to those portions of the Land as is necessary for the Project (the "Property") is transferred to the Developer. Upon the assembly of all Remainder Parcels comprising the Land, the Developer shall purchase, and the Agency shall sell the Property in accordance with the terms of this Agreement and the attachments hereto. If all of the Remainder Parcels cannot be assembled within 20 months of the date of this Agreement, and subject to Section 2 . 07 .c. , the respective obligations of the parties hereto shall be terminated, unless the parties agree otherwise in writing. Notwithstanding any language herein to the contrary, the parties acknowledge that the Project, as defined below, may require the transfer of less than all of the Land eventually acquired by the Agency. The parties hereto shall agree upon the extent of the Land necessary for the Project and, as used herein, the term "Property" shall, except where the context indicates otherwise, mean the portion of the Land which the parties agree is necessary for the Project. In addition, the parties contemplate that the Retail Parcel, as defined hereinbelow, will be conveyed, on certain conditions, to the Developer. At such time as the Property to be conveyed to the Developer is finally identified, and a legal description thereof is available, said legal description will be signed by the Agency and the Developer confirming their respective acceptance thereof, and will be attached hereto as Exhibit "K" . This Agreement will then be recorded. Section 2 . 02 . Developer' s Consideration. The covenants of the Developer set forth in this Agreement will be the consideration for the transfer of the Property and/or the Retail Parcel, as applicable, by the Agency, and no cash purchase price shall be paid by the Developer. Section 2 . 03 . Agency Assistance. Upon completion of the transfer to the Developer of all of the Property, the Agency will provide certain assistance with respect to the development of the Property in order to assist in the construction thereon of a multi screen cinema complex and related common areas (the "Project") all as more fully described in the Scope of Development as attached hereto as Exhibit "B" and incorporated herein by this reference. The Project shall consist of the Theater Parcel and the Common Area Parcel, as defined in Section 3 . 01, but shall exclude the Retail Parcel . a. The Agency will provide a loan (the "Agency Loan") to the Developer in a total amount not to exceed Seven Million 4 Dollars ($7, 000, 000) which loan shall be evidenced by a Promissory Note in favor of the Agency (the `Agency Note") . The Developer shall have the right to approve the terms of the Agency Note. If the Developer disapproves the provisions thereof, the Agency and the Developer will be excused from any further performance under this Agreement, other than the payment of their respective portion of any escrow fees or costs as provided herein. The Agency Note will provide that the Agency Loan will be fully amortized with level payments of principal and interest over a term of twenty (20) years and may be assumed in accordance with its terms and provisions. The form of the Agency Note shall be more or less as set forth in Exhibit "C" attached hereto and incorporated herein by this reference. The Agency Note will be secured by a Deed of Trust (in subordinate position to construction and/or permanent, financing for the Project to be obtained by the Developer in an amount not to exceed $3, 600, 000, and on terms and conditions reasonably satisfactory to the Agency) which will be recorded and constitute a lien against the Property. The form of the Deed of Trust will be as shown on Exhibit "D", attached hereto and incorporated herein by this reference and is subject to the approval of the Developer. Interest on the Agency Loan shall accrue at the rate set by HUD, with the Developer having the right to approve said rate. A disapproval of the interest rate by the Developer will excuse the Agency and the Developer from further performance under this Agreement, other than the payment of their respective portion of any escrow fees or costs as provided herein. The Agency Loan is to be funded from the proceeds of a HUD Section 108 loan to the Agency and the Agency' s obligations with respect to the Agency Loan and to this Agreement are contingent on the Agency' s receipt of said proceeds . b. In addition to the Agency Loan, and contingent upon receipt of the HUD loan proceeds, the Agency will provide an additional loan in an amount not to exceed One Million Three Hundred Twenty Four Thousand Five Hundred Seventy Five Dollars ($1, 324, 575) (the "Agency Contribution") which shall be evidenced by a promissory note in the form of Exhibit "E" attached hereto and incorporated herein by reference (the "Second Agency Note") . The Second Agency Note shall be secured by a Third Deed of Trust in favor of the Agency in the form of Exhibit "F11 attached hereto and incorporated herein by this reference, which will be recorded and constitute a lien against the Property. The Agency Contribution shall be used in connection with the construction of the Project, provided however, that such use shall be consistent with the provisions of the California Community Redevelopment Law. The Second Agency Note and the Third Deed of Trust shall be subordinated to a construction and/or permanent financing for the Property 5 - r in an amount not to exceed $3, 600, 000, and on terms and conditions reasonably satisfactory to the Agency. The Agency shall execute such Subordination Agreements from time to time as may be reasonably requested by the lenders whose loans shall have a priority superior to the Second Agency Note and the Third Deed of Trust and by the Title Company insuring the priority of such superior loan. C. In addition to the Agency Loan and the Agency Contribution the Agency agrees that it shall, at its own cost and expense, undertake, or cause to be undertaken, certain site preparation and site clearing work in order to remove all existing structures on the Land, including foundations, underground vaults and existing utility lines, rough grade the Land and bring all applicable utilities to the Land line in capacities sufficient for the Project. If any off-site improvements are required as part of the Project approvals, such off-site improvements will be accomplished at the cost and expense of the Agency. However, the Agency shall have the right to approve any off-site improvements, and if it disapproves such off-site improvements, the Agency and the Developer will be excused from further performance hereunder. Section 2 . 04 . Developer' s Obligations . In addition to its obligation to cause the construction of the Project the Developer agrees that, upon receipt of fee title to all portions of the Property, the Developer shall contribute not less than Two Hundred Fifty Thousand Four Hundred Twenty Five Dollars ($250, 425) of its own funds to pay certain Project construction costs (the "Developer Contribution") . Upon completion of the Project and in consideration for the provision of the Developer Contribution the Developer shall be entitled to an annual priority return (the "Developer Priority Return") equal to an eight percent (8%) return on the principal amount of the Developer Contribution, as said principal may be reduced by the distribution of Net Distributable Cash, as defined below, which return will be paid from the revenues of the Project, as and when such revenues are available . Interest on the Developer Contribution shall not begin to accrue until the earlier of (i) the date the theater operator commences operations, or (ii) twelve (12) months from the date the Developer tenders possession of the Theater Parcel to the theater operator. Said Developer Priority Return shall be calculated and distributed at the same time as the Agency Priority Return, as hereinafter described. Thereafter, the Developer will be entitled to twenty-five percent (25%) of Net Distributable Cash, as hereinafter defined, which is generated by the Project and which is available after the Agency has received the Agency Priority Return as hereafter defined. The amounts of 6 Net Distributable Cash received by the Developer (but exclusive of the Developer Priority Return) shall be deemed to reduce the principal amount of the Developer Contribution such that thereafter the Developer Priority Return shall be calculated on the Developer Contribution, less the amount of Net Distributable Cash received by the Developer. At the time of the opening of the Project, it is understood the Developer anticipates creating at least 105 full and part time jobs with Developer, reserving the right to modify its employment pattern from time to time in a manner consistent with its normal operations . Section 2 . 05. Agency Participation. In consideration for the Agency Assistance as provided in Section 2.03 hereof, the Agency shall be entitled to participate in certain revenues generated by the Project based upon the following formula: (i) The Agency shall receive an annual priority return (the "Agency Priority Return„) equal to an eight percent (8%) return on the principal amount of the Agency Contribution, as said principal may be reduced by Net Distributable Cash, as defined below, received by the Agency, which return will be paid from the revenues of the Project, as and when such revenues are available, to be calculated and distributed at the same time as the Developer Priority Return. Interest on the Agency Contribution shall not begin to accrue until the earlier of (i) the date the theater operator commences operations or (ii) twelve (12) months from the date the Developer tenders possession of the Theater Parcel to the theater operator. The amounts of Net Distributable Cash received by the Agency (but exclusive of the Agency Priority Return) , shall be deemed to reduce the principal amount of the Agency Contribution such that the Agency Priority Return shall be calculated on the Agency Contribution, less the amount of Net Distributable Cash received by the Agency. (ii) The Agency shall thereafter be entitled to seventy-five percent (75%) of all "Net Distributable Cash” of the Project. Net Distributable Cash shall mean all cash available for distribution from the Project, taking into account all rent, other income from the Project and tenant reimbursements, after the deduction of the Developer Priority Return and the Agency Priority Return, and net of all Project costs, including debt service on the first trust deed loan and the Agency Loan, operating expenses, property management fees, utilities, common area maintenance, parking charges, insurance expenses, repair and maintenance, a reserve for replacement of 7 capital items, including but not limited to, Project reserves equal to one percent (1%) of gross rental income and a Project Management fee equal to three percent (3%) of gross rental income. The Developer Priority Return and the Agency Priority Return shall have equal status. In the event that there is insufficient Net Distributable Cash to pay the total of both Priority Returns, each shall be proportionately reduced. The Developer shall provide the Agency with property management reports on a monthly basis, not later than the twentieth day of the succeeding month, setting forth, at a minimum, all income and expenses, including the Project reserves, related to the Project. All distributions of Net Distributable Cash will be made on a monthly basis, and paid at the same time the monthly property management report is distributed, adjusted as necessary at the end of the fiscal year which applies .to the . Project. Until the Agency no longer has a right to participate in the revenues of the Project, it may inspect and/or audit the books and records of the Developer as necessary to verify the performance of this Agreement, which inspection or audit will occur at the offices of the Developer on reasonable notice. The Developer agrees to maintain separate books of account for the Project, including a separate account for the reserves of one percent (1%) . The rights of the Agency to inspect and audit the Developer' s books and records shall survive the recordation of any Certificate of Completion as hereinafter defined. In the event that Project reserves, or any portion thereof, are distributed, such distribution shall be deemed a distribution of Net Distributable Cash and will be done in accordance with the terms of this Agreement . (iii) It is contemplated that, after completion of the Project, and from time to time, it may necessary to advance funds for the purposes of meeting ongoing operating costs of the Project. The Developer may advance any such funds as are necessary, up to an amount equal to 60 days of normal operating expenses of the Project, without the prior approval of the Agency (a ""Developer Advance") , and the amount so advanced shall become an operating expense of the Project and the Developer shall be entitled to repayment thereof from the revenues of the Project, together with eight percent (8%) interest. Repayment of a Developer Advance shall be subordinate to debt service of the permanent/construction financing permitted under Section 2 . 03 .a. and to the Agency Note, but shall have priority over any payment for the Second Agency Note, the Agency Priority Return and the Developer Priority Return. The Developer may advance operating expenses which exceed the amount of the Developer Advance, and shall be entitled to reimbursement thereof with eight percent (8%) interest from the revenues of the Project, but such repayment 8 shall be subordinate to debt service on the permanent/construction financing permitted under Section 2 . 03 .a. , the Agency Note, the Agency Second Note, the Agency Priority Return and the Developer Priority Return, unless, within 30 days of beginning to advance the Developer Advance, the Developer serves written notice on the Agency of its intention to advance operating expenses in excess of the Developer Advance, together with such information concerning the financial status and/or operations of the Project as the Agency may reasonably require. If the Agency, in its sole discretion, either (i) approves in writing the proposed advance of further funds, or (ii) fails to reject the proposed advance of further funds within 30 days of receiving the Developer' s written notice, the additional funds advanced shall have the same priority for repayment as the Developer. Advance. Notwithstanding any language in this Agreement to the contrary, the Developer may not make more than one (1) Developer Advance in any given twelve (12) month period, unless the Agency shall agree otherwise in writing. No advances by the Developer under this Section 2 . 05 (iii) shall become part of the Developer Contribution. (iv) The participation by the Agency as provided in this Section 2 . 05 is by way of contingent interest and the return of principal . Nothing provided in this Agreement creates, or shall be construed to create, a partnership or joint venture between the Agency and the Developer, and the Agency shall have no responsibility for or obligation to share in any losses incurred with respect to the Property, the Project or the Retail Parcel . Section 2 . 06 . Escrow. a. The Agency and the Developer agree to establish an escrow for the purchase and sale of the Property with an escrow holder to be determined by mutual agreement (the "Escrow Agent") . The Agency and the Developer likewise agree to establish an escrow for the purchase and sale of the Retail Parcel with the Escrow Agent, as and when the conditions precedent to the transfer of the Retail Parcel as set forth in Section 2 . 10 .c. 1 . through 8 . , inclusive, have been satisfied. All of the provisions of this Section 2 . 06 shall be deemed to apply to the Retail Parcel escrow when opened. The escrow shall be opened within thirty (30) days after all of the Property is owned by the Agency or under a binding agreement of purchase and sale or binding option agreement. The Retail Parcel escrow shall be opened within thirty (30) days of the satisfaction of the conditions precedent set forth in Section 2 . 10 . 9 b. The Agency and the Developer shall provide and execute such additional escrow instructions consistent with this Agreement as shall be necessary. The Escrow Agent hereby is empowered to act under this Agreement, and, upon indicating its acceptance of this Section in writing, delivered to the Agency and the Developer, within five (5) calendar days after the establishment of the escrow, shall carry out its duties as the Escrow Agent hereunder. c. The Agency and the Developer shall deliver to the Escrow Agent all documents necessary for the conveyance of title to or to create a lien on, as the case may be, the Property, or to the Retail. Parcel, as applicable, to the extent provided in this Agreement, in conformity with, within the times, and in the manner provided in this Agreement. d. The Agency and the Developer shall pay all fees, related to the transfer of the Property and/or the Retail Parcel, as applicable, from the Agency to the Developer, promptly after the Escrow Agent has notified the Developer and the Agency of the amount of such fees, charges, pro rations and costs . The allocation of fees, charges, pro rations and costs shall be in accordance with the customary practice of Escrow Agent. e. The Agency shall timely and properly execute, acknowledge and deliver to the Escrow Agent a grant deed conveying to the Developer title to the Property and/or the Retail Parcel, as applicable, in accordance with the requirements of this Agreement and the Developer shall timely and properly execute, acknowledge and deliver to the Escrow Agent, the deed or deeds of trust pertaining thereto, as required by this Agreement. f. The Agency will cause a Preliminary Title Report to be prepared and issued by a title company to be determined by agreement (the "Title Company") and will provide the Developer with copies thereof along with legible copies of all reported title exceptions. The Agency and the Developer must approve the Preliminary Title Report in writing as a condition precedent to close of escrow. g. All funds received in escrow shall be deposited by the Escrow Agent in an insured account with any state or national bank doing business in the State of California, and such funds may be combined with other escrow funds of the Escrow Agent . Such funds shall draw the highest reasonable rate of interest and such interest shall accrue to the party to this Agreement who shall have made the deposit thereof with the Escrow Agent. 10 h. All communications from the Escrow. Agent to the Agency or the Developer shall be directed to the respective parties at the addresses set forth in Section 6 . 01 of this Agreement for notices, demands and communications between the Agency and the Developer. Section 2 . 07 . Conveyance of Title and Delivery of Possession. a. Subject to the date set forth in Section 2 . 07 .c. below, and to any mutually agreed upon written extension of time or extensions otherwise authorized by this Agreement, conveyance to the Developer of title to the Property and/or the Retail Parcel, as applicable, in accordance with the provisions of this Agreement shall be completed as soon as the. conditions set forth in Section 2 . 10 . hereof have been satisfied ("Close of Escrow" ) . The Agency and the Developer agree to perform all acts necessary for conveyance of title to the Property, and/or title to the Retail Parcel, as applicable, in the form and to the extent required herein, in sufficient time for title to be conveyed in accordance with this provision. b. Possession of the Property, and/or the Retail Parcel, as applicable, shall be delivered to the Developer concurrently with the conveyance of title, or as otherwise provided in this Section. The Developer shall accept title and possession to the Property, and or to the Retail Parcel, as applicable, on the date established therefor in this Section. C. The transfer of fee title to the Property from the Agency to the Developer must occur prior to sixty (60) days after the assembly of all of the Land, but in no event later than twenty (20) months from the date of this Agreement, unless the parties agree otherwise in writing. The title to the Retail Parcel must be conveyed within thirty-six (36) months from the conveyance of the Property, and construction of the improvements thereon must be commenced immediately upon conveyance and diligently pursued to completion. In the event that the date for Close of Escrow of either the Property or the Retail Parcel cannot be met due to one or more of the conditions for Close of Escrow set forth in Section 2 . 10 of this Agreement having not been satisfied or waived, this Agreement shall be automatically extended for an additional period of one hundred twenty (120) days to permit the satisfaction or waiver of such unsatisfied conditions . The Agency and Developer may agree to such additional extensions 11 1 not to exceed an additional ninety (90) days, provided there is a reasonable likelihood that such additional time will permit the satisfaction of the unsatisfied condition or conditions. At the end of the time permitted, if the Close of Escrow as to either the Property or the Retail Parcel cannot occur, the parties shall be released from any and all obligations hereunder with respect to that parcel, and all funds and documents shall be returned to the party depositing them in escrow, and the parties shall bear equal responsibility for payment of any costs associated with the escrow, and shall bear their own costs and expenditures incurred to that point. Notwithstanding any language in this Agreement to the contrary, the parties agree that the Agency shall have no obligation to transfer title to the Retail Parcel unless and until the title to the Property has been. conveyed to the Developer, or simultaneously therewith, and on the further condition that the Developer not be in default of this Agreement in any material way. Further, notwithstanding any language in this Agreement to the contrary, the Developer shall not be required to, but may elect to, take title to the Property unless and until it takes title to the Retail Parcel. Section 2 ._08 . Form of Deed. The Agency shall convey to the Developer title to the Property and/or the Retail Parcel, as applicable, in the condition provided in Section 2 . 09 of this Agreement by a Grant Deed substantially in the form attached hereto as Exhibit "G" . Section 2 . 09 . Condition of Title. The Title to the Property and/or the Retail Parcel conveyed by the Agency to the Developer shall be a marketable title free and clear of encumbrances and exceptions, except for: (a) the agreements, covenants and conditions of this Agreement, the Grant Deed, the Deed of Trust securing the construction and/or permanent loan and the Deeds of Trust granted to the Agency under Section 2 . 03 hereof (in the case of the Property) and Section 2 . 10.c. 8 . (in the case of the Retail Parcel) ; (b) such pre-existing easements or rights-of-way as may be disclosed by the Preliminary Title Report and approved by the Agency and the Developer; and (c) real property taxes for the fiscal year in which escrow closes which constitute a lien not yet payable . Section 2 . 10 . Conditions for Close of Escrow. a. The Agency' s obligation to convey the Property to the Developer and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the Agency of each of the following: 12 1 1 . The Developer shall have deposited into the escrow all sums required to be deposited by it pursuant to this Agreement with respect to the Property, including the Developer' s Contribution, with a credit for any Pretransfer Costs, as defined in Section 3.01 . bb. below, advanced by the Developer. 2 . The Developer shall have provided to the Agency satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer with the State to transact business within the State, to hold title to the Property and to develop the Project, as provided in Section 3 . 0l .a. hereof and evidence of approval of this Agreement and the transaction contemplated, hereby by the Developer' s Board of Directors or other governing body. 3 . The Developer shall have received approval from the Agency of financing commitments as set forth in Section 2 . 17 hereof. 4 . The City shall be prepared to issue building permits for the final grading and improvement of the site and/or building improvements of the Project. S. The Agency shall have received funding of the HUD Section 108 loan which is to provide the funds for the Agency Loan. 6. The Developer shall have received final approval of any changes in zoning, variances, special use permits, site plan approvals, environmental approvals or other approvals under applicable law as are required for Developer' s intended use of the Property as described in the Scope of Development (the "Intended Use" ) . For the purposes of this Agreement, "final approval" shall mean approval by the applicable governmental agency authorized to grant such approval and expiration of any and all appeal or challenge periods with respect to any such approval without any appeal being taken or judicial challenge to such approval being filed. 7 . The Developer shall have obtained an executed and binding lease of the theater complex to a recognized cinema operator. The terms of the lease and the identity of the operator are subject to the reasonable approval of the Agency. 13 8 . The representations and warranties of the Developer shall be true and correct at the time of Close of Escrow. b. The Developer' s obligation to purchase the Property from the Agency and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the Developer of each of the following: 1 . The Agency shall be able to convey good, marketable and insurable title to the Property, subject only to those exceptions as set forth in Section 2 . 09 of this Agreement and delivery of title insurance evidencing such title as set forth in Section 2 . 13 of this Agreement. 2 . The Agency shall have deposited into escrow the proceeds of the Agency Loan and the Agency Contribution, with a credit to the Agency Contribution of any Pretransfer Costs, as defined in Section 3 . 0l .bb. below, advanced by the Agency. 3 . The results of any inspection, soil tests, drainage tests, survey, topographical analysis, engineering and/or architectural drawings (all to be performed at Developer' s expense) do not disclose that the Property is unsuitable for the Intended Use . The Agency shall provide to Developer, its employees and agents, a license for access over and through the portions of the Property controlled by the Agency for the purposes of conducting any of the foregoing tests, inspections or surveys, provided the Developer shall hold the Agency harmless from any liability, damage or expense which either may incur by reason thereof. 4 . The results of any hazardous substance site assessment to be performed on the Property does not disclose evidence suggesting the presence of any hazardous materials or environmental contamination, or if present, the same shall have been approved by Developer based on such assessment or remediated by the Agency. The Developer agrees and acknowledges that Developer' s reliance on any previously completed environmental assessment performed for the benefit of the Agency shall be at Developer' s own risk and shall not impose any liability upon the Agency. The Agency agrees that it will cause the engineer/consultant who prepares any environmental assessment of the Property and/or the 14 `��f Retail Parcel to issue its certification in the name of both the Agency and the Developer. Any incremental cost associated with naming the Developer in such certification shall be at the expense of the Developer, except that the Developer shall have the option of choosing not to be named in the certification if it so elects, in which case it shall bear no responsibility for the cost of any such assessment. 5. The representations and warranties of the Agency shall be true and correct at the time of Close of Escrow. 6. The Agency shall have performed its obligations. under Section 3 . 0l .a. 1 . C. The Agency' s obligation to convey the Retail Parcel to the Developer and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the Agency of each of the following: 1 . The Developer shall have deposited into the escrow all sums required to be deposited by it pursuant to this Agreement with respect to the costs of transfer of the Retail Parcel . 2 . The Developer shall have provided to the Agency satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer with the State to transact business within the State, to hold title to the Retail Parcel and to develop the Retail Parcel, as provided in Section 3 . 0l .a. hereof and evidence of approval of this Agreement and the transaction contemplated hereby by the Developer' s Board of Directors or other governing body. 3 . The Developer shall have received approval from the Agency of financing commitments as set forth in Section 2 . 17 hereof with respect to the Retail Parcel . 4 . The City shall be prepared to issue building permits for the final grading and improvement of the site and/or building improvements of the Retail Parcel . S . The Developer shall have received final approval of any changes in zoning, variances, special use 15 permits, site plan approvals, environmental approvals or other approvals under applicable law as are required for Developer' s Intended Use of the Retail Parcel . 6. The representations and warranties of the Developer shall be true and correct at the time of Close of Escrow. 7 . The Developer shall provide evidence reasonably satisfactory to the Agency that it has pre-leased not less than fifty percent (50%) of the rentable area of the proposed improvements on the Retail Parcel, and that the proposed lessees are bound to enter or have entered into leases at such rental. rates and for such terms as is commercially reasonable at the time. The Agency shall have the reasonable right of approval of the terms of any such lease, the identity of the proposed lessee, and the nature of the business to be conducted by said lessee on the Retail Parcel . 8 . The Developer shall have deposited in escrow a deed of trust on the Retail Parcel in favor of the Agency, in the form attached hereto as Exhibit "L", which is incorporated herein by reference, securing performance by the Developer of each and every covenant specified therein pertaining to the Retail Parcel, which shall be recorded at Close of Escrow in first lien position, subject to the subordination requirement set forth hereinafter. Said deed of trust shall remain a lien against the Retail Parcel unless and until a Certificate of Completion issued by the Agency is recorded against the Retail Parcel . The Agency agrees that it will subordinate the deed of trust provided for herein to a construction and/or permanent financing for the improvements to the Retail Parcel in an amount not to exceed $2, 200, 000, on terms and conditions reasonably satisfactory to the Agency. The Agency shall execute such Subordination Agreements from time to time as may be reasonably requested by the lender or lenders whose loan or loans shall have a priority superior to the Agency deed of trust and by the Title Company insuring the priority of such superior loan (s) . d. The Developer' s obligation to purchase the Retail Parcel from the Agency and the Close of Escrow shall be 16 t expressly conditioned upon satisfaction or waiver by the Developer of each of the following: 1 . The Agency shall be able to convey good, marketable and insurable title to the Retail Parcel, subject only to those exceptions as set forth in Section 2 . 09 of this Agreement and delivery of title insurance evidencing such title as set forth in Section 2 . 13 of this Agreement. 2 . The results of any inspection, soil tests, drainage tests, survey, topographical analysis, engineering and/or architectural drawings (all to be performed at Developer' s expense) do not disclose that the Retail Parcel is unsuitable for the Intended Use. The Agency shall provide to Developer, its employees and agents, a license for access over and through the portions of the Retail Parcel controlled by the Agency for the purposes of conducting any of the foregoing tests, inspections or surveys, provided the Developer shall hold the Agency harmless from any liability, damage or expense which either may incur by reason thereof. 3 . The results of any hazardous substance site assessment to be performed on the Retail Parcel do not disclose evidence suggesting the presence of any hazardous materials or environmental contamination, or if present, the same shall have been approved by Developer based on such assessment or remediated by the Agency. The Developer agrees and acknowledges that Developer' s reliance on any previously completed environmental assessment performed for the benefit of the Agency shall be at Developer' s own risk and shall not impose any liability upon the Agency. The Agency agrees that it will cause the engineer/consultant who prepares any environmental assessment of the Property and/or the Retail Parcel to issue its certification in the name of both the Agency and the Developer. Any incremental cost associated with naming the Developer in such certification shall be at the expense of the Developer, except that the Developer shall have the option of choosing not to be named in the certification if it so elects, in which case it shall bear no responsibility for the cost of any such assessment . 17 4 . The representations and warranties of the Agency shall be true and correct at the time of Close of Escrow. 5. The Agency shall have performed its obligations under Section 3 . O1 .a. 1 . Section 2 . 11 . Time and Place for Delivery of Documents to Escrow. Subject to any mutually agreed upon written extensions of time or any extensions otherwise authorized by this Agreement, the parties shall deposit with the Escrow Agent promptly at such time as such documents have been fully prepared and executed, but in no event later than ten (10) calendar days before the date established . for the conveyance of the Property or the Retail Parcel, as applicable, or any remaining portions thereof, any and all documents which are required in order for escrow to close in accordance with this Agreement. The grant deed conveying any remaining portions of the Property or the Retail Parcel, as applicable, from the Agency to the Developer hereunder shall be prepared by the Agency, at the Agency' s expense. The legal descriptions regarding the Property and the Retail Parcel will be supplied by the Agency. All other documents required to be recorded in order to permit the Close of Escrow shall be prepared by the Developer at its cost and expense. Section 2 . 12 . Recordation of the Grant Deed and Other Documents . When the parties have deposited into escrow all documents and funds as required by this Agreement and all conditions for the Close of Escrow as to the Property or the Retail Parcel, as applicable, have been satisfied, the Escrow Agent shall promptly file for recordation among the land records in the Office of the County Recorder where the Property or the Retail Parcel, as applicable, is located: (i) the grant deed to the Property or the Retail Parcel, as applicable; (ii) the Deeds of Trust granted by the Developer to the Agency in accordance with Section 2 . 03 hereof (as to the Property) or Section 2 . 10 .c. 8 . (as to the Retail Parcel) ; and (iii) this Agreement. The Escrow Agent shall thereafter promptly provide a copy of said recorded documents to both parties, and shall promptly deliver to the Developer a title insurance policy insuring title in conformity with this Agreement. As to the Property, the Escrow Agent shall transfer to the Project Account, as defined hereinafter, all proceeds, including the Agency Loan, the Agency Contribution and the Developer Contribution. 18 Section 2 . 13. Title Insurance. Concurrently with recordation of the grant deed to the Property and/or the Retail Parcel, as applicable, the Title Company shall provide and deliver to the Developer an ALTA owner' s policy of title insurance, and such additional title endorsements as the Developer may reasonably request, issued by the Title Company insuring that the title to the Property and/or the Retail Parcel, as applicable, is as required pursuant to the terms of this Agreement. The title insurance policy shall be in an amount to be determined by agreement of the parties. SP�t . n 2 . 14 . Taxes and Assessments . Ad valorem taxes and assessments, if any, on the Property. and/or the Retail Parcel, as applicable, and taxes upon this Agreement or any rights hereunder levied, assessed or imposed as to any period prior to conveyance of title to the Property and/or the Retail Parcel, as applicable, through the escrow, shall be borne by the Agency. Section 2 . 15. Zoni rty and the Retail Parcel . The Developer will undertake the obligation to confirm that the City' s general plan and zoning ordinance permit the contemplated development, construction and operation of the Property and/or the Retail Parcel, as applicable, in accordance with this Agreement, and Developer agrees to obtain any and all necessary conditional use permits required pursuant to the zoning ordinance, and Developer agrees to obtain any and all modifications or variances including, but not limited to, those modifications or variances necessary for height, parking, signs -and any and all other matters . Section-2,1 condition of the Land. a. The Land shall be conveyed in an "as is" condition with no warranty or liability, except as otherwise provided herein, express or implied on the part of the Agency as to the condition of the soil, its geology or the presence of known or unknown faults or defects . b. It shall be the responsibility solely of the Developer, at the Developer' s expense, to investigate and determine the soil and seismic conditions of the Land, and its suitability for the development to be constructed thereon. The Developer shall not disapprove any soils report or soils condition which would permit the construction with normal foundation conditions of the contemplated improvements . 19 f Section 2 . 17 . Sub [iission of Evidence of Financing commitments. a. As a condition to the Close of Escrow as to either the Property or the Retail Parcel, as applicable, the Developer shall submit to the Agency evidence reasonably satisfactory to the Agency that the Developer: (i) has obtained sufficient equity capital for Project financing or financing of the improvements to the Retail Parcel, as applicable; (ii) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and firm and binding commitments for construction financing; and (iii) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and firm and binding commitments for permanent financing; all as may be necessary for the construction of the Project on the Property or of the improvements on the Retail Parcel, as applicable, in accordance with this Agreement. In lieu of the foregoing, the Developer may submit evidence to the Agency that it has sufficient funds of its own for the purposes set forth in this Section, which evidence shall be acceptable to the Agency in its sole discretion. As used in this Agreement, "permanent financing" may consist of a post-construction loan with a five (5) to seven (7) year fully amortizing term (although it may have a longer amortization schedule) , with payment of principal and interest on terms and conditions reasonably acceptable to the Agency. b. Any and all financing for the development of the Land shall be obtained from reputable, recognized and well- established financial institutions or lending sources including, but not limited to, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like. Whenever the source of financing for all or any part of the development is from other than the Developer, the Developer shall promptly submit the following to the Agency: 1 . Copies of all construction and/or land purchase financing commitments received by the Developer; and 2 . Proof of acceptance of each such loan commitment by the Developer and proof of payment of all up-front loan commitment fees, if any. C. The Director of the Agency shall approve or disapprove such documents and/or financing commitments or sources within fifteen (15) business days of receipt by the 20 Agency of the documents and information required hereunder; provided, however, that the failure of the Director to disapprove any of the foregoing matters in writing within said fifteen (15) business day period shall be deemed to constitute approval thereof. d. Prior to submitting documents and evidence to the Agency as required by this Section, the Developer shall obtain approval by its lender for the Project and/or the improvements to the Retail Parcel of the transaction as provided in this Agreement. In the event that said lender selected. by the Developer disapproves of the transaction as provided in this Agreement, the Developer shall in good faith use its best efforts to obtain the necessary financing for the Project and/or the improvements to the Retail Parcel, from other. lender or lenders who approve thereof. Section 2 . 18 . Representations And Warranties of the Lggncy. The Agency hereby represents and warrants the following to the Developer for the purpose of inducing the Developer to enter into this Agreement and to consummate the transactions contemplated hereby, all of which shall be true as of the date hereof and as of the date of Close of Escrow of either the Property or the Retail Parcel, and shall survive the Close of Escrow and the conveyance of title to the Property and/or the Retail Parcel, as applicable. (a) The Agency is a duly organized and validly existing Redevelopment Agency created under the laws of the State of California. The Agency has the legal power, right and authority to enter into this Agreement and the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. The Director of the Agency executing this Agreement and the instruments referenced herein on behalf of the Agency hereby represents and warrants that he has the power, right and authority to bind the Agency. (b) The Agency has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (c) This Agreement is, and all agreements, instruments menu and documents to be executed by the Agency pursuant Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Agency and enforceable in accordance with their respective terms . 21 (d) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any agreement, document, instrument or other obligation to which the Agency is a party, or by which the Agency may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Agency or to the Land. (e) There is no claim, action, litigation, arbitration or other proceeding pending or to the best of the Agency' s knowledge, threatened against the Agency which relates to the Land or the transactions contemplated hereby or which could result in the imposition of a lien against the Land. If the Agency receives notice of any claim, litigation or proceeding prior to Close of , Escrow, the Agency shall promptly notify the Developer of the same in writing. (f) The uses and improvements to be constructed on the Property and/or the Retail Parcel, as applicable, in accordance with the Scope of Development attached hereto as Exhibit "B" and incorporated herein by reference, comply with the California Community Redevelopment Law and the use of funds comprising the Agency Contribution for the construction of the Project and/or the improvements on the Retail Parcel, as applicable, as described in the Scope of Development attached hereto is consistent with the provisions of the California Community Redevelopment Law and is not violative thereof. (g) The Agency has no knowledge that the Land is in violation of any federal, state or local law, ordinance or regulation relating to "Hazardous Substances" on, under or about the Land including, but not limited to, soil and ground water condition. The Agency has no knowledge that any third party has used, generated, manufactured, stored or disposed of on, under or about the Land or transported to or from the Land any hazardous materials . "Hazardous Materials" shall mean any flammable, explosives, radioactive materials, hazardous waste or substances, toxic waste or substances and other related materials including, without limitation, any substances defined as or included in the definition of "Hazardous Substances Hazardous waste", "Hazardous Materials" or "Toxic Substances" under any applicable, federal, state or local laws or regulations . (h) To the knowledge of the Agency, the Land is not in violation of, and the Agency has not received any notice of any violation of law, ordinance, regulation order or requirement applicable to the Land including, without limitation, requirements imposed under any recorded covenants, conditions, restrictions, easements or other rights affecting the Land. The Agency has not 22 received any notice from any governmental authority or any private person that the Agency or the Land or any portion thereof is in violation of any governmental or legal requirements. If the Agency receives such a notice prior to the Close of Escrow on either parcel, the Agency shall immediately notify the Developer in writing. The representations and warranties contained in this Section 2 . 18 are true and correct on the date hereof and no representation or warranty made by the Agency or in any statement or exhibit required to be furnished hereunder misstates, omits or shall misstate or omit a fact necessary to make the statement therein not misleading. The Agency shall promptly notify the Developer upon the Agency' s discovery of any fact which would render any representation or warranty in this Agreement untrue,. incorrect or misleading in any respect. The knowledge of the "Agency" shall be the actual knowledge of the following officials of the Agency: Timothy C. Steinhaus, Ronald E. Winkler and Adam Eliason or their replacements . Section 2 . 19 . Representations and Warranties of the Developer. The Developer hereby represents and warrants the following to the Agency for the purpose of inducing the Agency to enter into this Agreement and to consummate the transactions contemplated hereby, all of which shall be true as of the date hereof and as of the date of Close of Escrow as to either parcel and shall survive the Close of Escrow and the conveyance of title to either Parcel hereunder. (a) The Developer is a duly organized and validly existing limited liability company created under the laws of the state of Delaware and has qualified to do business in the State of California. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. (b) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (c) This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this 23 Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms . (d) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Land. The representations and warranties contained in this Section 2 . 19 are true and correct on the date hereof, and no. representation or warranty made by the Developer or in any statement or exhibit required to be furnished hereunder misstates, omits or shall misstate or omit a fact necessary to make the statement therein not misleading. The Developer shall promptly notify the Agency upon the Developer' s discovery of any fact which would render any representation or warranty in this Agreement untrue, incorrect or misleading in any respect. ARTICLE III DEVELOPMENT OF THE LAND Section 3 . 01 . Development by Developer. a. A parcel map will be prepared with respect to the Land, creating not less than three (3) separate legal parcels, which shall be (i) a parcel to be utilized for a multi screen cinema complex (the "Theater Parcel" ) , (ii) a parcel to be utilized for construction of up to 20, 000 square feet of retail and/or restaurants (the "Retail Parcel") and (iii) a parcel which shall consist of areas common to the Theater Parcel and the Retail Parcel (the "Common Area Parcel") . The Retail Parcel may consist of multiple parcels . 1 . The Theater Parcel and the Common Area Parcel comprise the Project as defined in this Agreement. The Theater Parcel, the Common Area Parcel and the Retail Parcel will be transferred in fee to the Developer in accordance with this Agreement, with all structures, underground vaults and underground utilities, if any removed, in a rough grade condition and with adequate utilities to the property line thereof. If any of the existing improvements contain hazardous substances, the Agency shall dispose of such hazardous substances lawfully and at its expense, subject to 24 i t the provisions of Section 3 . 02 .b. The Developer may seek to develop the Retail Parcel and shall be responsible for all costs and financing thereof. The Agency shall bear no cost associated therewith, nor shall it receive any revenues generated thereby. 2 . The Agency shall have the same rights of review and approval of the design of the Retail Parcel as it is accorded with respect to the Project. 3 . Upon completion of development of any portion of the Retail Parcel, the costs of owning, maintaining and insuring the Common Area Parcel shall be paid by the owner (s) of the Theater Parcel and the Retail Parcel in the same ratio as the square footage of completed improvements on the Theater. Parcel bears to the square footage of completed improvements on the Retail Parcel, with said ratio changing as improvements may be added or completed. 4 . The Developer shall be solely responsible for obtaining all required building permits, approvals, variances, conditional use permits or other governmental permits or approvals required for the development of the Project or the Retail Parcel, or the uses contemplated thereon. The tenants of the Retail Parcel shall have the same non-exclusive right as the tenant (s) of the Theater Parcel to utilize the parking provided by the Agency, as well as a non-exclusive right to access to the Common Area Parcel. S. The Developer agrees to develop the Theater Parcel as an approximately eighty thousand (80, 000) square foot multi screen cinema complex and related commercial facility to be occupied by, among others, CinemaStar Luxury Theaters, Inc. , all as more fully described in the Scope of Development set forth in Exhibit "B" attached hereto and incorporated herein by reference, and to develop the Common Area Parcel with appropriate improvements as agreed by the Agency and the Developer. 6. The parties hereto agree that the condition and appearance of the Retail Parcel has a substantial impact on the success of the Project. Accordingly, the Developer agrees that it will, prior to the issuance of a Certificate of Occupancy for the Theatre Parcel, install, construct and maintain landscaping, together with appropriate watering systems, on the Retail Parcel which will compliment and enhance the Project. Said landscaping will be subject to the reasonable approval of the Agency. The Agency will grant the Developer a license for entry on the Retail Parcel and or the work of installing the landscaping. 25 obligation with respect to the landscaping on the Retail Parcel shall commence as of the date of issuance of the Certificate of occupancy for the Theater Parcel and run until the earlier of (i) such time as the Developer no longer has an ownership in the Project; or (ii) such time as the Developer' s right to purchase the Retail Parcel has expired due to a failure to satisfy the conditions precedent set forth in Section 2. 10.c. and d. within the thirty-six (36) month period provided in Section 2 . 07 .c. b. The City' s zoning ordinance including, but not limited to, parking and height requirements, and the City' s building requirements are applicable to the use and development of the Land pursuant to this Agreement. The Developer acknowledges that any change in the plans for development or the use of the Land as set forth in the Scope of Development shall be subject to the City' s zoning ordinance and building requirements . No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City parking, height or other requirements which are applicable to the Land or to the Developer, any successor in interest or tenant of the Developer or any tenant or successor in interest pertaining to the Land, except by modification or variance approved by the City consistent with this Agreement. The Agency shall cooperate with and shall assist the Developer in efforts to obtain modifications or variances from City zoning regulations necessary to develop the Project consistent with this Agreement and, in particular, with the Scope of Development, within forty-five (45) calendar days following written application therefor by the Developer. Any failure by the City either to approve or disapprove any of such modifications or variances within said forty-five (45) calendar day period shall constitute an enforced delay hereunder, and the Schedule of Performance, as defined hereinafter, shall be extended by that period of time beyond said forty-five (45) calendar day period in which the City approves or disapproves such modifications or variances . C. The Scope of Development set forth in Exhibit "B" is hereby approved by the Agency upon its execution of this Agreement. The Project and the Retail Parcel shall be developed and completed in conformance with the approved Scope of Development and any and all other plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Agency. The Agency agrees to approve preliminary and final construction plans and preliminary and final landscaping plans, if reasonably consistent with the approved Scope of Development . 26 t i d. The approval of the Scope of Development by the Agency hereunder shall not be binding upon the City Council or the Planning Commission of the City with respect to any approvals of the Project and the Retail Parcel required by such other bodies. If any revisions of the Scope of Development as approved by the Agency shall be required by another government official, agency, department or bureau having jurisdiction over the development of the Land, the Developer and the Agency shall cooperate in efforts to obtain waivers of such revisions, or to obtain approvals of any such revisions which have been made by the Developer and have thereafter been approved by the Agency. The Agency shall not unreasonably withhold approval of such revisions . e. Notwithstanding any provision to the contrary in, this Agreement, the Developer agrees to accept and comply fully with any and all reasonable conditions of approval applicable to all permits and other governmental actions affecting the Project and/or the Retail Parcel and consistent with this Agreement. f. The Developer shall cause landscaping plans for the Project and the Retail Parcel to be prepared by a licensed landscape architect. The Developer shall prepare and submit to the Agency for its approval, preliminary and final landscaping plans for the Project and the Retail Parcel . These plans shall be prepared, submitted and approved within the times respectively established therefore in the Schedule of Performance as shown on Exhibit "H" attached hereto and incorporated herein by reference and shall be consistent with the Scope of Development . g. The Developer shall prepare and submit development plans, construction drawings and related documents for the development of the Project and the Retail Parcel consistent with the Scope of Development to the City and the Agency for review (including, but not limited to, architectural review of the exterior of structures) ; provided, however, that the Agency shall not have the .right or responsibility to approve development plans, construction drawings or related documents for purposes of the issuance of a building permit or otherwise on behalf of the City, but shall only have the right of review and approval of such plans, drawings and documents for purposes of: (a) architecture and design of structures and the overall development of the Project and/or the Retail Parcel, and (b) conformity of such plans, drawings and documents with the terms and conditions of this Agreement. The development plans, construction drawings and related documents for both the Project and the Retail Parcel shall be submitted in two stages -- preliminary and final drawings (i .e. , working 27 drawings) , plans and specifications. Final drawings, plans and specifications are hereby defined as those which contain sufficient detail necessary to obtain a building permit from the City. Any such items submitted to and approved in writing by the Agency shall not be subject to subsequent disapproval by the Agency, and any such Agency approval shall not be unreasonably withheld. h. During the preparation of all drawings and plans for the Project and/or the Retail Parcel, the Agency Staff and the Developer shall hold regular progress meetings to coordinate the preparation by the Developer, and the submission to and review by the City and the Agency of construction plans and related documents. The Agency Staff and the Developer shall communicate and consult informally as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer to the City and the Agency can receive prompt and speedy consideration. i . The Agency shall have the right of reasonable architectural review and approval of building exteriors and design of the Project and of the Retail Parcel. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Project and the Retail Parcel in order to ensure that they are consistent with this Agreement and with the Scope of Development set forth in Exhibit "B" . j . The Developer shall timely submit to the City for its review and approval any and all plans, drawings and related documents pertinent to the development of the Project and the Retail Parcel, as required by the City. The Agency shall cooperate with and shall assist the Developer in an effort to obtain the approval of any and all development plans, construction drawings and related documents submitted by the Developer to the City consistent with this Agreement within thirty (30) calendar days following the City' s receipt of said plans. Any failure by the City to approve any of such plans or to issue necessary permits for the development of the Property and/or the Retail Parcel, as applicable, within said thirty (30) calendar day period shall constitute an enforced delay hereunder, and the Schedule of Performance shall be extended by that period of time beyond said thirty (30) calendar day period in which the City approves said plans; provided, however, that in the event that the City disapproves of any of such plans, the Developer shall within thirty (30) calendar days after receipt of such disapproval revise and resubmit such plans in accordance with the City' s requirements and in such form and substance so as to obtain the City' s approval thereof. 28 k. The Agency shall in good faith use its best efforts to cause the City to approve in a timely fashion any and all plans, drawings and documents submitted by the Developer hereunder and to cause the City not to impose new conditions inconsistent with: (a) prior plans, drawings and documents approved by the City; or (b) the Scope of Development. 1 . The Agency shall approve any modified or revised plans, drawings and related documents to which reference is made in this Agreement within the times established in the Schedule of Performance as long as such plans, drawings and related documents are generally consistent with the Scope of Development and any other plans which have been approved by the Agency. Upon any disapproval of plans, drawings or related documents, the Agency shall state in writing the, reasons for such disapproval. The Developer, upon receipt of notice of any disapproval, shall promptly revise such disapproved portions of the plans, drawings or related documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements of the Agency in order to obtain the Agency' s approval thereof. The Developer shall resubmit such revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the notice of disapproval and, in any event, no later than thirty (30) calendar days thereafter. The Agency shall approve or disapprove such revised plans, drawings and related documents in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings and related documents initially submitted to the Agency. M. If the Developer desires to make any change in the final construction drawings, plans and specifications and related documents after their approval by the Agency and/or the City, the Developer shall submit the proposed change in writing to the Agency and/or the City for approval . The Agency shall notify the Developer of approval or disapproval thereof in writing within fifteen (15) calendar days after submission to the Agency. This fifteen (15) calendar day period may be extended by mutual consent of the Developer and the Agency. Any such change shall, in any event, be deemed to be approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted by the Agency to the Developer, setting forth in detail the reasons therefor, and such rejection shall be made within said fifteen (15) calendar day period unless extended as permitted herein. The Agency shall use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 3 . 0l .b. hereof. 29 n. The Developer, upon receipt of a notice of disapproval by the Agency and/or the City, may revise such portions of the proposed change in construction drawings, plans and specifications and related documents as are rejected and shall thereafter resubmit such revisions to the Agency and/or the City for approval in the manner provided in Section 3 . 0l .b. hereof. o. The Developer shall have the right during the course of construction to make changes in construction concerning the interior of structures and "minor field changes" without seeking the approval of the Agency; provided, however, that such changes do not affect the type of use to be conducted within all or any portion of a structure. Said "minor field changes" shall be defined as those changes from the approved final construction drawings, plans and specifications which- have no substantial effect on the improvements and are made in order to expedite the work of construction in response to field conditions. Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City' s Building Code requirements governing such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes . " p. The costs of developing the Property and/or the Retail Parcel and of constructing all improvements thereon and adjacent thereto as set forth in the Scope of Development shall be borne by the Developer. It is understood and agreed by the parties that, prior to conveyance of the Property to the Developer, the Agency shall cause the Land to be cleared of structures including foundations, underground vaults and underground utilities, if any, and to be rough graded and shall pay for the costs of those certain off-site improvements described in the Scope of Development as the obligations and responsibility of the Agency to complete hereunder. q. The Developer shall at its expense cause to be prepared, and shall pay any and all fees pertaining to the review and approval thereof by the City, all required construction, planning and other documents reasonably required by governmental bodies pertinent to the development of the Property and/or the Retail Parcel hereunder including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications and design review documents . r. The Developer shall pay for any and all costs as described in the Scope of Development which are attributable to the Developer concerning the design, construction, relocation and securing of permits for utility improvements and connections . The Developer shall obtain any and all 30 necessary approvals prior to the commencement of applicable portions of said construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. S . The Developer shall begin and complete all construction and development and undertake all obligations and responsibilities of the Developer within the times specified in the Schedule of Performance shown in Exhibit "H" attached hereto, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Schedule of Performance shall be subject to revision from time to time as mutually agreed upon in writing by and between the Developer and the Director of the Agency. Any and all deadlines for performance by the parties shall be extended for any times attributable to delays which • are not the fault of the performing party and are caused by the other party, other than periods for review and approval or reasonable disapprovals of plans, drawings and related documents, specifications or applications for permits as provided in this Agreement. The Developer shall obtain, or cause to be obtained, a completion bond or other form of financial guaranty assuring completion of the development of the Project and/or the Retail Parcel, as applicable, which bond or guaranty shall be in an amount, on terms and issued by a guarantor satisfactory to the Agency, and shall run in favor of the Agency or name the Agency as a third party beneficiary. The cost of such bond shall be a Project expense. The filing of a Certificate of Completion shall not serve to release any bond or guaranty given hereunder, which bond or guaranty will only be exonerated or released when all punch-list items are completed. t. Prior to and during the period of construction of the Project and/or the improvements to the Retail Parcel, as applicable, the Developer shall submit to the Agency written progress reports when and as reasonably requested by the Agency but in no event more frequently than every two (2) weeks . The reports shall be in such form and detail as may reasonably be required by the Agency, and shall include a reasonable number of construction photographs taken since the last such report submitted by the Developer. U. Prior to the commencement of construction on the Land, the Developer shall furnish, or shall cause to be furnished, to the Agency duplicate originals or appropriate certificates of public indemnity and liability insurance in the amount of One Million Dollars ($1, 000, 000 . 00) combined single limit, naming the Agency and the City as additional insureds . Said insurance shall cover comprehensive general liability including, but not limited to : contractual 31 liability; acts of subcontractors; premises-operations; explosion, collapse and underground hazards, if applicable; broad form property damage; and personal injury including libel, slander and false arrest. In addition, the Developer shall provide to the Agency adequate proof of comprehensive automobile liability insurance covering owned, non-owned and hired vehicles, combined single limit in the amount of One Million Dollars ($1, 000, 000.00) each occurrence; and proof of workers' compensation insurance. Any and all insurance policies required hereunder shall be obtained from insurance companies admitted in the State of California and rated at least B+ •• XII in Best' s Insurance Guide. All said insurance policies shall provide that they may not be canceled unless the Agency and the City receive written notice of cancellation at least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance obtained by the . Developer hereunder shall be primary to any and all insurance which the Agency and/or City may otherwise carry, including self insurance, which for all purposes of this Agreement shall be separate and apart from the requirements of this Agreement. Any insurance policies governing the Land as obtained by the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance means those insurance policies approved by the Agency Counsel consistent with the foregoing. Any and all insurance required hereunder shall be maintained and kept in force until the Agency has issued the Certificate of Completion for the Property or the Retail Parcel, as applicable. V. The Developer for itself and its successors and assigns agrees that in the construction of the improvements on the Land provided for in this Agreement, the Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin, or ancestry. W. The Developer shall carry out its construction of the improvements on and off the Land in conformity with all applicable laws, including all applicable federal and state labor standards and requirements, and acknowledges that it is required to pay prevailing wages" under applicable statutes . The Agency covenants and agrees likewise to meet the requirements set forth in this Subsection with regard to any and all construction undertaken by the Agency in accordance with this Agreement. X. Before commencement of construction and development of any buildings, structures or other work or improvements upon the Land, the Developer shall, at its own expense, secure or shall cause to be secured, any and all permits which may be required for such construction, development or work by the 32 City or any other governmental agency having jurisdiction thereof. The Agency shall cooperate in good faith with the Developer in the Developer' s efforts to obtain from the City or any other appropriate governmental agency any and all such permits and, upon completion of applicable portions of the Project and/or the Retail Parcel, as applicable, certificates of occupancy. Y- officers, employees, agents or representatives of the Agency and the City shall have the right of reasonable access to the Land, without the payment of charges or fees, during normal construction hours during the period of construction of the Project and/or the improvements to the Retail Parcel, for the purposes of this Agreement including, but not limited to, the inspection of the work being performed in constructing the Project and/or the improvements to the Retail Parcel. Such access and inspection will be undertaken in such a way as not to unreasonably interfere with construction and development activities . Such officers, employees, agents or representatives of the Agency and/or the City shall be those persons who are so identified by the Director. Any and all officers, employees, agents or representatives of the Agency and the City who enter the Property, or after conveyance thereof, the Retail Parcel, pursuant hereto shall identify themselves at the job site office upon their entrance thereon and shall at all times be accompanied by a representative of the Developer; provided, however, that the Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this right of access, other than injury, property damage or liability relating to the negligence of the Developer or its officers, agents or employees . Z . The Agency shall inspect relevant portions of the construction site prior to issuing any written statements reflecting adversely on the Developer' s compliance with the terms and conditions of this Agreement pertaining to construction of the Project and/or the improvements to the Retail Parcel, as applicable . aa. The parties have agreed to a budget for the development and construction of the Project, a copy of which is attached hereto as Exhibit J/, and incorporated herein by reference (the "Project Budget") . In the event that the costs of completing the Project exceed the total amount provided in the Project Budget, the Developer will contribute the first Two Hundred Fifty Thousand Dollars ($250, 000) of such 33 additional costs . Excess Project costs which exceed said amount will be paid by the Developer and the Agency in the ratio that the Developer Contribution bears to the Agency Contribution. Any sums advanced by the Developer under this Section 3 . 0l .aa. will be known as the "Additional Developer Contribution" and any such sums advanced by the Agency shall be known as the "Additional Agency Contribution" . The Additional Developer Contribution and the Additional Agency Contribution, once advanced by the respective party, shall become part of the Developer Contribution or the Agency Contribution, as applicable, and the Party advancing said additional contribution shall be entitled to receive the eight percent (8%) priority return on the Additional Contribution as is applicable to the original Developer Contribution or Agency Contribution, and the Additional Developer Contribution and the Additional Agency Contribution will be similarly reduced- by application of the respective Party' s share of Net Distributable Cash. bb. Notwithstanding any language in this Agreement to the contrary, the parties hereto acknowledge and agree that certain Project costs will be advanced by each of them prior to the transfer to the Developer of title to the Property, for the payment of costs necessarily incurred prior to the transfer (the "'Pretransfer Costs") . Neither party shall be obligated to advance Pretransfer Costs until the final execution and approval of this Agreement, and the execution and delivery of a multi-screen theater facility lease between the Developer and a recognized cinema operator whose identity is subject to the reasonable approval of the Agency. The Developer will advance the first $150, 000 of such Pretransfer Costs . Thereafter, the Pretransfer Costs will be advanced by the parties in the ratio that the Developer Contribution bears to the Agency Contribution, except that the Developer will not be required, prior to title transfer, to advance Pretransfer Costs in excess of the amount of the Developer Contribution, and the Agency will not be required, prior to title transfer, to advance Pretransfer Costs which exceed $400, 000. Pretransfer Costs shall consist only of costs included in the Project Budget and approved by both parties . Any sums advanced by either party as Pretransfer Costs will be credited to the Developer Contribution or the Agency Contribution, as applicable . In the event that, after the advance of any Pretransfer Costs by either party, the title to the Property is not transferred to the Developer as provided herein, each party will bear the loss of Pretransfer Costs advanced by it and shall not be entitled to any reimbursement by or offset against the other party, except in the case where the Property is not transferred due to the default of a party hereunder, in which case the non-defaulting party shall be entitled, in addition to any other claims against the defaulting party, to 34 recover the Pretransfer Costs advanced by it from the defaulting party. Providing that the Agency has not committed a material breach of this Agreement, any plans, designs, specifications, studies, reports or other work product created as a result of the advance of Pretransfer Costs by either party shall be the property of the Agency. CC. Prior to the transfer to the Developer of title to the Property, the Developer shall, by the fifth day of each month, submit to the Agency a draw request, together with copies of bills, invoices or other evidence reasonably satisfactory to the Agency, establishing Pretransfer Costs incurred in the preceding month and a request for that portion of said Pretransfer Costs which are the responsibility of the Agency under Section 3 . Ol .bb. above . The Agency and the Developer shall each pay that portion of the Pretransfer Costs. agreed to be paid by such party in Section 3 . O1 .bb. above as set out in each draw request within fifteen (15) days of receipt of said draw request by the Agency. The Agency may require, as a condition precedent to its payment of Pretransfer Costs, reasonable assurances as to the non- existence or payment of liens against the Project related to the Pretransfer Costs being paid and of payment to those persons entitled thereto of any Pretransfer Costs previously advanced. dd. The Project Budget will provide for a fee to the Developer for its services in developing the Project . The total allocated to such services will not exceed $350, 000 . Such fee may be drawn in such amounts and at such times as the parties may agree, but in all events, Developer shall have the right to draw upon the fee no later than the issuance of the Certificate of Occupancy. ee. The line items set forth in the Project Budget may be revised, deleted, increased or decreased by the Developer, with the written consent of the Agency, so as to adjust to changing circumstances, provided that (i) the total amount of the Project Budget may not be increased without the written consent of the Agency and (ii) no increase in the development fee payable to the Developer may occur. Any cost reimbursement received from a construction loan or other source shall be deposited in the Project Account, as defined below, and utilized for Project costs . Notwithstanding any language in this Section 3 . O1 .ee. to the contrary, the Project Budget may increase up to a maximum of $250, 000 without the consent of the Agency, with said increase being paid as provided in Section 3 . O1 . aa. above . gg. If the Project is completed at a total cost of less than the Project Budget, the amount of savings generated 35 ,�t thereby will be applied to reduce the principal amount of the permanent financing which is secured by the first trust deed. hh. Upon transfer of title to the Property to the Developer, the Developer shall place the Developer Contribution in an account opened with the holder of the first trust deed or other responsible financial institution acceptable to the parties (the "Project Account") . At such time, the Agency will likewise deposit the proceeds of the Agency Loan and the Agency Contribution in the Project Account. Deposit of the Agency Loan is subject to federal regulations. The Agency will receive a credit to the Agency Contribution in the amount of any Pretransfer Costs advanced by the Agency. Disbursements will be made from the Project Account by the holder thereof in accordance with the Project Budget and instructions on which the parties shall agree, and• in accordance with subsection 3 . 0l .bb. above. ii. The Agency agrees that it will enter into a license agreement, on terms acceptable to the parties, which will permit the Developer access to those portions of the Land not conveyed to the Developer, as is reasonable given the use and condition of such portions at the time, or to such areas thereof as are available, with such access for the purposes of facilitating grading and development of the Property conveyed to the Developer. Section 3 . 02 . Responsibilities of the Agency. a. The Agency, without any expense of the Developer therefor and without the creation of assessments or claims against the Land as a result thereof, shall perform the work specified for the Agency to perform and shall assume the other obligations imposed on the Agency as set forth in the Scope of Development. b. The Agency will, at Agency expense, cause the preparation of a Phase I environmental assessment of the Land, and will provide the Developer with a copy of same. The Agency, at Agency expense, will undertake such remediation of any environmental condition discovered on the Land in such a way and to the extent necessary to receive approval thereof by any governmental agency having jurisdiction thereof. The Agency reserves the right to withdraw from this Agreement and terminate all of its obligations hereunder if it determines in its sole discretion that the cost of remediation is excessive or that any environmental condition precludes the effective development of the Project and/or the Retail Parcel as contemplated in this Agreement. The Agency agrees that it will cause the engineer/consultant who prepares any environmental assessment of the Property and/or the Retail Parcel to issue 36 its certification in the name of both the Agency and the Developer. Any incremental cost associated with naming the Developer in such certification shall be at the expense of the Developer, except that the Developer shall have the option of choosing not to be named in the Certification if it so elects, in which case it shall bear no responsibility for the costs of any such assessment. C. The Agency agrees that it will provide approximately 1, 700 non-exclusive peak hour parking spaces for the use of patrons and employees of tenants of the Project and the Retail Parcel. The parties agree that they will enter into an agreement setting forth the terms and conditions pertaining to such parking (the "Parking Agreement") , which will include, among other things, provisions as follows: (i) parking will be free to the patrons and employees of tenants of the Project. and the Retail Parcel, or may be validated, as applicable; (ii) the tenants of the Project and the Retail Parcel will pay to the Developer, and the Developer will pay to the Agency, an annual charge for parking, calculated on the square footage of completed improvements occupied by each tenant at the rate of $ . 75 per square foot, with annual increases equivalent to increases in the Consumer Price Index; (iii) the parking spaces provided by the Agency may include public curbside parking; (iv) parking will be off-site and within a radius of 1, 600 feet from the center point of the Land; (v) the Agency obligation under this Section 3 . 02 .c. as to duration and location shall be as further defined in the Parking Agreement, except that the number of parking spaces to be provided is subject to reasonable reduction if the use of the Property and/or the Retail Parcel changes so as to require less parking under applicable City codes; (vi) the Agency may substitute alternative parking for the parking originally specified in the Parking Agreement, providing the alternative parking is within the radius from the center point of the Land as provided above; and (vii) the Agency obligation under the Parking Agreement shall be relieved, at the Agency' s option, as to any tenant of the Project or Retail Parcel which is engaged in any business related to sexually oriented adult only entertainment, or any business which is not in accordance with applicable City codes . Section 3 . 03 . Taxes Assessments Encumbranca and Li n . The Developer shall pay prior to delinquency all real property taxes and assessments assessed and levied on or against the Property and/or the Retail Parcel subsequent to the close of the escrow and the conveyance to the D Pr hereunder. o The Property or the Retail Parcel, as app licab e Developer shall not place and shall not allow to be placed on the 37 Property or the Retail Parcel any mortgage, trust deed, deed of trust, encumbrance or lien not otherwise authorized by this Agreement. The Developer shall remove, or shall have removed, any levy or attachment made on the Property or the Retail Parcel, or shall assure the satisfaction thereof, within a reasonable time but in any event prior to a sale thereof. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amounts of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect thereto. The covenants of the Developer set forth in this Section relating to the placement of any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien, shall remain in effect only until all Certificates of Completion have been recorded with respect to the Property or the Retail Parcel, as applicable. Section 3 . 04 . In Lieu Tax Payments/Tax Appeals . In the event the Developer fails to develop the Property and/or the Retail Parcel in accordance with the terms and provisions of this Agreement, and in the time provided and in the further event that such failure is not excused under the terms of this Agreement, the Developer shall pay to the Agency an in lieu tax payment in the amount equal to the tax increment which the Agency would have received on the Project, and/or the Retail Parcel, as applicable, had the Project and/or the Retail Parcel been constructed as agreed herein. Said payment shall be made for each tax year during which the Project and/or the Retail Parcel is not completed in violation of this Agreement, or any portion of such year, and shall be paid to the Agency at the same time as other regularly assessed property taxes on the Property and/or the Retail Parcel are due. Neither the Developer nor its successors or assigns shall institute, file or participate in any property tax assessed valuation appeals or challenges related to the Property and/or the Retail Parcel or any portion thereof .without the prior written consent of the Agency. Notwithstanding anything herein to the contrary, this paragraph shall only apply to those portions of the Land which Developer takes fee title to. section 3 . 05. Prohibition Against Transfer. a. Prior to the recordation of all Certificates of Completion with respect to the Property and/or the Retail Parcel, as applicable, as set forth in Section 3 . 09 of this Agreement, the Developer shall not, without prior written approval of the Agency, or except as permitted by this Agreement, (i) assign or attempt to assign this Agreement or any right herein or (ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of the whole or any part of the Property and/or the Retail Parcel, as applicable, or the improvements thereon. This prohibition shall not apply to any of the following: (i) the reasonable 38 grant of limited easements or permits to facilitate the development of the Property and/or the Retail Parcel, as applicable; or (ii) leases, other than ground leases, to prospective tenants whose use of the Property and/or the Retail Parcel, as applicable, is in conformity with the Community Redevelopment Law and all applicable zoning laws or ordinances. b. It is understood and agreed by the Developer that neither the Developer, nor its assigns or successors in interest to the Property or the Retail Parcel or this Agreement, shall use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property or the Retail Parcel or any portion of either to any entity or party, or for any use of the Property or the Retail Parcel, that is partially or wholly exempt from the payment of real property- taxes pertinent to the Property or the Retail Parcel, or any portion thereof, or which would cause the exemption of the payment of all or any portion of such real property taxes . C. In the absence of specific written agreement or approval by the Agency, no unauthorized sale, transfer, conveyance, lease, leaseback or assignment of the Property or the Retail Parcel shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. d. With respect to the Retail Parcel, the Agency will permit the transfer of the Developer' s rights hereunder prior to the recordation of a Certificate of Completion with respect to said parcel, on the condition that: (i) the proposed transferee has the demonstrated ability, experience and financial resources to complete the development of the Retail Parcel under the terms of this Agreement; (ii) the Developer is not in material default of any provision of this Agreement or any exhibit hereto; and (iii) the proposed transferee assumes in writing all of the obligations of the Developer with respect to the Retail Parcel under this Agreement or any exhibits hereto, as well as the deed of trust in favor the Agency recorded against the Retail Parcel . Section 3 . 06. Right of First Offer. a. The rights provided for under this Section 3 . 06 may not be exercised by the Developer until three (3) years have expired following the issuance of a Certificate of Completion covering the Project, and until said period has elapsed, the Developer may not sell the Project . At any time thereafter, if the Developer desires to sell the Project, and prior to listing the Project for sale with a broker, the Developer shall first give a Sale Notice to the Agency which Sale Notice shall include the price and other material terms and 39 f conditions on which the Project would be sold. The Sale Notice shall provide that the purchase price shall be payable by cash consideration rather than for property or any other asset. It may, however, provide that the sale of the Project shall be subject to, or with the buyer assuming, the existing First Trust Deed financing and the Agency Loan. b. The Agency shall have thirty (30) days from receipt of the Sale Notice to give a Purchase Notice to the Developer stating that the Agency shall purchase the interest of the Developer at the Interest Sale Price. The Interest Sale Price means the net amount that would be received by the Developer for its interest in the Project if the Project were sold to an outside third party at the Sale Notice price and terms and the proceeds of sale were distributed to the Developer and the Agency in accordance with the terms and provisions of this. Agreement. The Purchase Notice shall (i) not be effective unless it is accompanied by a deposit ("Deposit") of three percent (3%) of the Interest Sale Price, and (ii) state a closing date ("Closing Date") of the sale and purchase of the Developer' s interest, which shall be not less than ten (10) days nor more than sixty (60) days from the date of the Purchase Notice. On or before the Closing Date set forth in the Purchase Notice, the Developer shall execute all documents and make all payments required to transfer the Developer' s interest to the Agency upon the terms and provisions set forth in the Sale Notice and Purchase Notice. C. If the Agency does not give the Developer a Purchase Notice within the thirty (30) day period set forth in Section 3 . 06.b. above, or fails to close the escrow as specified, then the Developer may cause the Project to be sold at any time within two hundred seventy (270) days after the expiration of the thirty (30) day period referred to above, or after the Closing Date (as applicable) at a sale price which is not less than ninety-five percent (95%) of the price stated in the Sale Notice and on other terms which are not more favorable to the buyer than the terms proposed in the Sale Notice. Any such sale must provide for payment in full to the Agency of all the sums owed to it with respect to the Agency Contribution, unless the Agency agrees otherwise in writing, and at its sole discretion. If the sale of the Project is consummated within said two hundred seventy (270) day period, then the Agency shall execute all documents necessary or desirable in order to evidence or document the sale of the Project . In connection with the Developer' s efforts to sell the Project on the terms and conditions set forth herein, the Developer may cause the Project to be marketed for sale. with a licensed reputable real estate broker at the price and on the terms and conditions set forth in the Sale Notice . The proceeds of the sale of the Project after deduction of all 40 brokerage commissions, sales expenses and liabilities, shall be distributed promptly to the Agency and the Developer in accordance with the terms and provisions of this Agreement relating to the sale of the Project. In determining whether the terms of a sale to a third party are more favorable than the terms set forth in the Sale Notice, the Developer shall take into account the fact that no commission would be payable on a sale to the Agency, resulting in a lower cost of sale and a higher distribution to the Developer. If the sale of the Project is not consummated within said two hundred seventy (270) day period on the terms and conditions set forth herein, then the Developer shall no longer have the right to cause the Agency to agree to the sale of the Project pursuant to this Section 3.06 and shall further be precluded from delivering a Sale Notice to the Agency for a period of one (1) year following the expiration of said two hundred seventy (270) day , period. d. The Agency' s purchase of the Developer' s interest shall be on reasonable terms and conditions as is customary in transactions of a similar nature, including, without limitation, title review, environmental issues, and the like. e. This Right of First Offer shall run with the land and be binding on all successors or assigns of the Developer, unless and until the Agency Contribution has been paid in full, at which time the Right of First Offer shall terminate. Section 3 . 07 . Security Financing; Right of Holders . a. Notwithstanding any provision set forth in Section 3 . 08 hereof to the contrary, mortgages, deeds of trust, or any other form of lien required for any reasonable method of financing are permitted against either the Property or the Retail Parcel before the recordation of the Certificate of Completion (referred to in Section 3 . 09 of this Agreement) , but only for the purpose of securing loans of funds to be used for expenditures necessary and appropriate to develop the Property and/or the Retail Parcel, as applicable, under this Agreement. The Developer shall notify the Agency in writing in advance of any mortgage, deed .of trust, or other form of lien for financing if the Developer proposes to enter into the same before the recordation of the Certificate of Completion. The Developer shall not enter into any such conveyance for financing without prior written approval of the Agency, which approval the Agency agrees to grant if any such conveyance is given to a responsible financial or lending institution including, without limitation, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like, or other acceptable persons or entities . Such lender shall be deemed approved 41 unless rejected in writing by the Agency. within seven (7) calendar days following its receipt of notice from the Developer, subject to written extension or shortening of time signed by both parties . Any lender approved by the Agency pursuant to this Section shall not be bound by any amendment, implementation agreement or modification to this Agreement occurring after recordation of said lender' s lien. b. In any event, the Developer shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien on either the Property or the Retail Parcel that has been created or attached thereto prior to recordation of the Certificate of Completion on the Property or the Retail Parcel, as applicable, whether by voluntary act of the Developer or otherwise; provided, however, that no notice of filing of preliminary notices or- mechanic' s liens need be given by the Developer to the Agency prior to suit being filed to foreclose such mechanic' s lien. C. The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate acquisition, construction and land development. The Agency agrees to make such amendments regarding the rights of any lender as the approved lender shall reasonably require. d. The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete the improvements or to guaranty such construction or completion; nor shall any covenant or any other provision in the grant deed for the Property or the Retail Parcel be construed so to obligate such holder. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or the Retail. Parcel to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. e. Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in the completion of construction of the improvements, or any breach or default of any other obligations which might entitle the Agency to terminate this Agreement or exercise its right to re-enter under Section 5.07 hereof, the Agency shall at the same time deliver to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, to commence the cure or remedy of any such default and 42 r�'f to diligently and continuously proceed with such cure or remedy, within ninety (90) calendar days after the receipt of the notice; and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such holder upon obtaining possession, such holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within sixty (60) calendar days after obtaining possession; provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within such sixty (60) calendar day period, such holder shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or- continue the construction or completion of the improvements (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer' s obligations by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates and must submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations . Any such holder completing such improvements in accordance herewith shall be entitled, upon written request made to the Agency, to be issued a Certificate of Completion by the Agency. f. In any case where, one hundred twenty (120) calendar days after default by the Developer in the completion of construction of improvements under this Agreement, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Property and/or the Retail Parcel or any portion thereof has not exercised the option to construct the applicable portions of the Project or the improvements on the Retail Parcel, or has exercised the option but has not proceeded diligently and continuously with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between holder and the Developer. If the ownership of the Property and/or the Retail Parcel, as applicable, has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: 43 --l 1 . The unpaid mortgage, deed of trust or other security interest debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between the holder and the Developer, at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings . ) 2 . All expenses, if any, incurred by the holder with respect to foreclosure. 3 . The net expenses, if any (exclusive of general overhead) , incurred by the holder as a direct - result of the subsequent ownership or management of the Property and/or the Retail Parcel, as applicable, such as insurance premiums and real estate taxes . 4 . The cost of any improvements made by such holder. 5. An amount equivalent to the interest that would have accrued on the aggregate on such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. 6. After expiration of the aforesaid one hundred twenty (120) calendar day period, the holder of any mortgage, deed of trust or other security affected by the option created by this Section, may demand, in writing, that the Agency act pursuant to the option granted in Section 3 . 07 . f. If the Agency fails to exercise the right therein granted within ninety (90) calendar days from the date of such written demand, the Agency shall be conclusively deemed to have waived such right of purchase of the applicable portion of the Property and/or the Retail Parcel or the mortgage, deed of trust or other security interest. g. In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Property and/or the Retail Parcel (or any portion thereof) prior to the issuance of a Certificate of Completion for the applicable portion or portions of the Property and/or the Retail Parcel, and the holder has not exercised its option to complete the development, the Agency may cure the default prior to completion of any foreclosure. 44 i` In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien upon the Property and/or the Retail Parcel, as applicable (or any portion thereof) to the extent of such costs and disbursements . Any such lien shall be subordinate and subject to mortgages, deeds of trust or other security instruments executed for the sole purpose of obtaining funds to develop the Property and/or the Retail Parcel, as applicable, as authorized herein. h. If any lender making a loan to the Developer, in accordance with the terms of this Agreement, shall request changes to the provisions of this Section 3 . 07 which do not substantially affect the Agency' s rights hereunder, the Agency agrees that it will make reasonable modifications hereof. Section 3 . 08 . Right of the Agency to Satisfy Other Liens on the Land after Conveyance of Title After the conveyance of title to the Property and/or the Retail Parcel, as applicable, by the Agency to the Developer and prior to the recordation of the Certificate of Completion (referred to in Section 3. 09 of this Agreement) , and after the Developer has had a reasonable time to challenge, cure or satisfy any unauthorized liens or encumbrances on the Property and/or the Retail Parcel, as applicable, the Agency shall after sixty (60) calendar days prior written notice to the Developer have the right to satisfy any such liens or encumbrances; provided, however, that nothing in this Agreement shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Property or the Retail Parcel, or any portion thereof, to forfeiture or sale. Section 3 . 09. Certificate of Completion. a. Following the written request therefor by the Developer and the completion of construction and development of the improvements, excluding any normal and customary tenant improvements and reasonable building "punch-list" items, to be completed by the Developer for the Project or the Retail Parcel, the Agency shall furnish the Developer with a Certificate of Completion for the Project or the Retail Parcel, as is applicable, substantially in the form in Exhibit "I" attached hereto. Notwithstanding any provision set forth herein to the contrary, the completion of construction and development of improvements for the Project or the Retail Parcel, as applicable, shall be deemed to include the 45 completion of construction and development of any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the building and its use and occupancy for the Project or the Retail Parcel, as applicable. b. The Agency shall not unreasonably withhold the issuance of either such Certificate of Completion. The Certificate of Completion shall be, and shall state that it is, a conclusive determination of satisfactory completion of all of the obligations of this Agreement with respect to the development of the Project or the Retail Parcel, as applicable. After the recordation of the Certificate of Completion, any .party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Project or the Retail Parcel, as applicable, shall not (because of such , ownership, purchase, lease or acquisition) incur, any obligation or liability under this Agreement, except that such party shall be bound by any covenants contained in the grant deed, lease or other instrument of transfer which grant deed, lease or other instrument of transfer shall include the provisions of Section 4 . 01 through 4 . 05, inclusive, of this Agreement. Neither the Agency nor any other person, after the recordation of the Certificate of Completion, shall have any rights remedies or controls that it would otherwise have or be entitled to exercise under this Agreement with respect to the Project or the Retail Parcel, as applicable, as a result of a default in or breach of any provision of this Agreement, and the respective rights and obligations of the parties shall be limited to those set forth in the grant deed. C. The Certificates of Completion shall be in such form as to permit them to be recorded in the Recorder' s Office of the County where the Property is located. d. If the Agency refuses or fails to furnish a Certificate of Completion for either the Project or the Retail Parcel after written request from the Developer, the Agency shall, within fifteen (15) calendar days of the written request or within three (3) calendar days after the next regular meeting of the Agency, whichever date occurs later, provide to the Developer a written statement setting forth the reasons with respect to the Agency' s refusal or failure to furnish a Certificate of Completion. The statement shall also contain the Agency' s opinion of the action the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other reasonable building "punch-list" items, the Agency will issue its Certificate of Completion upon the posting of a bond or 46 .f irrevocable letter of credit, reasonably approved as to form and substance by the Agency Counsel and obtained by the Developer in an amount representing a fair value of the work not yet completed as reasonably determined by the Agency. If the Agency shall have failed to provide such written statement within the foregoing period, the Developer shall be deemed conclusively and without further action of the Agency to have satisfied the requirements of this Agreement with respect to the applicable portion of the Property as if a Certificate of Completion had been issued therefor. Notwithstanding any language in this Agreement or in a Certificate of Completion to the contrary, the issuance of a Certificate of Completion does not relieve the Developer from the obligation to complete, free of liens against the Property or the Retail Parcel, as applicable, any such remaining works of improvement. e. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements described herein, or any part thereof. Such Certificate of Completion shall not be deemed to constitute a notice of completion as referred to in Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants or conditions subsequent contained in the Grant Deed attached hereto as Exhibit "G". . f. As a condition precedent to the issuance of any Certificate of Completion, the Developer will create conditions, covenants and restrictions ("CCR' s") which will be recorded against the Property and/or the Retail Parcel, as applicable, and run with the land, requiring the owner of each parcel of the Property and/or the Retail Parcel, as applicable, to maintain its portion thereof. The CCR' s will be subject to the reasonable prior written approval of the Agency, and will designate the City and the Agency as third party beneficiaries of the CCR' s . The CCR' s shall provide that the Developer and its successors and assigns shall maintain in good condition the improvements on the Property and/or the Retail Parcel, as applicable, shall keep the Property and/or the Retail Parcel, as applicable, free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping required to be planted in accordance with the Scope of Development. In the event the Developer, or its successors or assigns, fails to perform the maintenance as required herein, the Agency and/or the City shall have the right, but not the obligation, to enter the Property and/or the Retail Parcel, as applicable, and undertake such maintenance activities . In 47 J t` such event, the Developer shall reimburse the Agency and/or city for all reasonable sums incurred by it for such maintenance activities . ARTICLE IV JJSE OF THE LAND Section 4 . 01 . Uses . The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Property, or any part thereof, that upon completion of construction, Developer shall lease to tenants and the tenants shall cause to be opened on the Theater Parcel a fully fixtured. multi screen cinema complex and related common areas . The Developer covenants and agrees for itself, its successors, assigns and every successor in interest to the Retail Parcel, or any part thereof, that it will develop the Retail Parcel for commercial uses as provided in this Agreement, and will, upon completion of the improvements thereon, lease to tenants who shall operate retail businesses consistent with this Agreement. It is understood and agreed by the Developer that neither the Developer, nor its assigns or successors in interest to the Property and/or the Retail Parcel, or any portion thereof, or this Agreement, shall use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate any portion thereof to any entity or party, or for any use of the Property and/or the Retail Parcel, that is partially or wholly exempt from the payment of real property taxes pertinent thereto, or which would cause the exemption of the payment of all or any portion of such real property taxes . Section 4 . 02 . Reserved. Section 4 . 03 . Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or the Retail Parcel, as applicable, or any part thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or the Retail Parcel, as applicable; nor shall the Developer, itself or any person claiming under or through 48 c-°1 it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the Property or the Retail Parcel, as applicable. Section 4 . 04 . Form of Nondiscrimination and Nonseareaation Clauses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property or the Retail Parcel, as applicable, or any part thereof,. that the Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property or the Retail Parcel, as applicable (or any part thereof) on the basis of sex,- marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses : a. In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. " b. In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions : That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sublessee, subtenants, or vendees in the premises herein leased. " 49 c. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the premises herein transferred. " The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. Section 4 . 05. Effect and Duration of Covenants. The covenants established against discrimination shall remain in effect in perpetuity. The covenants respecting uses of the Property and/or the Retail Parcel shall remain in effect for a period of ten (10) years from the date of execution of this Agreement, shall run with the land and shall constitute equitable servitudes thereon, and shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, and the City. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land for and in its own rights and for the purposes of protecting the interests of the community. The Agency shall have the right, if such covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or such other proper proceedings to enforce the curing of such breaches to which it or any other beneficiary of such covenants may be entitled, including, without limitation, to specific performance, damages and injunctive relief. The Agency shall have the right to assign all of its rights and benefits hereunder to the City. ARTICLE V DEFAULTS, REMEDIES AND TERMINATION Section 5. 01 . Defaults - General . a. Subject to the extensions of time set forth in Section 6 . 05 hereof, failure or unexcused delay by either party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) calendar 50 i days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits) , such party shall not be deemed . to be in default hereunder. b. The injured party shall give written notice of default to the party in default, specifying the default complained of by the nondefaulting party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Any failure or delays by either party in asserting any of its rights and remedies as to any default shall not• operate as a waiver of any default or of any such rights or remedies . Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies . Section 5 . 02 . Legal Actions . a. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy T any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement . Such legal actions must be instituted in the Superior Court of the County of San Bernardino, State of California, in any other appropriate court in that County, or in the Federal District Court in the Eastern District of California. b. The laws of the State of California shall govern the interpretation and enforcement of this Agreement . C. In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Director or Chairman of the Agency, or in such other manner as may be provided by law. d. In the event that any legal action is commenced by the Agency against the Developer, service of process shall be by personal service on the Developer (or such other Agent for service of process and at such address as may be specified in written notice to the Agency) , or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. 51 Section 5. 03 . Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Section 5. 04 . Damaaes . If either party defaults with regard to any provision of this Agreement, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the defaulting party does not diligently commence to cure such default within thirty (30) calendar days after service of the notice of default and promptly complete the cure of such default within a reasonable time, not to exceed ninety (90) calendar days (or such shorter period as may otherwise be specified in this Agreement for any specific default) , after the service of written notice of such default, the defaulting party shall be liable to the other party for damages caused by such default. Section 5. 05. Specific Performance. If either party defaults under any of the provisions of this Agreement, the nondefaulting party shall serve written notice of such default upon such defaulting party. If the defaulting party does not commence to cure the default and diligently and continuously proceed with such cure within thirty (30) calendar days after service of the notice of default, and such default is not cured within a reasonable time thereafter (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits) , the nondefaulting party, at its option, may institute an action for specific performance of the terms of this Agreement, except as otherwise provided in Section 5. 04 hereof. Section 5. 06. Rights and Remedies of Termination. a. Termination by the Developer. The Developer may terminate this Agreement as to the Property and/or the Retail Parcel, as applicable, if the Agency does not tender conveyance of title to and possession of the Property and/or the Retail Parcel, as applicable, to the Developer in the manner and condition and by the date provided in this Agreement (or any and all extensions thereof as authorized by this Agreement) , and if any such failure is not cured within thirty (30) calendar days after written demand therefor submitted by the 52 Developer to the Agency. Such written demand shall specify the Agency' s default and the action required to cure same. The Developer may also terminate this Agreement as to the Property and/or the Retail Parcel, as applicable, if one or more of the conditions set forth in Section 2 . 10.b. of this Agreement as to the Property and/or Section 2 . 10.c. as to the Retail Parcel, as applicable, have not been satisfied or otherwise waived by the Developer by the date set for Close of Escrow, such termination to be effective thirty (30) calendar days after receipt by Agency of written notice from the Developer specifying the one or more conditions set forth in Section 2 . 10.b. or 2 . 10.c. , as applicable, which have not been satisfied or waived by Developer. b. Termination by the Agency. 1 . Notwithstanding any provision set forth in this` Agreement to the contrary, upon written notice of default which shall specify the Developer' s default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency' s intent to terminate this Agreement pursuant to this Section as to the Property and/or the Retail Parcel, as applicable, the Agency at its option may terminate this Agreement if following satisfaction of all conditions precedent for conveyance of the Property and/or the Retail Parcel, as applicable, by the Agency to the Developer and at the time the Developer is required to deposit into escrow any funds required by this Agreement to be deposited by the Developer, the Developer fails to deposit such funds . 2 . Subject to written notice of default which shall specify the Developer' s default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency' s intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer, in breach of this Agreement, assigns or attempts to assign this Agreement, or any right therein, or attempts to make any total or partial sale, lease or leaseback, transfer or conveyance of the whole or any part of the Property and/or the Retail Parcel or the improvements to be developed thereon in violation of the terms of this Agreement, and the Developer does not correct such violation within thirty (30) calendar days from the date of receipt of such notice . 53 1 3. Subject to written notice of default, which shall specify the Developer' s default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency' s intent to terminate this Agreement as to either the Property and/or the Retail Parcel, or both, as applicable, pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer: (a) does not within the time limits set forth in this Agreement or as specifically provided in the Schedule of Performance, subject to extensions authorized by this Agreement due to force majeure or otherwise, submit development plans, construction drawings and related documents acceptable to the Planning Department and Building Division of the City for plan check purposes and in order to obtain building permits for the Project and/or the Retail Parcel, as applicable , together with applicable fees therefor, all prepared to the minimum acceptable standards as required by the Planning Department and Building Division of the City for commencement of formal review of such documents and as required by this Agreement, or (b) does not carry out its other responsibilities under this Agreement or in accordance with any modification or variance, precise plan, design review and other environmental or governmental approvals and such default is not cured or the Developer does not commence and diligently and continuously proceed with such cure within thirty (30) calendar days after the date of receipt of written demand therefor from the Agency. 4 . Subject to written notice of default which shall specify the Developer' s default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency' s intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement as to either the Property or the Retail Parcel, or both, as applicable, if upon satisfaction of all conditions precedent and concurrent therefor under this Agreement, the Developer does not take title to the Property or the Retail Parcel, as applicable, under tender of conveyance by the Agency, and such breach is not cured within thirty (30) calendar days after the date of receipt by the Developer of written demand therefor from the Agency. 54 Section 5. 07 . Right to Reenter Repossess, Terminate and Revest. a. The Agency shall, upon thirty (30) calendar days notice to the Developer, which notice shall specify this Section, have the right, at its option, to re-enter and take possession of all or any portion of the Property and/or the Retail Parcel, as applicable, together with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer hereunder, if after conveyance of title, the Developer (or its successors in interest) shall : 1 . Fail to commence construction of all or any portion of the improvements as required by this Agreement for a period of ninety (90) calendar days after written notice to proceed from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled pursuant to Section 6. 05 hereof; or 2 . Abandon or substantially suspend construction of all or any portion of the improvements for a period of ninety (90) calendar days after written notice of such abandonment or suspension from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled to pursuant to Section 6. 05 hereof; or 3 . Assign or attempt to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer, of the Property and/or the Retail Parcel, as applicable, or any part thereof, in violation of this Agreement, and such violation shall not have been cured within thirty (30) calendar days after the date of receipt of written notice thereof from the Agency to the Developer. 4 . Fail to pay the in lieu tax, if applicable, as provided in Section 3. 04 hereof. 5. Transfer title to the Property and/or the Retail Parcel to a tax exempt entity, or otherwise violate Section 3 . 05.b. hereof. b. The thirty (30) calendar day written notice specified in this Section shall . specify that the Agency proposes to take action pursuant to this Section and shall specify which of the Developer' s obligations set forth in Section 5. 07 .a. 1 . through S. have been breached. The Agency shall proceed with its remedy set forth herein only in the 55 event that the Developer continues in default of said obligation(s) for a period of thirty (30) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. C. The right of the Agency to reenter, repossess, terminate, and revest shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: 1 . Any mortgage, deed of trust or other security interest permitted by this Agreement; 2 . Any rights or interests provided in this Agreement for the protection of the holders of such. mortgages, deeds of trust or other security interests; 3 . Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents applicable to the Property and/or the Retail Parcel, as applicable. d. The grant deed or ground lease to any portion of the Property or the Retail Parcel conveyed or leased by the Developer to another party shall contain appropriate references and provisions to give effect to the Agency' s right, as set forth in this Section under specified circumstances prior to the recordation of the Certificate of Completion, to reenter and take possession of such parcel, or any part thereof, with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer. e. Upon the revesting in the Agency of title to the Property and/or the Retail Parcel, or any part thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State law, use its best efforts to resell the Property and/or the Retail Parcel, as applicable, or any part thereof, at fair market value as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligations of making or completing the improvements, or such other improvements in their stead as shall be satisfactory to the Agency and in accordance with the uses 56 r r specified for the Property and/or the Retail Parcel, as applicable, or any part thereof. Upon such resale of the Property, or any part thereof, the proceeds thereof shall be applied: 1 . First, to make any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Property and/or the Retail Parcel, as applicable, or part thereof; next to reimburse the Agency on its own behalf or on behalf of the City for all actual costs and expenses incurred by the Agency and the City, including but not limited to customary and reasonable fees or. salaries to third party personnel engaged in such action (but excluding the Agency' s or the City' s general overhead expense) , in connection with the recapture, management and resale of the Property and/or the Retail Parcel, as applicable, or part thereof; all taxes, assessments and water and sewer charges paid by the City and/or the Agency with respect to the Property and/or the Retail Parcel, as applicable, or part thereof; any amounts otherwise owing to the Agency by the Developer and its successor transferee; and 2 . Second, to the extent that any and all funds which are proceeds from such resale are thereafter available, to reimburse the Developer, or its successor transferee, up to the amount equal to the costs incurred for the development of the Property and/or the Retail Parcel, as applicable, or applicable part thereof, or for the construction of the improvements thereon including, but not limited to, costs of carry, taxes and items set forth in the Developer' s cost statement which shall be submitted to and approved by the Agency. 3 . Any balance remaining after the foregoing application of proceeds shall be retained by the Agency. f. The rights set forth in this Section 5. 07 shall apply to the Property and the Retail Parcel, jointly and separately, as is applicable. g. In the event of the exercise of the rights provided in this Section 5. 07 with respect to any parcel, the Agency may record a Notice of Revesting of Title, executed by the 57 Administrator or Director of the Agency, specifying the parcel or parcels as to which title is revested in the Agency, and may record such a notice as to each parcel as and when allowed under this Agreement. The recordation of a Notice of Revesting of Title shall conclusively revest title in the subject parcel or parcels in the Agency as if the Developer, or its successors or assigns, had executed and delivered to the Agency a grant deed conveying such parcel or parcels. Section 5. 08 . Limitation on Riahts and Remedies After Issuance of Certificate of Completion. After issuance by the Agency of the Certificate of Completion under Section 3 . 09 of this Agreement as to either the Property or the Retail Parcel, the rights and remedies contained in this Article V shall be applicable as to said parcel only with respect to the covenants and agreements contained in Article IV of this Agreement. Section 5 . 09, No Cross-Default. The Agency and Developer hereby acknowledge that this Agreement and all covenants contained herein are made with respect to the Property and the Retail Parcel, severally and not jointly; that all provisions regarding defaults, including but not limited to this Article V, are to be construed solely against the parcel upon which the contractual obligation underlying the default is made, including any default respecting any covenant or agreement to any mortgagor (including the Agency) ; and that a default by Developer respecting the Property shall not be deemed a default with respect to the Retail Parcel, nor shall a default respecting the Retail Parcel be deemed a default with respect to the Property. Accordingly, no mortgage, lien or security interest of any kind may encumber the Land which provides that a default against either the Property or the Retail Parcel singularly shall give such mortgagee, lien holder or secured party the right to declare a default on both the Property and the Retail Parcel . ARTICLE VI GENERAL PROVISIONS Section 6. 01 . Notices Demands and Communications BetWPP71 the Parties . a. Any and all notices, demands or communications submitted by any party to another party pursuant to or as required by this Agreement shall be proper if in writing and dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, 58 I return receipt requested, to the principal office of the Agency and the Developer, as applicable, as designated in Section 1 . 03.a. and Section 1 . 03 .b. hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate as provided in this Section. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail as heretofore provided. b. In addition to the submission of notices, demands or communications to the parties as set forth above, copies of all notices to any party shall also be sent to: (If to Developer) MDA-San Bernardino Associates, L.L.C. 300 Continental Boulevard Suite 360 El Segundo, CA 90245 Attn: Jason Kamm (With copy to) Greenberg, Glusker, Fields, Claman & Machtinger 1900 Avenue of the Stars Suite 2100 Los Angeles, CA 90067 Attn: Stephen Claman, Esq. (If to Agency) Redevelopment Agency of the City of San Bernardino 201 N. "E" Street, 3rd Floor San Bernardino, CA 92401-1507 Attn: Agency Director (With copy to) Sabo & Green, A Professional Corporation 23801 Calabasas Road, Ste. 1015 Calabasas, CA 91302 Attn: Charles R. Green, Esq. Section 6. 02 . Conflict of Interest. No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Agreement and the development of the Land shall participate in any decision relating to the Agreement. The parties represent and warrant that they do not have knowledge of any such conflict of interest. 59 Section 6 . 03 . Warranty Against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. Section 6 . 04 . Nonliability of Agency Officials and Employees . No member, official or employee of the Agency shall be personally liable to the Developer, or any successor in interest, . in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, officer or employee. Section 6 . 05. Enforced Delay: Extension of Time of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of public enemy; epidemics; quarantine restrictions; freight embargoes or lack of transportation; weather- caused delays; inability to secure necessary labor, materials or tools; delays of any contractors, subcontractor or supplier; acts of the other party other than as permitted or required by the terms of this Agreement; acts or failure to act of any public or governmental agency or entity other than as permitted or required by the terms of this Agreement (except that action or failure to act by the City or the Agency shall not extend the time for the Agency to act unless such extension is otherwise expressly authorized herewith unless such action or failure to act is the result of a lawsuit or injunction including by way of illustration, but not limited to, lawsuits pertaining to the adoption of the Agreement, the EIR and any other environmental documentation and procedures, eminent domain, and the like) or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Any extension of time for any such cause hereunder shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) calendar days of the commencement of the cause. Times of performance under this 60 rte_ Agreement may also be extended by mutual agreement in writing by and between the Agency and the Developer. Section 6. 06. Inspection of Books and Records . The Agency shall have the right at all reasonable times at the Agency' s cost and expense to inspect the books and records of the Developer pertaining to the Land and/or the development thereof as necessary for the Agency, in its reasonable discretion, to enforce its rights under this Agreement. Matters discovered by the Agency shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of the Agency hereunder. The Developer shall also have the right at all reasonable times to inspect and audit the books and records of the Agency pertaining to the Land and/or the development thereof as pertinent to the purposes of this Agreement. The rights of inspection and audit provided hereunder shall survive the recordation of any Certificates of Completion and will continue until the Agency has been paid all sums as provided in this Agreement. Section 6 . 07 . Approvals . a. Approvals required of the Agency or the Developer, or any officers, agents or employees of either the Agency or the Developer, shall not be unreasonably withheld and approval or disapproval shall be given within the time set forth in the Schedule of Performance or, if no time is given, within a reasonable time. b. The Director of the Agency is authorized to sign on his own authority amendments to this Agreement which are of routine or technical nature, including minor adjustments to the Schedule of Performance. Section 6. 08 . Real Estate Commissions . The Agency shall not be liable for any real estate commissions, brokerage fees or finder fees which may arise from or related to this Agreement. The Agency represents to Developer that it has not retained or entered into any Agreement with any broker in connection with the sale of the Land or negotiation of this Agreement. Section 6. 09 . Indemnification. The Developer agrees to indemnify and hold the City and the Agency, and their officers, employees and agents, harmless from 61 and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Developer in performing its obligations hereunder. The Agency agrees to indemnify and hold the Developer and its officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Agency in performing its obligations hereunder. Section 6. 10 . Release of Developer from Liability. Notwithstanding any provision herein to the contrary, the Developer shall be relieved of any and all liability for the obligations of the Developer hereunder with regard to the Property or the Retail Parcel, as applicable, when a Certificate of Completion has been issued by the Agency hereunder with respect to said parcel, other than any covenants and obligations provided by the grant deeds by which the Land is conveyed to the Developer hereunder. Section 6. 11 . Attorneys ' Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, seeks the resolution of disputes pursuant to Section 6. 12 hereof, or is made a party to any action or proceeding brought by the Escrow Agent, then as between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit or resolution of disputes pursuant to Section 6. 12 hereof, and not as damages, its reasonable attorneys ' fees as fixed by the Court or other forum for resolution of disputes as set forth in Section 6. 12 hereof, in such action or proceeding or in a separate action or proceeding brought to recover such attorneys ' fees . Section 6 . 12 . Dispute Resolution. Any controversy or dispute arising from or relating to this Agreement shall be heard by a reference pursuant to California Code of Civil Procedure Sections 638 (1) , 640 and 641 through 645. 1, inclusive, by the Court in an action or proceeding to be commenced only in San Bernardino County, California. Upon commencement of any such action or proceeding, the parties hereto shall endeavor to agree upon and have appointed by the Court a retired Superior Court Judge or Court of Appeal Justice from the then current list of retired judges and justices available to serve as referees in San Bernardino County. If the parties are unable to agree upon the referee within five (5) business days after service of the complaint, or the referee selected by the parties is unable or unwilling to serve and the parties cannot agree on an alternate within five (5) business days of notice thereof, then either party may make application to the Court in which the action or proceeding 62 J is pending for the appointment of a judge or justice from said list to serve as the referee. In connection therewith, the parties each shall be entitled to submit the names of three names from said list, each party shall be entitled to strike one name proposed by the other party, and the appointment shall be made from the remaining four names, unless each of them are unwilling or unable to serve, in which case the Court shall exercise its powers under California Code of Civil Procedure Section 640 . The referee shall try any or all of the issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon. The parties shall advance, in equal shares, the fees and expenses of the referee selected pursuant to this Section 6. 12 . However, the referee' s statement of decision shall award the party that, in light of the issues litigated and the referee' s decision on those issues, was the more successful in the reference, all of its actual attorneys' fees reasonably incurred in good faith, all. of its fees and expenses associated with the reference, including, without limitation, any administrative fees, room charges, and referee fees, and those costs allowable in an action at law. Notwithstanding anything contained herein to the contrary, the parties hereto expressly preserve all rights and remedies they may have at law or in equity unless and until a referee is appointed pursuant to this Section 6 . 12, including, without limitation, the right to seek provisional remedies or injunctive relief. Section 6 . 13 . Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns . ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENT Section 7 . 01 . Entire Agreement. a. This Agreement shall be executed in four (4) duplicate originals each of which is deemed to be an original . This Agreement, and the attachments hereto, constitute the entire understanding and Agreement of the parties . b. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property and the development thereof. 63 C. None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with the grant deed conveying title to the Property and/or the Retail Parcel, as applicable, and this Agreement shall continue in full force and effect as to the Property and the Retail Parcel before and after such conveyance until issuance of the Certificate of Completion for the Property or the Retail Parcel, as applicable. d. All waivers of the provisions of this Agreement and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Developer. ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION Section 8 . 01 . Execution and Recordation. a. Following its execution by the Developer and prompt delivery thereafter to the Agency, this Agreement must be approved, executed and delivered by the Agency to the Developer within thirty (30) calendar days after the date of signature by the Developer. In the event that the Agency has not approved, executed and delivered the Agreement to the Developer within the foregoing period, then this Agreement shall be deemed to be of no further force or effect unless the time for such approval, execution and delivery is extended by written notice from the Developer to the Agency. The date of this Agreement shall be the date when the Agreement shall have been approved by the Agency. b. The Developer and the Agency agree to permit recordation of this Agreement or any portion thereof against the Land in the Office of the County Recorder for the County where the Property is located. END OF THIS PAGE - 64 s'1 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. Date: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Chairman (SEAL) By: Secretary APPROVED AS TO ORM: Agency Special Counsel Date: �O- 9' 9� MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P. , a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By. Rex wanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: Stephen Claman Attorneys for Developer (All Signatures Must Be Notarized) SBEO\0001\DDA\METRO.7 65 f STATE OF CALIFORNIA ) COUNTY OF /®5 On before me, (here insert name and title of the officer) , personally appeared personally known to me (Gr preve-' o to be the person(prf whose name e is/ax subscribed to the within instrument and acknowledged to e that he/& y executed the same in his/:% -r authorized capacityl..i:e , and that by his/h e r signature �sf on the instrument the person VI , or the entity upon behalf of which the person �'Z) acted, executed the instrument. WITNESS my hand and official seal . Signature (Seal) COUHN M.RA mly Q Cwn.#1023067 2 c«�� uy Cantu.E�ira Apt•25.1999� 66 ,r i IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. Date: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Chairman (SEAL) By: Secretary APPROVED AS TO FORM: Agency Special Counsel Date: MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P. , a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By: Rex Swanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: 0_&-� i'- "DEBBY//P,. ZUR LW, ESQ. Attorneys for Developer (All Signatures Must Be Notarized) SBEO\0001\DDA\METRO.7 65 i STATE OF CALIFORNIA ) COUNTY OF (-(bS Ay\&-E x ) On ©ck So before me,'- \) S We 1A, (here insert name and title of the officer) , personally appeared personally known to me (or proved to me on thd basis of satisfactory evidence) to be the person(s) whose names) is re sub ribed to the within instrument and ack wledged to me that he/ h /they executed the M'�me in his/K�their authorized capacity(ies) , and that by his/htr_Aheir signature (s) on the instrument the person (s) , or the entity upon behalf of which the person (s) acted, executed the instrument. WITNESS my hand and official seal. SignaturrG,,� (Seal) PAMELA S.VYELTON COMM.*MI 74 i a Notary Public—Califon-Pa D LOS ANGELES COUNTY My comm.Expires FES 19,1997 68 1 H - Ot -iD lb rrap om --- �` Irer•.l �x.� .:�,'�.fix-�r�:�r•' p �_ � �. �•� ,! a,.\ _'.1._:::emu-t��{y p.- ,"7, ; \■ ,p• � 11���� ® sf VA r t- •j-, r.;:- .::CC I � iii:. �1� '• ,r•� ��.� :,.!.:1. � _ M y. °;`iii: ■7 n , ��;,\ .�{.��•? '� �^-r� nt � �j�4�.0.9• �^.:i::: f _`� `. •r: �-, J 9 ax•.a �+ gs t3 5/ � c.3••a a d tm � � es. t�::• ir�e: � E m:: -�_��__,+r���a������s�s���r■■■/t■■I�■■aaa.■■�■■■�tr.lt��■■I'��i �e�,-�:_e �,� - rll/ ■ 11I��I llll� f�l n, iii a•iii q ... ,H';I �I -�=____c ���i'i►■i"' �.■�■M:i1�::��lrw-„!.•. ■N�■w■wf■Y�,i�■r.�rd��ie�;►i:. i- i• ;s•�•o ,�. i Win' , +-� _ ..._ �� r , � ■ ♦..�. .� \•.+�.r■Rr■■■fir[ .�•i•• •. rr •a ', 1 - •- -r f1 t■ � � -tom'" �YZlf ■ oil ,;J w.•r _ a. �5:.. !p +I• a mss. � m .M-y■r_.•w� ..tr_as_��i■"�■�r■_v�■r ��,o,.a EXHIBIT "A-1" AGENCY PARCELS 0134-121-16 0134-121-15 0134-121-17 0134-131-01 0134-131-11 0134-131-02 0134-131-16 0134-131-17 0134-131-04 0134-131-05 A - 2 EXHIBIT "B" SCOPE OF DEVELOPMENT The Property shall be developed as an approximately 80, 000 square foot multi screen cinema complex and the Retail Parcel as a related commercial facility complex consisting of up to 20, 000 square feet of commercial structures, all as described herein. Structures on the Property and/or the Retail Parcel shall generally be located as shown on the Site Plan approved by the City. The Property and the Retail Parcel may be developed in accordance with this Agreement, but subject to the requirements of the zoning ordinance of the City and any variances or modifications therefrom as approved by the City. The Developer shall cause the design and construction of . approximately 5.5 plus/minus acres of the Land as shown in the Site Plan in accordance with the Schedule of Performance (Exhibit "H" ) and this Agreement as follows : The development shall be first class, constructed of quality materials, to City Code, and shall be unified in architectural theme and treatment throughout the Property and the Retail Parcel and adjacent off-site areas, insofar as reasonable and practicable. All improvements to be constructed by the Developer shall be constructed or installed in accordance with the technical specifications, standards and practices of the City and in accordance with plans and specifications approved by the City. The Developer shall cause the proper documents to be filed and fees paid to all governmental or regulatory agencies, including utilities, for applications for all required permits and approvals . The Project and the Retail Parcel shall include parking in accordance with applicable City regulations, pursuant to a parking agreement to be entered into between the Agency and the Developer. The Developer shall design all structures, landscaping and parking areas to achieve a high degree of attractiveness and compatibility with the Property and the Retail Parcel and the area in which they are located. Prior to the conveyance of fee title to the Property or the Retail Parcel, or any part thereof, the Developer shall, at its cost and expense, undertake and complete any and all soils, utility and drainage studies, plans and reports pertinent to the development of the Property or the Retail Parcel and shall provide a copy of said studies and reports to the Agency. B - 1 r EXHIBIT "A-2" REMAINDER PARCELS 0134-121-19 0134-121-20 0134-121-12 0134-131-15 0134-131-06 EXHIBIT "C" AGENCY NOTE (HUD Loan) Final form to be reviewed by Developer and Agency. EXHIBIT "D" DEED OF TRUST (HUD Loan) Final form to be reviewed by Developer and Agency. EXHIBIT "E" PROMISSORY NOTE (Agency Contribution) $1, 324, 575. 00 Date: For value received, MDA-San Bernardino Associates, L.L.C. , a Delaware limited liability company (the "Developer") , hereby promises to pay to the Redevelopment Agency of the City of San Bernardino, (the "Agency") , or order, in United States currency, the principal sum of One Million Three Hundred Twenty Four Thousand Five Hundred Seventy Five Dollars ($1, 324, 575) together with interest thereon from the date hereof, as provided below. 1 . Disposition and Development Agreement. This Promissory Note ("Note") is entered into in connection with and pursuant to that certain Disposition and Development Agreement (the "Agreement") by and between the Agency and the Developer, dated , wherein the Agency agrees to convey to the Developer fee title to certain property described in the Agreement, consisting of the Theater Parcel and the Common Area Parcel (together referred to herein as the "Project") . In the event of a conflict between the provisions of this Note and the Agreement, the provisions of the Agreement will govern. Defined terms used in this Note will have the meanings set forth in the Agreement unless otherwise defined herein. This Note is the "Second Agency Note" as defined in the Agreement. 2 . Security. As security for payment of this Note, the Developer has granted to the Agency a deed of trust on the land and improvements comprising the Project which deed of trust will be subordinate only to a first trust deed for construction and permanent financing in a principal amount not to exceed Three Million Six Hundred Thousand Dollars ($3, 600, 000) , and to a deed of trust in second position securing the Agency Loan. 3 . Participation and Repayment . This is a participation note, wherein principal and interest are repayable solely from (i) participation in the revenues generated by the Project and/or (ii) the proceeds of a sale or refinance of. the Property, and there shall be no personal liability for the payment of this Note or interest accruing hereon. Repayment of principal and interest shall be made as follows : a. The Agency shall receive an Agency Priority Return in the form of contingent interest calculated as eight percent E - 1 i 1 (8%) per annum on the unpaid principal balance of this Note, with interest commencing to accrue as of the date the theater commences operations, but not later than twelve (12) months from the date possession of the Theater Parcel is tendered to the lessee. The Developer shall give the Agency written notice of the date when possession is tendered, simultaneously with the giving of notice to the lessee. The Agency Priority Return and the Developer Priority Return will be paid simultaneously, and will be calculated on and payable out of the Project' s gross revenues . Payments of the Agency Priority Return shall be made in arrears on a monthly basis, within ten (10) days of the end of each calendar month. b. In addition to the Agency Priority Return, the Agency . will receive seventy-five percent (75%) of the Net Distributable Cash, as defined in the Agreement. The portion of Net Distributable Cash paid to the Agency shall reduce the principal amount of this Note. After the principal amount of this Note is paid in full, the Agency will continue to receive seventy-five percent (75%) of the Net Distributable Cash so long as the Developer owns the Project. The Developer shall provide to the Agency monthly property management reports, not later than the twentieth day of the succeeding month, setting forth, at a minimum, all income and expenses, including the Project reserves, related to the Project. All distributions of Net Distributable Cash to either the Agency or the Developer will be made on a monthly basis, and will accompany the monthly property management report for the given month, and will be adjusted as necessary at the end of the fiscal year which applies to the Project. C. In the event that the Project is refinanced so as to generate excess proceeds which are available for distribution, the Agency will receive seventy-five percent (75%) of such proceeds and the Developer will receive twenty-five percent (25%) thereof. Any costs associated with such refinance shall be reasonable and ordinary for such transactions, and shall not include any commission or fee to the Developer. In the event that Project reserves are distributed to the Agency and/or the Developer, such reserves shall be treated as Net Distributable Cash and distributed in accordance with this Note. d. In the event of a sale or transfer of the Project by the Developer, the proceeds of such sale or transfer will be allocated as follows : E - 2 J I (1) First to the payment of the first trust deed in full, unless the loan evidenced thereby is assumed by the purchaser of the Project with the consent of the lender (if required) , in which event any interest or principal or other sums then due but unpaid under said loan shall be paid. (2) Secondly, to the payment in full of the Agency Loan secured by the Agency Trust Deed, unless the loan evidenced thereby is assumed by the purchaser of the Project with the concurrence of HUD and the Agency, in which event any interest or principal installments or other sums due but unpaid under said loan shall be paid. (3) Thirdly, to the payment of the unpaid principal. amount of this Note, and, to the extent necessary, such additional sums as are necessary to cause the Agency to have received not less than an eight percent (8%) per annum return on the principal hereof, as to each portion of the principal hereof advanced by the Agency with said interest to be calculated from the date on which the term of the theater lease on the Theater Parcel commences, through the date of the payment of the Agency Contribution, plus any unpaid interest thereon at eight percent (8%) . (4) Fourth, to the costs of the sale, including commissions, which costs shall be reasonable and ordinary for similar transactions and shall not include any commission or fee for the Developer, and which shall include normal prorations and allocations of income and expenses, including real property taxes . (5) Seventy-five percent (75%) of the remaining proceeds of the sale will be distributed to the Agency and twenty-five percent (25%) will be distributed to the Developer, less reasonable reserves for contingent liabilities, if any. Any such reserves will be thereafter distributed, in the percentages provided in this Section 3 .d. (5) , when the contingent liabilities have been paid or otherwise resolved. 4 . Miscellaneous Provisions . a. The Developer waives notice of non-payment and protest, presentment and notice of dishonor. E - 3 f 1 b. In the event of any legal action with respect to the terms or enforcement of this Note, the prevailing party shall be entitled to an award of its attorney' s fees and costs of suit. C. Notwithstanding any language herein to the contrary, this Note shall become immediately due and payable in the amount of all unpaid principal, together with interest in an amount sufficient to represent an eight percent (8%) return to the Agency as to each portion of the principal hereof advanced by the Agency from the date provided for commencement of interest in Section 3 .a. hereof, upon any transfer in violation of the Agreement of title to the Project described in the Agreement to any person, firm or corporation other than the . Developer and except as provided in said Agreement, whether such transfer of title be voluntary, involuntary, or by operation of law. d. All payments on this Note shall be applied first to the interest due on the Note and then to the principal due on the Note. e. In the event the Developer shall fail to pay the payments when due, and if such failure be subsisting thirty (30) days thereafter, the unpaid principal amount of this Note, together with accrued interest and late charges, shall become due and payable, at the option of the Agency, without notice to the undersigned. Failure of the Agency to exercise such option shall not constitute a waiver of such default. If the payments on this Note are not paid within ten (10) days of the due date, the undersigned shall pay to the Agency a late charge of six percent (6%) on the amount past due and remaining paid. f. Until all sums due under this Note have been paid and the Agency no longer participates in the revenues of the Project, the Agency has the right to inspect and audit the books and records of the Developer related to the Project as necessary to verify the performance of the terms hereof, which inspection or audit will occur at the offices of the Developer on reasonable notice. The Developer agrees to maintain separate books of account for the Project, including a separate account for the Project reserves of one percent (1%) of gross revenues . The rights of the Agency to inspect and audit the Developer' s books and records shall E - 4 survive the recordation of any Certificates of Completion. MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P., a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By: Rex Swanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: Stephen Claman Attorneys for Developer E - 5 EXHIBIT "F" THIRD DEED OF TRUST (Agency Contribution) RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) (Space Above for Recorder' s Use) DEED OF TRUST WITH ASSIGNMENT OF RENTS Deed of trust made on by MDA-San, Bernardino Associates, L.L.C. , a Delaware limited liability company, hereinafter called "Trustor", whose address is 300 Continental Boulevard, Suite 360, El Segundo, California 90245, NORTH AMERICAN TITLE COMPANY, hereinafter referred to as "Trustee", whose business address is 721 South Parker Avenue, Suite 100, Orange, California 92668, in favor of the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, hereinafter referred to as "Beneficiary", whose business address is 201 North "E" Street, Third Floor, San Bernardino, California 92401 . Trustor irrevocably grants, transfers, and assigns to Trustee in trust, with power of sale, all that property, including all easements and rights of way used in connection therewith or as a means of access thereto, in the City of San Bernardino, County of San Bernardino, State of California, described as follows : That certain property located in the City of San Bernardino, County of San Bernardino, State of California, more particularly described as : SEE EXHIBIT "A" HERETO together with the rents, issues and profits thereof, subject however to the right reserved by Trustor in Paragraph B-16 hereof to collect and apply such rents, issues and profits, prior to any default hereunder; for the purpose of securing performance in a timely manner of all of Trustor' s obligations under that certain Promissory Note which was executed in connection with that certain Disposition and Development Agreement by and between Trustor and Beneficiary, dated as of , 1996 (the "DDA") , and any liability, cost or charge incurred or advanced by Beneficiary under said Promissory Note, including principal, interest and/or late charges; and performance of each agreement to Trustor incorporated F - 1 i t herein by reference or contained herein. Upon breach of any obligation or agreement secured hereby after notice and opportunity to cure as provided herein, Beneficiary shall have the right to foreclose upon such breach under this Deed of Trust. Defined terms used in this Deed of Trust shall have the meanings set forth in the DDA, unless otherwise defined herein. A. To protect the security of this Deed of Trust, Trustor agrees: 1 . To maintain the property in good condition and repair; not to remove or demolish any building or improvement thereon; to complete promptly in workmanlike manner any improvement hereafter constructed thereon and to restore promptly in workmanlike manner any improvement thereon that is damaged or destroyed, and to pay when due all costs incurred therefor or in connection therewith; to comply with all laws, ordinances,, regulations, covenants, conditions and restrictions affecting the property; not to commit or permit any waste thereof or any act upon the property in violation of law or of covenants, conditions or restrictions affecting the property. 2 . To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and also, if at any time Beneficiary or Trustee is a party to or appears in any such action or proceeding, or in any action or proceeding to enforce any obligation hereby secured, to pay all cost and expenses paid or incurred by them or either of them in connection therewith, including, but not limited to, cost of evidence of title and attorneys ' fees in a reasonable SUM. 3 . To pay (a) prior to delinquency, all taxes and assessments affecting the property, all assessment upon water company stock, and all rents, assessments and charges for water appurtenant to or used in connection with the property; (b) when due, all encumbrances, charges and liens, with interest, on the property or any part thereof, which appear to be prior or superior hereto; and (c) all costs, fees and expenses of this trust. 4 . If Trustor fails to make any payment or to do any act as herein provided, then Beneficiary or Trustee (but without obligation so to do, and with or without notice to or demand upon Trustor, and without releasing Trustor from any obligation hereof) may (a) make or do the same in such manner and to such extent as either deems necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the property for such purpose; (b) appear in or commence any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest, or compromise any encumbrance, charge or lien that, in the judgment of either, appears to be superior hereto; and in exercising any such power, F - 2 Beneficiary or Trustee may incur necessary expenses, including reasonable attorneys' fees . 5. To pay immediately and without demand all sums expended hereunder by Beneficiary or Trustee, with interest from date of expenditure at the annual rate of five percentage points over Bank of America' s published prime rate. B. It is mutually agreed that: I . Subject and subordinate to the rights of superior trust deed holders, any award of damages made in connection with the condemnation for public use of or injury to the property or any part thereof is hereby assigned and shall be paid to Beneficiary, . who may apply or release such moneys received therefor upon any indebtedness secured hereby in such order as Beneficiary determines, or at the option of Beneficiary the entire amount so received or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 1 . The acceptance by Beneficiary of any payment less than the amount then due shall be deemed an acceptance on account only and shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due or of Beneficiary' s right either to require prompt payment of all sums then due or to declare default. The acceptance of payment of any sum secured hereby after its due date will not waive the right of Beneficiary either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. No waiver of any default shall be a waiver of any preceding or succeeding default of any kind. 2 . At any time upon the occurrence of a default, without liability therefor and with or without notice, upon written request of Beneficiary and presentation of this deed for endorsement, and without affecting the personal liability of any person, Trustee may reconvey any part of the property, consent to the making of any map or plat thereof, join in granting any easement or join in any extension agreement or any agreement subordinating the lien or charge thereof. 3 . Upon written request of Beneficiary, surrender of this deed to Trustee for cancellation and retention, and payment of its fees, Trustee shall reconvey, without warranty the property then held hereunder. The recitals in such reconveyance shall be conclusive proof of the truthfulness thereof. The grantee may be designated in such reconveyance as "the person or persons legally entitled thereto . " F - 3 -f i 4 . Trustor may give such notice to Beneficiary at any time before there is a Trustee's sale of the property. At any time Trustor is in default in payments to be made to Beneficiary hereunder, any amounts paid to and received by Beneficiary for execution of releases pursuant to the terms of this paragraph after notice of default and election to sell has been recorded shall not, unless the requirements of Section 2924c of the Civil Code are fully met by or on behalf of Trustor, waive the right of Beneficiary to continue its plans to have the property sold, nor shall they have any effect on the exercise by Beneficiary of the acceleration privilege contained herein, except to entitle the person effecting such payment to the release of the property for which the release amount was paid, and insofar as Beneficiary is concerned, to constitute a credit against the secured debt. 5. If Trustor or any subsequent owner of the property- covered hereby shall occupy the property, or any part thereof, after any default, Trustor or such owner shall pay to Beneficiary in advance on the first day of each month a reasonable rental for the premises so occupied. On failure to pay such reasonable rental, Trustor or such owner may be removed from the premises by summary dispossession proceedings or by any other appropriate action or proceeding. 6. If default is made in performance of any agreement hereby secured, then Beneficiary, with or without notice to Trustor, may institute suit for the foreclosure of this deed, or by delivering to Trustee a written declaration of default and demand for sale, as well as a written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be filed for record. If such declaration is delivered to .Trustee, Beneficiary shall deposit with Trustee this deed, and all documents evidencing expenditures secured hereby. 7 . After the time then required by law has elapsed after recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, with or without demand on Trustor, shall sell the property at the time and place fixed in the notice of sale, either as a whole or in separate parcels and in such order as Trustee determines, at public auction, to the highest bidder, for cash in lawful money of the United States, payable at the time of sale. Trustee may postpone from time to time sale of all or any portion of the property by public announcement at the time and place of sale originally fixed or at the last preceding postponed time. Trustee shall deliver to the purchaser its deed conveying the property sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Trustor, Trustee, Beneficiary or any other person may purchase at the sale. F - 4 ) 8 . After deducting all costs, fees and expenses of Trustee and of this trust, including cost of evidence of title and reasonable attorneys ' fees in connection with sale, Trustee shall apply the proceeds of sale to payment of (a) all sums expended under the terms hereof and not theretofore repaid, with accrued interest at five percentage points over Bank of America' s published prime rate per annum, and (b) all other sums then secured hereby in such order as Beneficiary, in the exercise of its sole discretion, directs . The remainder, if any, shall be paid to the person or persons legally entitled thereto. 9. Before Trustee's sale, Beneficiary may rescind such notices of default and its election to cause the property to be sold by delivering to Trustee a written notice of rescission, which notice, when recorded, shall cancel any prior declaration of default, demand for sale and acceleration of maturity. The exercise of such a right of rescission shall not constitute a waiver of any default then existing or subsequently occurring, or impair the right of Beneficiary to deliver to Trustee other declarations of default and demands for sale or notices of default and of election to cause the property to be sold, or otherwise affect any provision of the secured note or of this deed or any of the rights, obligations or remedies of Beneficiary or Trustee hereunder. 10. Beneficiary may, from time to time as provided by statute, or by a writing signed and acknowledged by him and recorded in the office of the county recorder of the county in which the land or such party thereof as is then affected by this deed of trust is situated, appoint another trustee in stead and of Trustee herein named; and thereupon, the Trustee herein named shall be discharged, and the trustee so appointed shall be substituted as Trustee hereunder with the same effect as if originally named Trustee herein. 11 . If two or more persons are designated as Trustee herein, any or all powers granted herein to Trustee may be exercised by any of such persons if the other person or persons is unable, for any reason, to act. Any recital of such inability in any instrument executed by any of such persons shall be conclusive against Trustor, his heirs and assigns . 12 . All leases of any structures on the Property which constitute the Project as defined in the DDA, now or hereafter affecting the Property are hereby assigned and transferred to Beneficiary by Trustor. Trustor hereby covenants that none of such leases will be modified or terminated without the written consent of Beneficiary. Beneficiary will, when reasonably requested to do so, provide to tenants, under leases approved by it, agreements of non-disturbance of such tenancy in the event that Beneficiary acquires title to the Property, providing that such tenant attorns F - 5 i in writing to the interests of Beneficiary and pays to Beneficiary the rent and other sums owed under the lease. 13 . If a default is made in the performance of any agreement hereby secured, Trustor when requested to do so, shall give such further written assignments of rents, royalties, issues and profits; of all security for the performance of leases; and of all money payable under any option to purchase, and shall give executed originals of all leases, now or hereafter on or affecting the property. 14 . Trustor reserves the right, prior to any default in payment of any indebtedness or performance of any obligation secured hereby, to collect all such rents, royalties, issues and profits, as but not before they become due. Upon any such default, Trustor' s right to collect such moneys shall cease, not only as to . amounts accruing thereafter, but also as to amounts then accrued and unpaid. In the event of default, Beneficiary, with or without notice and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, or by a receiver to be appointed by the court, (a) may enter upon and take possession of the property at any time and manage and control it in Beneficiary' s discretion, and (b) with or without taking possession, may sue for or otherwise collect the rents, issues and profits thereof, whether past due or coming due thereafter, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys ' fees, upon any obligation secured hereby and in such order as Beneficiary determines . None of the aforesaid acts shall cure or waive any default hereunder or invalidate any act done pursuant to such notice. Beneficiary shall not be required to act diligently in the care or management of the property or in collecting any rents, royalties or other profits that it is hereby authorized to collect, and shall be accountable only for sums actually received. 15. Without affecting the liability of Trustor or of any other party now or hereafter bound by the terms hereof, from time to time and with or without notice, Beneficiary may release any person now or hereafter liable for performance of such obligation, and may extend the time for payment or performance, accept additional security, and alter, substitute or release any security. 16. In any judicial action brought to foreclose this deed or to enforce any right of Beneficiary or of Trustee hereunder, Trustor shall pay to Beneficiary and to Trustee attorneys' fees in a reasonable sum, to be fixed by the court. 17 . No remedy hereby given to Beneficiary or Trustee is exclusive of any other remedy hereunder or under any present or future law. F - 6 18 . The pleading of any statute of limitations as a defense to any and all obligations secured by this deed is hereby waived, to the full extent permissible by law. 19. Trustor shall, upon request made by Beneficiary, furnish the Beneficiary with annual statements covering the operations of the property. 20. Beneficiary may collect a "late charge" not to exceed an amount equal to five percent (5%) on the amount past due and remaining unpaid on any installment that is not paid within ten (10) days from the due date thereof, to cover the extra expense involved in handling delinquent payments . 21 . This deed applies to, inures to the benefit of and binds all parties hereto, their heirs, legatees, devises, administrators, executors, successors, successors in interest, and assigns . The term "Beneficiary" means the owner and holder, including pledgees, of the Agreement secured hereby, whether or not named as Beneficiary herein. In this deed, whenever the context so requires, the masculine gender includes the feminine and neuter, and the singular number includes the plural, and all obligations of each Trustor hereunder are joint and several . 22 . Trustee accepts this trust when this deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee is a party unless brought by Trustee. 23 . Trustor agrees that, so long as Beneficiary has any interest in any income generated on the Site, Beneficiary shall have the right to inspect and audit the books and records of Trustor with respect to the Project, which inspection and audit will take place at the offices of Trustor and on reasonable notice. Trustor covenants to maintain separate books and records for the Project, including a separate account for reserves . Trustor agrees to provide Beneficiary with property management reports setting forth, at a minimum, all income and expenses of the Project, including the Project reserves, on a monthly basis, not later than the fifth day of the succeeding month. 24 . Trustor, and its successors and assigns, shall maintain in good condition the improvements on the Property, shall keep the Property free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping on the Property. In the event Trustor, or its successors or assigns, fails to perform the maintenance as required herein, Beneficiary shall have the right, but not the obligation, F - 7 to enter the Property and undertake such maintenance activities. In such event, Beneficiary shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities . 25. Beneficiary agrees that it will enter into subordination agreements, and execute such other documents which are reasonably required to effect such subordinations, on terms reasonably acceptable to it, with the lenders under any deeds of trust which are in compliance with the provisions of the DDA and are intended by the parties to the DDA to be superior to this Deed of Trust. END OF THIS PAGE - F - 8 i i Trustor requests that a copy of notice of default and of any notice of sale hereunder shall be mailed to him at the address set out opposite his name, immediately below: MAILING ADDRESSES FOR NOTICES: MDA-San Bernardino Associates, L.L.C. as Trustor: 300 Continental Blvd. , Suite 360 E1 Segundo, California 90245 Attn: Jason Kamm Executed at San Bernardino, California, on the date first above written. MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P., a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By: Rex Swanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: Stephen Claman Attorneys for Developer F - 9 EXHIBIT "A" TO DEED OF TRUST LEGAL DESCRIPTION F - 11 EXHIBIT "G" GRANT DEED Recording Requested by: After Recordation, Mail to: Redevelopment Agency of the City of San Bernardino Mail Tax Statements to: GRANT DEED For valuable consideration, the receipt of which is hereby acknowledged, THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, of the State of California (the "Grantor") , pursuant to and in accordance with the Community Redevelopment Law of the State of California, hereby grants to MDA- San Bernardino Associates, L.L.C. , a Delaware limited liability company (the "Grantee") the real property (the "Real Property") legally described in the document attached hereto, labeled Exhibit "A", and incorporated herein by this reference. 1 . The Real Property is conveyed subject to the Disposition and Development Agreement entered into between the Grantor and the Grantee, dated , 1996 (herein referred to as the "Agreement") . The provisions of the Agreement are incorporated herein by this reference and shall be deemed to be a part hereof as if set forth at length herein. 2 . The Grantee covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Real Property, or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Real Property. G - 1 All deeds, leases or contracts made relative to the Real Property, shall contain the following nondiscrimination clauses: (a) In deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. " (b) In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions : i That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, subtenants, sublessees or vendees in the land herein leased. " (c) In contracts : "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. " 3 . No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or G - 2 r security instrument permitted by the Agreement; provided, however, that any successor of Grantee to the Real Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor' s title was acquired by foreclosure, deed in lieu of foreclosure, trustee' s sale or otherwise. 4 . The terms and conditions set forth in Article IV of the Agreement and the covenants otherwise contained in this Grant Deed shall remain in effect for a period of ten (10) years from the date hereof, except that the covenants against discrimination set forth in Article IV of the Agreement shall remain in effect in perpetuity and the covenants set forth in Article III of the Agreement shall remain in effect until they are satisfied in full . 5. The covenants contained in this Grant Deed shall be binding for the benefit of the Grantor and its successors and assigns, and such covenants shall run in favor of the Grantor for the entire period during which such covenants shall be in full force and effect, without regard to whether the Grantor is or remains an owner of any land or interest herein to which such covenants relate. The grantor, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach as provided in the Agreement or by law. The covenants contained in this Grant Deed shall be for the benefit of and shall be enforceable only by the Grantor and its successor. - END OF THIS PAGE - G - 3 1 IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized, this day of , 19 Grantor: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Chairperson By: Secretary APPROVED AS TO FORM: By: Counsel for Grantor The provisions of this Grant Deed are hereby approved and accepted. Grantee: Date: MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P. , a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By: Rex Swanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: Stephen Claman Attorneys for Developer G - 4 i EXHIBIT "A" TO GRANT DEED LEGAL DESCRIPTION G - S f EXHIBIT H SCHSDULE OF PER.FOKANCE (pays shall be calendar days, as long as the last day does not tall on a Saturday, Sunday or legal holiday, and all dates herein are subject to change due to force majuere in accordance with Section 6.05 of the Agreement.) SCHEDULE ITEM TIME FRAME FOR COMPLETION 1. Agency approval of Disposition and Within 30 days of Developer signing. Development Agreement (DDL) . 2. Developer commences traffic study Within 30 days of DDA approval. and items necessary for filing for project entitlements . 3. Agency to make application to HUD within 30 days of DDA approval. for a 106 loan for the project and commences with the site acquisition. 4. Agency to complete site acquisition. Within 20 months of Agency approval of ODA, subject to extensions S. Agency prepares and deposits in within 30 days of Agency's effective escrow, CC&R's, Grant Deed and any site control and the ability to otter items required for opening of convey site to Developer and within escrow pursuant to Section. 2.10 (b) 20 months of the approval of the o-� the Agreement including the DDA, subject to extensions . �vidence of Agency Loan and Agency Contribution. 6. Developer, satisfies all Within 20 months from the approval requirements under Section 2. 10 (a) of the DDA, subject to extensions. .of the Agreement. 7. Escrow Closes and Theater Parcel within 60 days of conditions in 2.10 and/or Retail Parcel (at Developer's being met, within 20 months from election) is conveyed to Developer. approval of the DDA, subject to extensions. 8 . Developer commences site work and Within 30 days of Escrow closing. Project construction. 9• Completion of Project construction. Within 18 months from construction commencement. 14. Retail Parcels to start construction At the time of conveyance of the y Developer. Theater Parcels or within 36 months Erom conveyance of the Theater Parcel, at Developer's Option Exhibit H - Page 1 1 It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items in this Schedule of Performance is not intended to supersede or modify the more complete description in the tent; in the event there is any conflict or inCOagigtency between the text and this Schedule of Performance, the text shall govern. The time periods set forth in this Schedule of Performance may be altered by attorney or amended only by written agreement signed by both the Developer and the Agency's Executive Director. Exhibit H - Page 2 1 EXHIBIT "I" When Recorded, Mail to: CERTIFICATE OF COMPLETION We, Chairman and , Secretary of the Redevelopment Agency of the City of- San Bernardino (the "Agency") hereby certify as follows: By its Resolution No. , adopted and approved , 199_, the Agency has resolved as follows : Section 1 . Certain of the improvements required to be constructed in accordance with that certain Disposition and Development Agreement (the "Agreement" ) dated by and between the Agency and MDA-San Bernardino Associates, L.L.C. , a Delaware limited liability company (the "Developer") , on that certain real property (the "Completed Property") more fully described in Exhibit "A" attached hereto and incorporated herein by this reference, have been completed in accordance with the provisions of said Agreement . Section 2 . This Certificate of Completion shall constitute a conclusive determination of satisfaction of the agreements and covenants contained in the Agreement with respect to the obligations of the Developer, and its successors and assigns, to construct and develop the improvements on the Completed Property, excluding any normal and customary tenant improvements and reasonable building "punch-list" items, which the Developer shall remain liable to complete without creating any liens against the Completed Property, and including any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the building and its use and occupancy on the Completed Property, whether or not said improvements are on the Completed Property or on other property subject to the Agreement, all as described in the Agreement, and to otherwise comply with the Developer' s obligations under the Agreement with respect to the Completed Property and the dates for the beginning and completion of construction of improvements thereon under the Agreement; provided, however, that the Agency may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the I - 1 Agreement, the grant deed pursuant to which the Completed Property was conveyed under the Agreement, and any deed of trust in favor of the Agency. The Agreement is an official record of the Agency and a copy of the Agreement may be inspected in the office of the Secretary of the Redevelopment Agency of the City of San Bernardino located at the 201 N. "E" Street, 3rd Floor, San Bernardino, California 93514, during regular business hours . Section 3 . The Agreement contains provisions relating to multiple parcels of land and the improvements to be constructed thereon. This Certificate of Completion applies only to the parcels (s) indicated in Exhibit "A". DATED AND ISSUED this day of , 199_. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Chairman of the Agency ATTEST: Secretary of the Agency I - 2 EXHIBIT "A" TO CERTIFICATE OF COMPLETION LEGAL DESCRIPTION '1 t EXIBIT "J" (Project Budget) o ° ° 0 0 0 ° o 0 o Q _ � N tl y �dya, o 0 0 o q 0 0 0 0 0 0 o a i� tl o N 02 t1" r r, j tl Q � < O O a o O O O O O O q O O N o N . 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U vt F cn Gv J C3 N N N c�I c� ff CZ] O N C4 i"t r4 is to - ~ N N fV hl [V e4 c L� f O O 0 .0 6 d 8 -r. ❑ .4 C 3 c (5 q ❑ ❑ ❑ ;,.4 -Q .2 m .C4- z E Z !E < ILI ;a v t C4 'i Ni r"n < < = o Cl! r1i CO Cr ca en C-i I-S Nr Ir V, "'t v 'r v v 0 0 O i O 1 O . 1 t i O t t t f 0 i 1 o O 1 I N 1 O 1 o ! O Q O O O N N M M d P O O O O O O C O O O O P1 0 0 C1 O O N .--. 0 0 0 : 0 0 0 0 0 0 0 0 0 t � 1 N C C C V u o c A u p �' n C v v ?� u ° e a ca a _ _ c Z Zl C� Cj O �t S m c o m c c a C CJ :U Q .C"! H d� d o v N N c. o ev C' cv�, u T �T `T �3` T 4 Q 7 <Y V' f EXHIBIT "K" LEGAL DESCRIPTION yR r, k V\ rl Y�. K - 1 r EXHIBIT "L" THIRD DEED OF TRUST (Retail Parcel) RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) (Space Above for Recorder' s Use) DEED OF TRUST WITH ASSIGNMENT OF RENTS Deed of trust made on by MDA-San Bernardino Associates, L.L.C. , a Delaware limited liability company, hereinafter called "Trustor", whose address is 300 Continental Boulevard, Suite 360, E1 Segundo, California 90245, NORTH AMERICAN TITLE COMPANY, hereinafter referred to as "Trustee", whose business address is 721 South Parker Avenue, Suite 100, Orange, California 92668, in favor of the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, hereinafter referred to as "Beneficiary", whose business address is 201 North "E" Street, Third Floor, San Bernardino, California 92401 . Trustor irrevocably grants, transfers, and assigns to Trustee in trust, with power of sale, all that property, including all easements and rights of way used in connection therewith or as a means of access thereto, in the City of San Bernardino, County of San Bernardino, State of California, described as follows : That certain property located in the City of San Bernardino, County of San Bernardino, State of California, more particularly described as : SEE EXHIBIT "A" HERETO together with the rents, issues and profits thereof, subject however to the right reserved by Trustor in Paragraph B-16 hereof to collect and apply such rents, issues and profits, prior to any default hereunder; for the purpose of securing performance in a timely manner of all of Trustor' s obligations under Sections 1 . 04, 2 . 19, 3 . 01, 3 . 03, 3 . 04, 3 . 05, 4 . 01, 4 . 03, 4 . 04, 6. 03 and 6. 07, inclusive, as said sections relate to the real property described in Exhibit "A" of that certain Disposition and Development Agreement by and between Trustor and Beneficiary, dated as of 1996 (the "DDA") ; and performance of each agreement to L - 1 Trustor incorporated herein by reference or contained herein. A breach of any obligation or agreement secured hereby shall, at Beneficiary' s sole option, be deemed a breach of all such obligations or agreements, and Beneficiary shall have the right to accelerate all such obligations or agreements and to foreclose upon such breaches under this Deed of Trust. Defined terms used in this Deed of Trust shall have the meanings set forth in the DDA, unless otherwise defined herein. A. To protect the security of this Deed of Trust, Trustor agrees: 23 . To maintain the property in good condition and repair; not to remove or demolish any building or improvement thereon; to complete promptly in workmanlike manner any improvement hereafter constructed thereon and to restore promptly in workmanlike manner any improvement thereon that is damaged or - destroyed, and to pay when due all costs incurred therefor or in connection therewith; to comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the property; not to commit or permit any waste thereof or any act upon the property in violation of law or of covenants, conditions or restrictions affecting the property. 24 . To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and also, if at any time Beneficiary or Trustee is a party to or appears in any such action or proceeding, or in any action or proceeding to enforce any obligation hereby secured, to pay all cost and expenses paid or incurred by them or either of them in connection therewith, including, but not limited to, cost of evidence of title and attorneys ' fees in a reasonable SUM. 25. To pay (a) prior to delinquency, ' all taxes and assessments affecting the property, all assessment upon water company stock, and all rents, assessments and charges for water appurtenant to or used in connection with the property; (b) when due, all encumbrances, charges and liens, with interest, on the property or any part thereof, which appear to be prior or superior hereto; and (c) all costs, fees and expenses of this trust. 26. If Trustor fails to make any payment or to do any act as herein provided, then Beneficiary or Trustee (but without obligation so to do, and with or without notice to or demand upon Trustor, and without releasing Trustor from any obligation hereof) may (a) make or do the same in such manner and to such extent as either deems necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the property for such purpose; (b) appear in or commence any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest, or compromise L 2 .- t any encumbrance, charge or lien that, in the judgment of either, appears to be superior hereto; and in exercising any such power, Beneficiary or Trustee may incur necessary expenses, including reasonable attorneys ' fees . 27 . To pay immediately and without demand all sums expended hereunder by Beneficiary or Trustee, with interest from date of expenditure at the annual rate of five percentage points over Bank of America' s published prime rate. B. It is mutually agreed that: I . Subject and subordinate to the rights of superior trust deed holders, any award of damages made in connection with the- condemnation for public use of or injury to the property or any part thereof is hereby assigned and shall be paid to Beneficiary, who may apply or release such moneys received therefor upon any indebtedness secured hereby in such order as Beneficiary determines, or at the option of Beneficiary the entire amount so received or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice . 1 . The acceptance by Beneficiary of any payment less than the amount then due shall be deemed an acceptance on account only and shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due or of Beneficiary' s right either to require prompt payment of all sums then due or to declare default. The acceptance of payment of any sum secured hereby after its due date will not waive the right of Beneficiary either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. No waiver of any default shall be a waiver of any preceding or succeeding default of any kind. 2 . At any time upon the occurrence of a default, without liability therefor and with or without notice, upon written request of Beneficiary and presentation of this deed for endorsement, and without affecting the personal liability of any person, Trustee may reconvey any part of the property, consent to the making of any map or plat thereof, join in granting any easement or join in any extension agreement or any agreement subordinating the lien or charge thereof. 3 . Upon written request of Beneficiary, surrender of this deed to Trustee for cancellation and retention, and payment of its fees, Trustee shall reconvey, without warranty the property then held hereunder. The recitals in such reconveyance shall be conclusive proof of the truthfulness thereof. The grantee may be L 3 .,. designated in such reconveyance as "the person or persons legally entitled thereto. " 4 . Trustor may give such notice to Beneficiary at any time before there is a Trustee' s sale of the property. At any time Trustor is in default in payments to be made to Beneficiary hereunder, any amounts paid to and received by Beneficiary for execution of releases pursuant to the terms of this paragraph after notice of default and election to sell has been recorded shall not, unless the requirements of Section 2924c of the Civil Code are fully met by or on behalf of Trustor, waive the right of Beneficiary to continue its plans to have the property sold, nor shall they have any effect on the exercise by Beneficiary of the acceleration privilege contained herein, except to entitle the person effecting such payment to the release of the property for which the release amount was paid, and insofar as Beneficiary is- concerned, to constitute a credit against the secured debt. 5. If Trustor or any subsequent owner of the property covered hereby shall occupy the property, or any part thereof, after any default, Trustor or such owner shall pay to Beneficiary in advance on the first day of each month a reasonable rental for the premises so occupied. On failure to pay such reasonable rental, Trustor or such owner may be removed from the premises by summary dispossession proceedings or by any other appropriate action or proceeding. 6. If default is made in performance of any agreement hereby secured, then Beneficiary, with or without notice to Trustor, may institute suit for the foreclosure of this deed, or by delivering to Trustee a written declaration of default and demand for sale, as well as a written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be filed for record. If such declaration is delivered to Trustee, Beneficiary shall deposit with Trustee this deed, and all documents evidencing expenditures secured hereby. 7 . After the time then required by law has elapsed after recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, with or without demand on Trustor, shall sell the property at the time and place fixed in the notice of sale, either as a whole or in separate parcels and in such order as Trustee determines, at public auction, to the highest bidder, for cash in lawful money of the United States, payable at the time of sale. Trustee may postpone from time to time sale of all or any portion of the property by public announcement at the time and place of sale originally fixed or at the last preceding postponed time. Trustee shall deliver to the purchaser its deed conveying the property sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the L - 4 -7 truthfulness thereof. Trustor, Trustee, Beneficiary or any other person may purchase at the sale. 8 . After deducting all costs, fees and expenses of Trustee and of this trust, including cost of evidence of title and reasonable attorneys' fees in connection with sale, Trustee shall apply the proceeds of sale to payment of (a) all sums expended under the terms hereof and not theretofore repaid, with accrued interest at five percentage points over Bank of America' s published prime rate per annum, and (b) all other sums then secured hereby in such order as Beneficiary, in the exercise of its sole discretion, directs . The remainder, if ' any, shall be paid to the person or persons legally entitled thereto. 9. Before Trustee's sale, Beneficiary may rescind such notices of default and its election to cause the property to be - sold by delivering to Trustee a written notice of rescission, which notice, when recorded, shall cancel any prior declaration of default, demand for sale and acceleration of maturity. The exercise of such a right of rescission shall not constitute a waiver of any default then existing or subsequently occurring, or impair the right of Beneficiary to deliver to Trustee other declarations of default and demands for sale or notices of default and of election to cause the property to be sold, or otherwise affect any provision of the secured note or of this deed or any of the rights, obligations or remedies of Beneficiary or Trustee hereunder.. 10 . Beneficiary may, from time to time as provided by statute, or by a writing signed and acknowledged by him and recorded in the office of the county recorder of the county in which the land or such party thereof as is then affected by this deed of trust is situated, appoint another trustee in stead and of Trustee herein named; and thereupon, the Trustee herein named shall be discharged, and the trustee so appointed shall be substituted as Trustee hereunder with the same effect as if originally named Trustee herein. 11 . If two or more persons are designated as Trustee herein, any or all powers granted herein to Trustee may be exercised by any of such persons if the other person or persons is unable, for any reason, to act. Any recital of such inability in any instrument executed by any of such persons shall be conclusive against Trustor, his heirs and assigns . 12 . All leases of any structures on the Retail Parcel as defined in the DDA, now or hereafter affecting the Retail Parcel are hereby assigned and transferred to Beneficiary by Trustor. Trustor hereby covenants that none of such leases will be modified or terminated without the written consent of Beneficiary. Beneficiary will, when reasonably requested to do so, provide to L - 5 tenants, under leases approved by it, agreements of non-disturbance of such tenancy in the event that Beneficiary acquires title to the Retail Parcel, providing that such tenant attorns in writing to the interests of Beneficiary and pays to Beneficiary the rent and other sums owed under the lease. 13 . If a default is made in the performance of any agreement hereby secured, Trustor when requested to do so, shall give such further written assignments of rents, royalties, issues and profits; of all security for the performance of leases; and of all money payable under any option to purchase, and shall give executed originals of all leases, now or hereafter on or affecting the property. 14 . Trustor reserves the right, prior to any default in payment of any indebtedness or performance of any obligation, secured hereby, to collect all such rents, royalties, issues and profits, as but not before they become due. Upon any such default, Trustor' s right to collect such moneys shall cease, not only as to amounts accruing thereafter, but also as to amounts then accrued and unpaid. In the event of default, Beneficiary, with or without notice and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, or by a receiver to be appointed by the court, (a) may enter upon and take possession of the property at any time and manage and control it in Beneficiary' s discretion, and (b) with or without taking possession, may sue for or otherwise collect the rents, issues and profits thereof, whether past due or coming due thereafter, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys ' fees, upon any obligation secured hereby and in such order as Beneficiary determines . None of the aforesaid acts shall cure or waive any default hereunder or invalidate any act done pursuant to such notice. Beneficiary shall not be required to act diligently in the care or management of the property or in collecting any rents, royalties or other profits that it is hereby authorized to collect, and shall be accountable only for sums actually received. 15. Without affecting the liability of Trustor or of any other party now or hereafter bound by the terms hereof, from time to time and with or without notice, Beneficiary may release any person now or hereafter liable for performance of such obligation, and may extend the time for payment or performance, accept additional security, and alter, substitute or release any security. 16 . In any judicial action brought to foreclose this deed or to enforce any right of Beneficiary or of Trustee hereunder, -Trustor shall pay to Beneficiary and to Trustee attorneys ' fees in a reasonable sum, to be fixed by the court . L - 6 17 . No remedy hereby given to Beneficiary or Trustee is exclusive of any other remedy hereunder or under any present or future law. 18 . The pleading of any statute of limitations as a defense to any and all obligations secured by this deed is hereby waived, to the full extent permissible by law. 19. Trustor shall, upon request made by Beneficiary, furnish the Beneficiary with annual statements covering the operations of the property. 20. Beneficiary may collect a "late charge" not to exceed an amount equal to five percent (5%) on the amount past due and remaining unpaid on any installment that is not paid within ten (10) days from the due date thereof, to cover the extra expense- involved in handling delinquent payments . 21 . This deed applies to, inures to the benefit of and binds all parties hereto, their heirs, legatees, devises, administrators, executors, successors, successors in interest, and assigns . The term "Beneficiary" means the owner and holder, including pledgees, of the Agreement secured hereby, whether or not named as Beneficiary herein. In this deed, whenever the context so requires, the masculine gender includes the feminine and neuter, and the singular number includes the plural, and all obligations of each Trustor hereunder are joint and several . 22 . Trustee accepts this trust when this deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee is a party unless brought by Trustee. 23 . Trustor, and its successors and assigns, shall maintain in good condition the improvements on the Retail Parcel, shall keep the Retail Parcel free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping on the Retail Parcel . In the event Trustor, or its successors or assigns, fails to perform the maintenance as required herein, Beneficiary shall have the right, but not the obligation, to enter the Retail Parcel and undertake such maintenance activities . In such event, Beneficiary shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities . 24 . Beneficiary agrees that it will enter into subordination agreements, and execute such other documents which are reasonably required to effect such subordinations, on terms L - 7 reasonably acceptable to it, with the lenders under any deeds of trust which are in compliance with the provisions of the DDA and are intended by the parties to the DDA to be superior to this Deed of Trust. Trustor requests that a copy of notice of default and of any notice of sale hereunder shall be mailed to him at the address set out opposite his name, immediately below: MAILING ADDRESSES FOR NOTICES: MDA-San Bernardino Associates, L.L.C. as Trustor: 300 Continental Blvd. , Suite 360 El Segundo, California 90245 Attn: Jason Kamm Executed at San Bernardino, California, on the date first above written. MDA-SAN BERNARDINO ASSOCIATES, L.L.C. , a Delaware limited liability company, By: SK Metro Development, L.P. , a California limited partnership, its managing member By: SK Metro Corp. , a California corporation, its general partner By: Rex Swanson, President APPROVED AS TO FORM: GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER, L.L.P. By: Stephen Claman Attorneys for Developer L - 8 r EXHIBIT "A" TO DEED OF TRUST (RETAIL PARCEL) LEGAL DESCRIPTION L - 10 r