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Home My WebLink AboutR3 EDAECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION /COUNCIL ACTION FROM: GARY VAN OSDEL SUBJECT: INS OFFICE BUILDING Executive Director �� r /� DISPOSITION AND W ^1N AL A L DEVELOPMENT DATE: November 13, 1998 AGREEMENT ----------------------------------------------------------------------------------------- Synopsis of Previous Commission /Council /Committee Action(s): The Commission has previously authorized the EDA Staff to submit a Final and Best Offer to the General Services Administration ( "GSA ") for the development by the EDA of an office and processing facility for the Immigration and Naturalization Service ( "INS "). The Final and Best Offer was submitted by the Mayor on April 24, 1998, for the property located at 655 W. Rialto Avenue within the Central City South Redevelopment Project Area ('Rialto Avenue Site "). (Synopsis Continued to Next Page...) OPEN PUBLIC HEARING CLOSE PUBLIC HEARING Recommended Motion(s): (Mayor and Common Council) MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO MAKING CERTAIN FINDINGS AND DETERMINATIONS, APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE EXECUTION THEREOF AND ANY DOCUMENTS RELATED Recommended Motion(s) Continued to Next Page.... Contact Person(s): Gary Van Osdel Phone: 5081 Project Area(s): Ward(s): Supporting Data Attached:❑x Staff Report ❑x Resolution(s) ❑x Agreement(s) /Contract(s) ❑ Map(s) ❑ Ltr/Memo FUNDING REQUIREMENTS: Amount: $ Source: SIGNATURE: . A Commission /Council Notes: AN OSDEL Director ------------------------------------------------- - - - - -- RE W : Iag:11- 16 -04. c do / ` 1//1P / �f>r A 92 5 Budget Authority: ----------------------------------------------------- COMMISSION MEETING AGENDA MEETING DATE: ///,A J 3 /te Agenda Item J A`x3 REQUEST FOR COMMISSION /COUNCIL ACTION INS DDA November 13, 1998 Page Number -2- SYNOPSIS OF COMMISSION /COUNCIL /COMMITTEE ACTIONS) CONTINUED: GSA had previously undertaken a solicitation process to obtain proposals from developers and property owners for the siting of the proposed INS facility within the San Bernardino/Riverside region. In 1997, the Commission directed EDA Staff to participate in the response process to assure that at least one proposal would include a City of San Bernardino location. Preliminary cost estimates were compiled, site plans and architectural elevations were prepared and a proposed construction budget and rental rates, including operating, maintenance and repair expenses, were determined. All such estimates were included within the final proposal as submitted by the EDA Staff on April 24, 1998, to the GSA during the solicitation and response process conducted by GSA. Recommended Motion(s) Continued: (Community Development Commission) MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MAKING CERTAIN FINDINGS AND DETERMINATIONS, APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE EXECUTION THEREOF AND ANY DOCUMENTS RELATED THERETO REW:lag:11- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 2< Agenda Item Number: � ECONOMIC DEVELOPMENT AGENCY STAFF REPORT INS Office Building Disposition And Development Agreement THE INS PROJECT The EDA owned parcel is approximately 3.27 acres in size and was acquired over a period of years starting in 1982 for a total price of $208,350. The INS facility is proposed to consist of an initial phase of approximately 39,000 net usable square feet with the opportunity for a possible expansion of an additional 10,000 square feet. It is anticipated that as many as 600 persons per day may visit the INS facility. The on -site parking requirement will be determined by a focused traffic and parking study for the project, however, it should be noted that the EDA proposal met the parking requirements stipulated by GSA. THE LEASE AGREEMENT On August 17, 1998, the GSA issued its notice of intention to award the INS facility lease to the EDA based upon the Final and Best Offer submitted in March, 1998. The award letter from GSA stated that the EDA had 60 working days (which was determined to be November 7, 1998) to execute the proposed final Lease Agreement which was submitted by GSA as a part of the award materials. The final lease document included as part of the award letter consisted of 5 pages which set forth the final modifications to the standard form GSA contract and lease documents plus 4 plan sheets including floor plans and elevations. The final Lease Agreement included the commitment by GSA as to the actual 10 -year lease term and the rental rates to be paid to the EDA based upon the required net usable square footage of the INS facility. Twelve (12) related lease documents and the standard GSA forms are incorporated into the final Lease Agreement. These related lease documents and standard GSA forms had been reviewed and approved by EDA and were originally delivered to GSA as part of the Final and Best Offer submittal in March 1998. Upon review of the 5 page final Lease Agreement and the related lease documents and standard forms delivered by GSA in August, 1998, by the City Attorney's Office and Special Counsel it was apparent that except for possible errors or modifications in the 5 page final Lease Agreement document, the EDA staff and the Commission had previously consented to the terms and provisions of the various related lease documents and standard GSA forms. Included within the final Lease Agreement is GSA's requirement for providing occupancy to the INS in the facility by not later than November, 1999. EDA staff was of the view that the occupancy date was intended to be February, 2000 and could have been extended to perhaps June, 2000. Questions were raised upon further review of the EDA Final and Best Offer as to whether the EDA would be able to construct the INS REW:lag:11- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 Agenda Item Number: Ids. Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 2 facility within the originally contemplated budget as prepared by EDA staff. Efforts were also undertaken to obtain alternate financing sources in the form of commercial bank loans or taxable bond financings rather than relying upon EDA reserve funds to fund the construction of the INS facility. The final Lease Agreement, when fully executed by both the EDA and GSA, obligates the EDA to complete the project by the required date at whatever cost is required based upon construction bids. The EDA is responsible for payment of damages to GSA in the event occupancy is not achieved by the mandatory date or if GSA is required to obtain an alternate facility due to the inability of the EDA to complete the facility by the dates agreed to by the EDA. CONSTRUCTION AND DEVELOPMENT ISSUES As discussions ensued between GSA representatives and EDA staff during the month of September 1998, it became apparent that the EDA would have to substantially accelerate the completion of final working drawings in order to meet the time schedules that GSA was now setting for the completion and occupancy of the INS facility. GSA also required that the EDA execute the 5 page final Lease Agreement prior to November 7, 1998. As these discussions with GSA were unfolding, the EDA's project manager for the INS facility resigned on September 15, 1998. As a result, EDA determined that either: (i) a construction manager would need to be retained immediately to coordinate the architectural, civil engineering and structural engineering efforts; or (ii) the EDA would need to transfer its interest in the the final Lease Agreement and the property to a qualified developer to complete the pre - construction efforts for the design, obtain the necessary building permits and, obtain construction and permanent financing and to assure that occupancy was achieved by the required date. On October 22, 1998 the results of the Phase I environmental hazardous substance investigation of the site was delivered to EDA staff. This Phase I review indicated various levels of surface contamination caused by previous gas station and vehicle repair uses and splashing of oils from the adjacent rail lines. A notable issue covered in the Phase I investigation was that certain dumping activities had occurred on a portion of the site in the early 1900's when a ravine traversed the site. The extent of dumping deposits in the old ravine appear to vary in depth from 6 to 22 feet in a southeasterly direction across the site. REW:1ag:11- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 Agenda Item Number: Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 3 It is anticipated that the EDA will be authorized to consolidate further Phase 1I environmental investigation work on the site with the commencement of removal of the old dump or fill materials and import of clean soils to the site. This cost for the site preparation and soil compaction will have to be borne by the EDA regardless of the alternative selected for the development of this site or whether the INS facility or another project were to be constructed on this site. DEVELOPER SELECTION PROCESS On Wednesday, October 7, 1998, GSA communicated with the Executive Director that the EDA would have 24 hours or until 3:00PM on Thursday, October 8, 1998, to approve, execute and deliver the final Lease Agreement to GSA or GSA would offer the INS facility to the next best proposal. EDA Staff was unable to obtain information from GSA whether the second best proposal was within the City of San Bernardino. On Thursday, October 8, 1998, at 9:OOAM, the Executive Director actually received by fax a demand letter from GSA. The Executive Director met with Special Counsel and Mr. Ralph Affaitati at approximately 2:OOPM that same afternoon to discuss whether Mr. Affaitati could assume the obligations of the EDA under the final Lease Agreement if it were finally executed by the EDA and delivered to GSA within the time restraints imposed by GSA. It was explained to Mr. Affaitati that EDA staff could not commit to assign the final Lease Agreement to any particularly individual or company prior to official action by the Commission after having conducted a public hearing as required by the Community Redevelopment Law. A first step in the process prior to scheduling any such public hearing is the preparation of a draft of a suitable disposition and development agreement ( "DDA "). At that time Mr. Affaitati was willing to commence the architectural and structural engineering design at his own cost and participation with EDA Staff and Special Council in the preparation of a draft DDA without any binding commitment that the final DDA would be awarded to him after the conclusion of the required public hearing. On the basis of these primarily discussions with Mr. Affaitati, the Executive Director sought the legal advice from Special Counsel as to the authorization for the Mayor as Chairperson of the Commission to execute the final Lease Agreement. Special Counsel concurred and eventually provided GSA with a written legal opinion upon request as to the legal ability of the EDA to enter into the final Lease Agreement and the authority for the execution of the final Lease Agreement. The signed form of the final Lease Agreement was faxed to GSA prior to the 3:OOPM deadline, the original was sent via messenger to GSA for delivery that afternoon and an additional copy was sent to GSA via Federal Express for deliver the next day. To date, we have not been informed as to whether GSA has executed the lease agreement. ------------------------------------------------------------------------------------------------------------------ REW:lag:11- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16//1998 Agenda Item Number: �"� Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 4 On October 9, 1998, an unsolicited proposal was received from the Choppin Company offering $1,120,000 in cash to the EDA for the property and also offering to hold harmless the EDA from any and all liabilities under the final Lease Agreement if the final Lease Agreement were assigned by the EDA to the Choppin Company. This item was presented to the RDA Committee on Monday, October 12, 1998, at which time EDA staff was directed to obtain additional written proposals and not to commit even informally to any particular proposal at that time. This same matter was submitted to the Commission on Monday, October 19, 1998, for further discussion and direction. The Commission ratified the execution of the final Lease Agreement by the Chairperson and Secretary and directed EDA Staff to undertake a formal interview process to obtain a recommended proposal complying with the 8 criteria imposed by the Commission and discussed in open session. Said criteria included:(i) cash at close of escrow; (ii) completion bond or other guarantee; (iii) retain architects and engineers at own cost and construct project without EDA financial on -site or off -site assistance; (iv) obligation contingent upon completion of Phase I, soils tests and land use entitlements provided by EDA; (v) history of past involvement with GSA; (vi) track record of the developer; (vii) assurance to meet time deadline; and (viii) general past history. Interviews were established for Thursday, October 22, 1998, with an interview team comprised of the following individuals on behalf of the EDA: Gary Van Osdel, Executive Director, EDA John Hoeger, Project Manager, EDA Timothy J. Sabo, Special Counsel, EDA James Rabbe, Keyser Marston, EDA consultant (first three interviews) Kevin Engstrom, Keyser Marston, EDA consultant (last two interviews) The following companies were interviewed at the times noted: 11:00 AM - Ralph Affaitati, Affaitati Construction 12:25 PM - Jason Kamm, Metropolitan Development 1:45 PM - Michael Choppin, The Choppin Company, Inc. 3:05 PM - Frank Dominguez, Vanir Group ------------------------------------------------------------------------------------------------------------------ REW:1ag:11- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 Agenda Item Number: �h�> Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 5 The following is a composite of the average of the interviewers' rating for each company by category: CATEGORY AFFAITATI VANIR CHOPPIN MDA Experience in Development 4 5 4.25 3.67 General Capability 3 4.75 2.25 3.67 Knowledge of Project 5 3.50 3.75 1.67 Dollar Return to EDA 1.33 2.25 5 3.67 Knowledge of GSA/INS Processes 4 5 3 1.33 Experience in Special Facility Development 3 5 2.75 1.33 Resources 2.33 4.75 2.25 3.33 TOTAL 22.66 30.25 23.25 18.67 The individual interviewers provided the following average total scores as listed for each company: INTERVIEWER AFFAITATI VANIR CHOPPIN MDA 41 22 32 20 16 #2 23 30 28 23 #3 23 29 20 17 #4 NA 30 25 NA TOTAL (AVERAGE) 22.6666667 30.25 23.25 18.67 A summary of the best three (3) offers as presented is set forth below: ITEM AFFAITATI CHOPPIN VANIR Land Purchase Upon resale, the lesser $1.12M cash Appraised value paid Payment of (1) net proceeds from 15% of net cash after payment of debt and 25% to Developer or (2) not to exceed actual EDA costs. Responsibility for EDA EDA EDA payment of site clean- up costs Responsibility for EDA Developer Developer payment of off -sites ------------------------------------------------------------------------------------------------------------------ REW:1ag:11-16-04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 Agenda Item Number: Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 6 ITEM AFFAITATI CHOPPIN VANIR Responsibility for EDA Developer Developer payment of permit /fees Security for Approve substitution Completion Corporate guaranty Assumption of EDA of lessor by GSA bond/performance lease liability bond Deposit $100,000 $100,000 $100,000 Experience 1 recent GSA /Social No current experience INS, GSA, IRS; 2 Security as Choppin Company current projects/S13 and Lancaster Professional Team Team used on prior No staff - assemble In house capacity submittal contractors SECTION 33433 REPORT AND PUBLIC HEARING Health and Safety Code Section 33433 permits a transfer of property acquired with tax increment revenues after a public hearing and the preparation of a written report. The financial consulting firm of Keyser Marston has prepared such report on behalf of the EDA based upon information provided by the EDA Staff. At the public hearing, the Commission is not obligated to accept the recommendations of EDA Staff or the interview panel and the Commission may consider other oral and written presentations at the public hearing and, may decide on another alternative for undertaking the INS facility development -- Commission retains the prerogative to award the DDA to another developer on any terms and conditions that are consistent with the Section 33433 report and public hearing notice. SUMMARY OF SECTION 33433 REPORT The summary report prepared by Keyser Marston was based upon the October 22, 1998 recommendations of the interview panel that the DDA be awarded to the Vanir Group of Companies ( "Vanir "). Vanir has offered to release $100,000 cash to the EDA upon transfer of title to the Rialto Avenue Site and to develop a formula for the determination of the fair market value of said property in the following manner. Vanir will obtain a construction loan for the project. The lender bank will conduct an appraisal of the INS facility and the parties will agree that the land value determined in the appraisal shall constitute the fair market value of the land. REW:lag:I1- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/119998 Agenda Item Number: f �S' Economic Development Agency Staff Report INS DDA November 13, 1998 Page Number 7 Thus, Vanir will pay the EDA the remaining amount of the price of the land (purchase price less $100,000 deposit received) based upon said appraisal. The remaining amount of the purchase price shall be paid over 10 years from 15% of net rental revenues. The full land purchase price is due in 10 years or upon the sale or refinancing of the project. When the purchase price of the property being conveyed is less than fair market value, Health and Safe Code Section 33433 requires that the report explain the reason for any difference. While it appears that the purchase price is lower than fair market value, based upon the Keyser Marston Report, when the costs of acquisition, environmental clean up and site preparation are included, the disposition price should be approximately equal to the fair market value of the property. The costs to the EDA for the project are land acquisition and environmental remediation. The EDA acquired the land for $208,350 and environmental remediation is estimated at $250,000 as a minimum to upwards of $600,000. Thus, total costs to the EDA are estimated at $408,350. The revenue to the EDA from the disposition of the Rialto Avenue Site will come from land sales and tax increment revenues. Land sale costs shall be paid based upon the appraisal $100,000 of which shall be received at the execution of the DDA; and it is estimated that the present value of tax increment revenues from the project equals $850,000. Thus, the EDA is projected to receive at least $541,650 in net revenues from the project, plus an additional sum for the remaining value of the interest in the land which will be determined by appraisal. STAFF RECOMMENDATION Staff recommends that the public hearing be opened, comments and written materials submitted at the hearing be considered by the Commission, and based upon the documentation available to the EDA Staff as of the date of this Staff Report, that the attached Resolutions be adopted as proposed andthe DDA be awarded to Vanir Development. �� zz Gary n Osdel, Executive Director Ecpdomic Development Agency REW: lag: I 1- 16- 04.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/16/1998 Agenda Item Number: C 03FT 1 RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO MAKING CERTAIN FINDINGS AND DETERMINATIONS, 3 APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE EXECUTION THEREOF AND ANY DOCUMENTS 4 RELATED THERETO 5 WHEREAS, the City of San Bernardino ( "City ") is a 6 municipal corporation and charter city organized and existing 7 pursuant to the Constitution of the State of California; and 8 9 10 WHEREAS, the Redevelopment Agency of the City of San 11 Bernardino (the "Agency ") is a body duly created pursuant to the 12 provisions of Sections 33000, et seg, of the Health and Safety Code of the State of California; and 13 14 15 WHEREAS, the Agency currently owns certain property (the "Property ") which is located within its Central City South 16 Redevelopment Project Area; and 17 18 19 WHEREAS, the Agency desires to convey the Property to a developer in order for said developer to construct a commercial 20 21 office building ( "Building ") to house the Immigration and Naturalization Service; and 22 23 24 WHEREAS, the Agency sought proposals from developers and 25 determined that the proposal of the Vanir Group of Companies 26 through its subsidiary INS Office, Inc. ( "Developer ") contained the 27 requisite items necessary to cause the construction and operation of the Building; and 28 - 1 - 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 N� 28 WHEREAS, the Agency deems it desirable to enter into a Disposition and Development Agreement (the "Agreement ") with the Developer in the form as on file with the City Clerk and incorporated herein by this reference; and WHEREAS, the City and Agency have held a duly noticed public hearing in accordance with Sections 33431 and 33433 of the California Health and Safety Code and have caused the preparation of, and made available for public inspection, a report including a' summary of the transaction; and WHEREAS, the development of the Property will help eliminate blighting conditions in the Central City South Redevelopment Project Area, will increase property values and will result in the creation of additional employment opportunities; and WHEREAS, the Agreement, and the development to be undertaken in connection therewith, is consistent with the Agency's redevelopment plan for the Central City South Redevelopment Project Area; and WHEREAS, based upon the evidence and testimony submitted to the City, it is reasonable and appropriate for the City to approve the Agreement. - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 1. _,NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, DO HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The foregoing Recitals are true and 11correct and are incorporated herein by this reference. Section 2. The City hereby adopts the findings and determinations as set forth herein and finds that the Agreement is within the redevelopment goals and objectives of the Agency. Section 3. The City, having held a duly noticed public hearing in accordance with Health and Safety Code Sections 33431 and 33433, finds and determines that the disposition of the Property to the Developer, pursuant to the Agreement, will be of benefit to the Agency and the City and will also promote redevelopment within the Central City South Redevelopment Project Area of the Agency. Section 4. The City hereby approves the form of the Agreement on file with the City Clerk and authorizes the Mayor, City Administrator and City Clerk to execute the Agreement with such changes as may be deemed appropriate by the Mayor and City Attorney. The City further authorizes the execution and delivery by the Mayor, City Administrator and City Clerk of any and all other documents, agreements, certificates, instruments of conveyance, consents and notices which they may deem necessary or advisable to carry out the transactions contemplated hereby. - 3 - A 1 2 3 4 5 6 7 8 9 10 11'' 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO MAKING CERTAIN FINDINGS AND DETERMINATIONS, APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE EXECUTION THEREOF AND ANY DOCUMENTS RELATED THERETO Section 5. This Resolution shall take effect from and after its passage and adoption. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the day of , 1998, by the following vote, to wit: Council: AYES NAYS ABSTAIN ABSENT ESTRADA LIEN SCHNETZ DEVLIN ANDERSON MILLER City Clerk The foregoing resolution is hereby approved this day of , 1998. Judith Valles, Mayor City of San Bernardino Approved as to form and legal content: By: 01y Attorney SBEO /0001- 169 /DOC /008.WPD 11/10/98 1:45 cag - 4 - SUMMARY REPORT PURSUANT TO HE =ALTH 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 INS OFFICE, INC. 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 INS Office, Inc. (Developer), a company owned by the Vanir Group of Companies, regarding a 3.27 acre site located at 655 West Rialto Street (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. 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 01F the Proposed Development The purpose of the proposed Agreement is to effect the development of an office building for the Immigration and Naturalization Service (INS) in downtown San Bernardino. Based on the proposed lease agreement with the General Services Administration (GSA) for the INS, the proposed project would consist of an office building of up to 60,000 square feet and appurtenant parking, landscaping and on -site improvements. The .Agency owns the Site and will convey the Site to the Developer through the Agreement. B. Agency Responsibilities 1. Prepare a Phase I and Phase II environmental assessment and perform remediation of the Site. 2. Assign the lease agreement with the INS to Developer. 3. Convey the cleared Site to the Developer in an as -is physical condition. C. Developer Responsibilities 1. Pay the Agency $100,000 at the execution of the DDA which amount shall be credited as required against the purchase price. 2. Purchase the Site from the Agency for appraised value. The purchase price will be secured by a 10 -year note payable from 15% of net operating income and /or sale or refinancing proceeds. 3. Assume all costs of planning, designing, developing and constructing all off -site and on -site improvements and building improvements on the Site in accordance with the lease agreement with the INS. 4. Undertake all environmental remediation of the Site. 04 II. COST OF THE AGREEMENT TO THE AGENCY The costs to be incurred by the Agency are comprised of land acquisition and environmental remediation, demolition of the existing improvements. The Agency costs have been estimated as follows: Site Acquisition $208,350 Environmental Remediation 200.000 Total Agency Costs $408,350 The Agency acquired the Site for $208,350. Environmental remediation costs are estimated to be $200,000. Total Agency costs are estimated to be $408,350. The Agency will receive revenues from three sources: the land purchase deposit, land sale proceeds and tax increment revenues. In terms of land sale proceeds, the Agency will receive the appraised value for the Site less the $100,000 land purchase deposit. This amount will be paid to the Agency from 15% of net rental income and sale or refinancing proceeds. Under the Agreement, the appraised value will be determined at completion. The Agency will also receive tax increment revenues over the remaining term of the Central City Redevelopment Project Area through 2021. Land Purchase Deposit $100,000 Land Sale Proceeds TBD NPV Tax Increment Revenues 850,000 Total Agency Revenues $950,000 As indicated above, Agency costs amount to $408,350 and the land purchase deposit and Agency tax increment revenues are estimated at $950,000. Under the Agreement, the Agency is projected to receive $541,650 in net revenues. Payments received for the remainder of land purchase over time will increase the Agency's net revenues. III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN The Site has a peripheral location in downtown San Bernardino. Given the location characteristics of the Site, office use represents the highest and best use of the Site. Under the Agreement the Site will be conveyed to the Developer at the appraised value for an office use which represents the highest use allowed under the Redevelopment Plan. 3 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 As noted above, the Site will be conveyed to the Developer for the highest use value allowed under the Redevelopment Plan. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE FAIR REUSE VALUE As noted above, the Site is being conveyed to the Developer at its highest use value. VI. BLIGHT ALLEVIATION The implementation of the proposed Agreement will result in the development of a vacant site and the remediation of environmental conditions at the Site. The development of a modern office building at the Site will add to the commercial diversity of the area and will bring new employment to the downtown. 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. 5. Enhancement of ceremonial streets which function as the focal points in their individual neighborhoods. 6. Continued preservation of historically significant structures. L! It E 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 office complex. 2. The provision of the office building and its occupancy by the INS will increase employment in downtown San Bernardino, providing a catalyst for additional reinvestment by private enterprise in the surrounding area. 3. The office building 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. 5 KEYSER MARSTON ASSOCIATES INC. 500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE: 213 /622 -8095 FAX: 213/622 -5204 E -MAIL: kmala@kmainc.com WEB SITE: http: / /www.kmainc,.com MEMORANDUM To: Mr. Ronald Winkler, Director San Bernardino Redevelopment Agency From: Keyser Marston Associates, Inc. Date: November 11, 1998 Subject: Vanir Disposition and Development Agreement Health & Safety Code Section 33433 Report ADVISORS IN: REAL ESTATE REDEVELOPMENT AFFORDABLE HOUSING ECONOMIC DEVELOPMENT FISCAL IMPACT INFRASTRUCTURE FINANCE VALUATION AND LITIGATION SUPPORT LOS ANGELES CALVIN E. HOLLIS, II KATHLEEN H. HEAD JAMES A. RABE SAN DIEGO GERALD M. TRIMBLE ROBERT J. WETMORE PAUL C. MARRA SAN FRANCISCO A. JERRY KEYSER TIMOTHY C. KELLY KATE EARLE FUNK DENISE E. CONLEY DEBBIE M. KERN MARTHA N. PACKARD Pursuant to your request, Keyser Marston Associates, Inc. (KMA) has 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 INS Office, Inc. and the San Bernardino Redevelopment Agency. Should you have any questions, please call. JAR:gbd Attachment 98750.SNB 19020.001.005 RECORDING REQUEs'TED BY REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND WHEN RECORDED MAIL TO: SABO & GREEN A Professional Corporation Suite 1015 23801 Calabasas Road Calabasas, California 91302 (Space Above for Recorder's Use) Disposition and Development Agreement TABLE OF CONTENTS ARTICLE............................... ............................... 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 .............................. 1 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 .. ............................... 3 Section 2.02. Escrow ............. ............................... 4 Section 2.03. Conveyance of Title and Delivery of Possession ............ 5 Section 2.04. Form of Deed ........ ............................... 6 Section 2.05. Condition of Title ...... ............................... 6 Section 2.06. Conditions for Close of Escrow .......................... 6 Section 2.07. Time and Place for Delivery of Documents to Escrow ........ 8 Section 2.08. Payment of the Consideration and Recordation of the Grant Deed(s) and other Documents ......... ............................... 8 Section 2.09. Title Insurance ....... ............................... 8 Section 2.10. Taxes and Assessments ............................... 9 Section 2.11. Zoning of the Property . ............................... 9 Section 2.12. Condition of the Property .............................. 9 Section 2.13. Financing .......... ............................... 10 Section 2.14. Guarantee .......... ............................... 10 ARTICLE III ............................. ............................... 11 DEVELOPMENT OF THE SITE ..... ............................... 11 Section 3.01. Development by Developer ............................ 11 Section 3.02. Responsibility of the Agency ........................... 18 Section 3.03. Taxes, Assessments, Encumbrances and Liens ............ 18 Section 3.04. [Omitted] ........... ............................... 19 Section 3.05. Prohibition Against Transfer ........................... 19 Section 3.06. Security Financing; Right of Holders ..................... 19 Section 3.07. Right of the Agency to Satisfy Other Liens on the Property after Conveyance of Title ......... ............................... 20 Section 3.08. Certificate of Completion .............................. 20 ARTICLEIV ............................. ............................... 22 USE OF THE SITE ............... ............................... 22 Section 4.01. Uses .............. ............................... 22 Section 4.02. Maintenance of the Property ........................... 22 Section 4.03. Obligation to Refrain from Discrimination ................. 22 Section 4.04. Form of Nondiscrimination and Nonsegregation Clauses ..... 22 Section 4.05. Effect and Duration of Covenants ....................... 23 ARTICLEV .......................... ............................... 23 DEFAULTS, REMEDIES AND TERMINATION ......................... 23 Section 5.01. Defaults - General . ... ............................... 23 Section 5.02. Legal Actions ....... ............................... 24 Section 5.03. Rights and Remedies are Cumulative .................... 24 Section 5.04. Damages ........... ............................... 25 Section 5.05. Specific Performance . ............................... 25 Section 5.06. Rights and Remedies of Termination .................... 25 Section 5.07. [Intentionally Omitted] .. ............................... 27 Section 5.08. Obligations of Developer After Termination ............... 27 Section 5.09. Limitation on Rights and Remedies After Issuance of Certificate of Completion ................ ............................... 27 ARTICLEVI ............................. ............................... 27 GENERAL PROVISIONS .......... ............................... 27 Section 6.01. Notices, Demands and Communications Between the Parties. ......................... ............................... 27 Section 6.02. Conflict of Interest . ... ............................... 28 Section 6.03. Warranty Against Payment of Consideration for Agreement. .. 28 Section 6.04. Nonliability of Agency Officials and Employees ............ 28 Section 6.05. Enforced Delay: Extension of Time of Performance ......... 28 Section 6.06. Inspection of Books and Records ....................... 29 Section 6.07. Approvals .......... ............................... 29 Section 6.08. Real Estate Commissions ............................. 29 Section 6.09. Indemnification ...... ............................... 30 Section 6.10. Release of Developer from Liability ..................... 30 Section 6.11. Attorneys' Fees ...... ............................... 30 Section 6.12. Dispute Resolution ... ............................... 30 Section 6.13. Effect .............. ............................... 31 ARTICLEVII ............................ ............................... 31 ENTIRE AGREEMENT, WAIVERS AND AMENDMENT .................. 31 Section 7.01. Entire Agreement .... ............................... 31 ARTICLE VIII ............................ ............................... 32 TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION ......................... ............................... 32 Section 8.01. Execution and Recordation ............................ 32 EXHIBIT "A" - SCOPE OF DEVELOPMENT EXHIBIT "B" - LEGAL DESCRIPTION EXHIBIT "C" - ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT "D" - GRANT DEED EXHIBIT "E" - SCHEDULE OF PERFORMANCE EXHIBIT "F" - CERTIFICATE OF COMPLETION EXHIBIT "G" - GUARANTEE EXHIBIT "H" - HOLD HARMLESS AGREEMENT EXHIBIT "I" - DEFAULT ASSIGNMENT AGREEMENT THIS AGREEMENT is entered into by and between the Redevelopment Agency of the City of San Bernardino (the "Agency "), and Affaitati LLC, a California 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 construction of a commercial office building (described in Exhibit "A" hereto and incorporated herein by reference) (the "Project ") by the Developer on certain real property (described in Exhibit "B" attached hereto and incorporated herein by reference) (the "Property "). The Property is located within a duly established redevelopment project area of the City designated as the Central City South Redevelopment Project Area (the "Project Area ") . The purchase and the redevelopment of the Property 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 South 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. The Agency represents and warrants that the uses and improvements to be constructed on the Property in accordance with the Scope of Development and the attachments thereto including but not limited to that certain Lease Agreement (the "Lease ") between the Agency and General Services Administration of the United States ( "GSA" or "Lessee ") comply with the provisions of the Community Redevelopment Law. Section 1.03. Parties to the Agreement. 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 M. The principal office of the Agency is located at 201 N. "E" 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. 1 The Developer is Affaitati LLC, a California limited liability company. The principal office of the Developer for purposes of this Agreement is located at 393 West Athol Street, Suite 2, San Bernardino, CA 92401, 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 Ralph Affaitati. Prior to the Agency's execution of 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 Property 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 Property 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 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 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: (a) the Agency shall first notify the Developer in writing of its intention to terminate this Agreement pursuant hereto, and (b) 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 2 1.04(c), and (c) 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. Agency agrees that, so long as Ralph Affaitati remains the Manager of the Developer, no material change in management or control of the Developer shall be deemed to have occurred. W Kelm Section 2.01. Purchase of Property. The Developer shall purchase, and the Agency shall sell, the Property under the terms of this Agreement and the attachments hereto: a. Stash. At the Close of Escrow, as hereinafter defined, Developer shall pay the Agency Two Hundred Eight Thousand Three Hundred Fifty Dollars ($208,350) in cash. b. Assumption of Lease Obligation and Professional Service Agreements. Subject to Section 3.01x hereof, Developer shall assume all of Agency's obligations under the Lease pursuant to that certain Assignment and Assumption Agreement (the "Assignment ") attached hereto as Exhibit "C" and incorporated herein by this reference. Specifically, under said Assignment, Developer shall assume the obligations of the Agency to cause the construction of the Project, obtain construction and permanent financing for said Project and provide for the operation and maintenance thereof. Notwithstanding the foregoing, Developer shall not be required to assume any professional service agreement entered into between the Agency and any provider of professional services. Agency agrees that, in the event Agency receives any payment from the tenant under the Lease, whether by check or otherwise, Agency shall, promptly endorse such check and deliver the same to the Developer or othe a deliver such payment to the Developer; picevided heweveF, DeyelepeF iS =da Wit WAE$6� /GPI C. Appraisal Differential. Prior to Close of Esc/ yuo ; °pan appraisal ( "Appraisal ") of the Property shall be performed at Agency's cost, by a reputable MAI appraiser or appraisal company mutually agreeable to Developer and Agency. In addition to the amount paid by Developer to Agency at Close of Escrow, as set forth in Section 2.01 a of this Agreement, upon obtaining permanent financing for the Project, Developer shall also pay to Agency an amount representing the appraised value of the land 3 constituting the Property, less the amount paid to Agency by Developer as set forth in Section 2.01a of this Agreement. In the event that the amount paid by Developer asset forth in Section 2.01 a of this Agreement is greater than the appraised value of the land determined by the Appraisal, Agency shall not be required to repay Developer, and the cash price paid as set forth in Section 2.01 a of this Agreement shall constitute the purchase price of the land hereunder. Section 2.02. Escrow. a. On or before three (3) days of the date of this Agreement, the Agency and the Developer agree to establish an escrow for the purchase and sale of the Property at First American Title Insurance Company, San Bernardino, California Telephone: (909) 889 - 0311), Attention: Lee Ann Adams (the "Escrow Agent "). b. Upon the opening of escrow, Developer shall deposit Two Hundred Eight Thousand Three Hundred Fifty Dollars ($208,350) as a non - refundable deposit which shall be applied to the cash portion of the purchase price of the Property set forth in Section 2.01(a). In the event that this Agreement is terminated prior to conveyance of title to the Developer for any reason other than the default of Developer, the Agency shall cause the Escrow Agent to return the deposit to the Developer within five (5) days. C. Upon the opening of escrow, the Agency shall cause a Preliminary Title Report prepared by First American Title Insurance (the "Title Company ") to be delivered to the Developer along with legible copies of all reported title exceptions. Developer will respond in writing within ten (10) days of receipt of said Preliminary Title Report and copies of all reported title exceptions and will indicate any exceptions which Developer requests to be removed. Within ten (10) days of receipt of said response, Agency may terminate this Agreement and any obligations hereunder if the Agency believes, in its sole discretion, that removing such title exception(s) will place an undue burden on the Agency. The Agency and the Developer must approve the Preliminary Title Report in writing as a condition precedent to close of escrow. d. The Agency and the Developer shall deposit this Agreement into escrow upon opening and 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. e. The Agency and the Developer shall deliver to the Escrow Agent all documents necessary for the conveyance of title to the Property, to the extent provided in 51 this Agreement, in conformity with, within the times, and in the manner provided in this Agreement. f. The Agency and the Developer shall pay all fees, related to the transfer of the Property 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. g. 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 in accordance with the requirements of this Agreement. h. 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. i. 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 1.03 of this Agreement for notices, demands and communications between the Agency and the Developer. Section 2.03. Conveyance of Title and Delivery of Possession. a. Subject to the conditions set forth in Section 2.06 hereof 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 in accordance with the provisions of this Section and Section 2.06 of this Agreement shall be completed on or prior to May 1, 1999 ( "Close of Escrow "). The conveyance of title to the Developer shall occur upon the Close of Escrow, subject to Sections 2.06(a) and (b). The Agency and the Developer agree to perform all acts necessary for conveyance of title to the Property, in the form and to the extent required herein, in sufficient time for title to be conveyed in accordance with this provision. b. In the event that prior to the close of escrow the Developer commences environmental remediation of the Property as described in Section 3.01(x) hereof, Developer is hereby granted access to the Property in order to perform said environmental remediation. Possession of the Property shall be delivered to the 5 Developer concurrently with the conveyance of title. The Developer shall accept title and possession to the Property on the date established therefor in this Section. C. In the event that the date for Close of Escrow cannot be met due to one or more of the conditions for Close of Escrow set forth in Section 2.06 of this Agreement having not been satisfied or waived, the Agency and Developer may agree to an extension, provided there is a reasonable likelihood that such additional time will permit the satisfaction of the unsatisfied condition or conditions. To the extent the Property is not acquired within the times set forth herein, as extended, then the Agency's obligations under this Agreement shall be deemed terminated. Section 2.04. Form of Deed. The Agency shall convey to the Developer title to the Property in the condition provided in Section 2.05 of this Agreement by a grant deed substantially in the form attached hereto as Exhibit "D ". Section 2.05. Condition of Title. The title to the Property conveyed by the Agency to the Developer shall be a marketable title free and clear of encumbrances and exceptions, except for: (a) the Lease and the agreements, covenants and conditions of this Agreement and the Grant Deed, (b) such pre- existing covenants, conditions, restrictions and 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, if any. Section 2.06. 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: 1. The Developer shall have deposited into the escrow the cash payable upon closing and all other sums required to be deposited by it into the escrow pursuant to this Agreement; 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 of California to transact business within the State, to hold title to the Property and to develop the Project, as provided in Section 3.01(a) hereof; 3. [Intentionally Omitted] 4. The Developer shall have delivered to the Agency an executed original of the personal guarantee of Ralph Affaitati, as guarantor of the obligations of the Developer hereunder as provided in Section 2.14 hereof; 5. The Developer shall have delivered to the Agency an executed Assignment as provided in Section 2.01(b) hereof; and 6. The Developer shall have executed an assignment of any and all of the professional service contracts and agreements entered by Developer in connection with the construction of the Project, in the form of Exhibit "I" hereof (the "Default Assignment Agreement "), with a condition subsequent stating that said assignment shall only take effect upon the default hereunder by the Developer. 7. The Developer shall have executed construction financing agreements for the financing of the Project by a reputable, recognized and well- established financial institution or lending source including, but not limited to, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like, and the loan represented by such financing is in a position to fund conditioned only on the Close of Escrow. 8. The Developer shall have obtained all entitlements and building permits necessary to commence construction of the Project. b. The Developers 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 to Developer, subject only to those exceptions as set forth in Section 2.05 of this Agreement and delivery of title insurance evidencing such title as set forth in Section 2.09 of this Agreement. 2. The Agency shall deliver to the Developer a Zoning Compliance Letter from the City stating that (i) the Property is zoned for the contemplated development, construction and operation of the Property in accordance with this Agreement and the Lease and (ii) the Developer shall be in a position to obtain, conditioned only on 7 the payment of permit fees, all construction permits required for the construction of the Project in accordance with this Agreement and the Lease; provided that Developer submits "complete" drawings and plans to the City which are consistent with City Codes. 3. The Agency shall deliver to the Developer a hold harmle 's greem t in the form of Exhibit "H" hereto. 4. See attached page 8 -a. Section 21_07. Time and la li of Documents to E Sub' ct to any mutually agreed upon written extensions of time or any extensi s o�erwise 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 two (2) calendar days before the date established for the conveyance of the Property, any and all documents which are required in order for escrow to close in accordance with this Agreement. The grant deed conveying the Property from the Agency to the Developer hereunder shall be prepared by the Agency, at the Agency's expense. The legal descriptions regarding the Property 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 'N8. Payment of the Consideration and Recordation of the Grant Deed(s) 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 have been satisfied, the Escrow Agent shall promptly file for recordation the grant deed to the Property and this Agreement among the land records in the Office of the San Bernardino County Recorder. The Escrow Agent shall thereafter promptly provide a copy of said recorded documents to both parties, shall promptly deliver the Purchase Price to the Agency and shall promptly deliver to the Developer a title insurance policy insuring title in conformity with this Agreement. Section 2.09. Title Insurance. Concurrently with recordation of the grant deed to the Property, the Title Company shall provide and deliver to the Developer a CLTA owner's policy of title insurance issued by the Title Company insuring that the title to the Property is as required pursuant to the terms of this Agreement. The title insurance policy shall be in the amount of Two Hundred Eight Thousand Three Hundred Fifty Dollars ($208,350). Developer at its sole cost, shall have the right to upgrade the CLTA owners policy of title insurance to an extended coverage policy of title insurance and, if Developer elects to do so, all references in this Agreement to good, marketable and /or insurable title to the Property shall be deemed to mean as insured pursuant to such extended coverage policy of title insurance. N. 4. The Developer shall have executed construction financing agreements for the financing of the Project by a reputable, recognized and well - established financial institution or lending source including, but not limited to, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like, and the loan represented by such financing is in a position to fund conditioned only t e' C 1 e f Escrow. 8 -a Section 2.10. Taxes and Assessments. Ad valorem taxes and assessments, if any, on the Property and taxes upon this Agreement or any rights hereunder levied, assessed or imposed as to any period prior to conveyance of title through the escrow, shall be borne by the Agency. Section 2.11. Zoning of the Property. The Agency will undertake the obligation to confirm in writing by Certificate of the City or otherwise, that the City's general plan and zoning ordinance permit the contemplated development, construction and operation of the Property in accordance with this Agreement and the Lease. The Agency shall assist the Developer in obtaining any and all necessary 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 2.12. Condition of the Property. a. The Property 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. 1. It shall be the responsibility solely of the Developer, at the Agency's expense, to remove all contaminated soil in accordance with Sections 3.01 (x) and 3.02 hereof and fill and recompact the Property upon completion of the remediation. 2. It shall be the responsibility solely of the Developer, at the Agency's expense, to perform all work necessary to remediate the Property in accordance with all applicable laws and ordinances. 3. It shall be the responsibility solely of the Developer, at the Developer's cost, to perform all normal grading operations on the Property (including, without limitation, subexcavation and recompaction of the soil within the property) which are necessary to construct the Project in accordance with all applicable laws and ordinances. However, to the extent that (a) the Developer is required to perform any grading operations as a result of (i) the existence of contaminated soil (within the Property) or (ii) the existence of rubble or debris (within the Property) and (b) Developer in fact performs such operations in accordance with the recommendations of CHJ Inc. (Including, without limitation, the recommendations in that certain report entitled, "Geotechnical Investigation, Proposed Office Building, Immigration and Naturalization Service, Southeast Comer of Rialto Avenue and "G" Street, San Bernardino, California, proposed for the City of San Bernardino, Economic Development Agency, Job. No.r986138`, dated N1998), then L198698 -3 P 9 Ti / � Developer shall perform such operations at the Agency's expense. In view of the foregoing, the Developer shall not disapprove any soils report or soils conditions which would permit the construction of the Project with normal foundation conditions. Section 2.13. Financing. a. [Intentionally Omitted] b. Any and all financing for the development of the Property 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 submit the following to the Agency as soon as reasonably available: 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. 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 of the form and manner of conveyance of the Property by the Agency to the Developer, as set forth in Sections 2.04, 2.05 and 2.06 hereof. In the event that said lender for the Project selected by the Developer disapproves of the form and manner of conveyance of the Property, as set forth in Sections 2.07, 2.08 and 2.09 hereof, the Developer shall in good faith use its best efforts to obtain the necessary financing for the Project from such other lender or lenders who approve said form and manner of conveyance. Section 2.14. Guarantee. The Developer shall cause Ralph Affaitati, an individual ( "Guarantor ") to execute a personal guarantee of the obligations of the Developer hereunder in the form of Exhibit G hereto incorporated herein by this reference. The guarantee ( "Guarantee ") shall provide for indemnification of the Agency pursuant to Section 6.09 hereof for any and all liability incurred as a result of a breach of the Lease due to Developer's actions, including but not limited to its failure to proceed with the construction of the Project; provided however, the Guarantee shall not include failure of Developer to proceed with performance hereunder resulting from one of the contingencies set forth in Section 5.06(a) hereof. In that event, as provided in Section 5.06(a), neither Developer nor Guarantor shall be subject to any liability hereunder. 10 ARTICLE III DEVELOPMENT OF THE SITE Section 3.01. Development by Developer. a. Scope of Development. The Developer agrees to develop the Property as a commercial office building (the "Building ") in accordance with and within the limitations established in the Scope of Development set forth in Exhibit "A" attached hereto and incorporated herein by reference and the Lease attached thereto. Subject to the limitations imposed herein, the Developer shall assume all of the Agency's obligations under the Lease and, subject to the obligations of the Agency to assist Developer pursuant to this Agreement, shall obtain all necessary City approvals and approvals from other governmental agencies. 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 Property pursuant to this Agreement. The Developer acknowledges that any change in the plans for development or the use of the Property as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City parking, height or other requirements which are applicable to the Project or to the Developer, any successor in interest or tenant of the Developer or any tenant or successor in interest pertaining to the Property, except by modification or variance approved by the City consistent with this Agreement. The Agency shall cooperate with and shall assist the Developer in order 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. Any failure by the City either to approve or disapprove any of such modifications or variances within a thirty (30) calendar day period shall constitute an enforced delay hereunder and, subject to the terms of the Lease, the Schedule of Performance attached hereto as Exhibit E shall be extended by that period of time beyond said thirty (30) calendar day period in which the City approves or disapproves such modifications or variances. Prior to the Close of Escrow, in the event that any delays are caused hereunder due to the actions or inactions of the City and said delays result in a breach of the terms of the Lease and said breach is not waived by the lessee after Developer, using its reasonable best efforts to negotiate a modification to the Lease, has not obtained such modification or waiver, then the Developer may, at its sole election, terminate this Agreement. In the event Developer terminates this Agreement pursuant to this subsection, upon written request by the Developer accompanied by supporting documentation, the Agency shall reimburse the Developer for all costs incurred in connection with the development of the Project. 11 C. The Scope of Development set forth in Exhibit "A" is hereby approved by the Agency upon its execution of this Agreement. The Project shall be developed and completed in conformance with the approved Scope of Development and any and all other plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Agency subject to approval by the Lessee. d. Subject to the obligations of the Agency to assist Developer pursuant to this Agreement, 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 required by such other bodies. If any revisions of the Scope of Development as approved by the Agency shall be required by another government official, agency, department or bureau having jurisdiction over the development of the Property, the Developer and the Agency shall cooperate in efforts to obtain waivers of such revisions, or to obtain approvals of any such revisions which have been made by the Developer and have thereafter been approved by the Agency. The Agency shall not unreasonably withhold approval of such revisions. e. Notwithstanding any provision to the contrary in this Agreement, the Developer agrees to accept and comply fully with any and all reasonable conditions of approval applicable to all permits and other governmental actions affecting the Project and consistent with this Agreement. f. The Developer shall cause landscaping plans for the Project 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 Property. These plans shall be prepared, submitted and approved within the times respectively established therefor in the Schedule of Performance as shown on Exhibit "E" attached hereto and incorporated herein by reference and shall be consistent with the Scope of Development. g. Within One Hundred Twenty (120) days of the execution of this Agreement, the Developer shall prepare and submit development plans, construction drawings and related documents for the development of the Property consistent with the Scope of Development and the Lease to the City, the Agency and the Lessee 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 (b) conformity of such plans, drawings and documents with the terms and conditions of this Agreement and the Lease. The development plans, construction drawings and related documents shall be submitted in two stages -- preliminary and final drawings (i.e., working drawings), plans and specifications. Final drawings, plans and specifications are hereby defined as those IVA 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. To the greatest possible extent, the Agency shall conduct its review of development plans, construction drawings and related documents for the development of the Property, concurrent with review of the same documents by the City. h. During the preparation of all drawings and plans for the Project, 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. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Property in order to ensure that they are consistent with this Agreement, the Scope of Development and the Lease. j. The Developer shall timely submit to the City for its review and approval any and all plans, drawings and related documents pertinent to the development of the Property, as required by the City. The Agency shall cooperate with and shall assist the Developer in order for the Developer 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. Any failure by the City to approve any of such plans or to issue necessary permits for the development of the Property within a 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 an substance to as to obtain the City's approval thereof. Prior to the Close of Escrow, in the event that any delays are caused hereunder due to the actions or inactions of the City and said delays result in a breach of the terms of the Lease and said breach is not waived by the lessee after Developer, using its reasonable best efforts to negotiate a modification to the Lease, has not obtained such modification or waiver, then the Developer may, at its sole election, terminate this Agreement. In the event Developer terminates this Agreement pursuant to this subsection, the Agency shall reimburse the Developer for all costs incurred in connection with the development of the Project upon written request by the Developer accompanied by supporting documentation for such costs. 13 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, (b) the Scope of Development, or (c) the Lease. Notwithstanding the foregoing, the Agency does not guarantee or warrant that the City will approve Developer plans, drawings or documents or will not impose new conditions on the Developer. I. 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 3.01(b) hereof. 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 3.01(b) hereof. 14 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 of constructing all improvements thereon and adjacent thereto as set forth in the Scope of Development shall be borne by the Developer except as provided herein. q. 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, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Schedule of Performance shall be subject to revision from time to time as mutually agreed upon in writing by and between the Developer and the Agency and as consistent with the Lease. 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 and as consistent with the Lease. r. Prior to and during the period of construction of the Project, the Developer shall submit to the Agency written progress reports when and as reasonably requested by the Agency but in no event more frequently than every calendar month. 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. S. Prior to the commencement of remediation of the Property pursuant to subsection (x) hereof or construction on the Property, 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 may be provided by a combination of policies, including a so- called "umbrella" policy. Said insurance shall cover comprehensive general liability including, but not limited to, contractual liability; acts of subcontractors; premises - operations; explosion, collapse and underground hazards, if applicable; broad form property damage, and personal injury including libel, slander and false arrest. In addition, the Developer shall provide to the Agency adequate proof of comprehensive automobile 15 liability insurance covering owned, non -owned and hired vehicles, with limits of liability of $350,000 per occurrence, provided so- called "umbrella" coverage of at least $1,000,000 is also provided; and proof of workers' compensation insurance. Any and all insurance policies required hereunder shall be obtained from insurance companies admitted in the State of California and rated at least B +: XII in Best's Insurance Guide. All said insurance policies shall provide that they may not be canceled unless the Agency and the City receive written notice of cancellation at least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance obtained by the Developer hereunder shall be primary to any and all insurance which the Agency and/or City may otherwise carry, including self insurance, which for all purposes of this Agreement shall be separate and apart from the requirements of this Agreement. Any insurance policies governing the Property as obtained by the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance means those insurance policies approved by 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. t. The Developer for itself and its successors and assigns agrees that in the construction of the improvements on the property 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. U. The Developer shall carry out its construction of the improvements on and off the Property in conformity with all applicable laws, including all applicable federal and state labor standards and requirements; provided, however, that the Developer and its contractors, successors, assigns and transferees are not waiving their rights to contest any such laws, rules or standards. 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. V. Before commencement of construction and development of any buildings, structures or other work or improvements upon the Property, 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 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, certificates of occupancy. W. Officers, employees, agents or representatives of the Agency and the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours during the period of construction of the Project for the purposes of this Agreement including, but not limited to, the inspection of the work being performed in constructing the Project. Such officers, employees, agents or representatives of the Agency and /or the City shall be those persons who are so identified by the Executive Director. Any and all officers, employees, agents or 16 representatives of the Agency and the City who enter the Property pursuant hereto shall identify themselves at the job site office upon their entrance on to the Property and shall at all times be accompanied by a representative of the Developer while on the Property; provided, however, that the Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the Agency and /or the City of this right of access, other than injury, property damage or liability relating to the sole negligence of the Developer or its officers, agents or employees. X. The Agency and the Developer hereby acknowledge that Phase I and Phase II Environmental purveys showing certain contamination of the Property have been delivered to Developer. Developer and Agency agree that the Agency has the sole responsibility to deliver the Property to Developer free and clear of any contamination by any kind of toxic or hazardous material which exceeds any regulatory standard or threshold or which would pose any risk to humans through acute or chronic exposure. Notwithstanding the above, Developer shall remediate, or cause the remediation of the Property on behalf of the Agency at the Agency's sole cost and expense. The Developer agrees to contract with licensed remediation specialists with prior experience undertaking the remediation required for the Property. The Developer shall submit to the Agency for approval prior to the execution thereof all contracts or subsequent change orders for, or relating to, remediation services. The Agency shall have five (5) business days to review and approve all contracts and three (3) business days to review and approve any change orders thereto. Developer agrees to comply with all prevailing wage laws which would be applicable to the Agency in the event that the Agency entered said agreements. The Developer shall submit invoices to the Agency every thirty (30) days, or as received, and the Agency shall reimburse the Developer for said costs within thirty (30) days of receipt by the Agency. The Developer shall provide the Agency, at the Agency's request, any and all necessary documentation describing and /or detailing the services performed in connection with the invoices. After completion of the remediation, the Developer shall extinguish any and all mechanics liens against the Property arising as a result of work performed on the Property in connection with the remediation; or obtain a bond or other surety covering any and all outstanding mechanics liens. The Developer hereby acknowledges and agrees that the Agency shall not be responsible for clearing title to the Property arising from liens placed on the Property as a result of the remediation except for mechanic's liens resulting from the failure of the Agency to pay invoices properly charged when due hereunder. Nothing contained herein shall confer legal responsibility for remediation of the Property to the Developer and the Agency shall indemnify and hold harmless the Developer as provided in Exhibit "H" hereof from any and all damages arising out of its 17 remediation of, or the condition of, the Property; provided that the Agency shall not be legally responsible for any mechanics liens placed on the Property resulting from acts other than failure of the Agency to pay invoices when due hereunder. Section 102. Responsibility of the Agency. The Agency, without any expense of the Developer therefor and without the creation of any assessments or claims against the Property as a result thereof, shall perform the work specified for the Agency to perform, as follows: a. The Agency shall perform all necessary soils and environmental tests and cause the remediation of the Property. b. The Agency shall use its best efforts to assist the Developer in obtaining the necessary approvals from the Lessee in order to cause the transfer of ownership of the Property from the Agency to the Developer, including but not limited to the execution of all assignment documents required by a Lessee to evidence the substitution of the Developer for the Agency un a the _ se Agreement. including granting; an easement for such purpose to Develope6raina ` C. The Agency shall cooperate with the Developer to allow from the Proper ty to drain into the existing drainage facilities on the adjacen property owned b the A enc . The costs of connection shall be the sole re lity of the Developer. The Agency shall not charge the Developer connection fees for the -tom connection to the stadium property. The Developer acknowledges that an easement from the Southern Pacific Railroad may be required to run lines from the Property to the adjacent stadium property and obtaining any such easements or approvals shall be the sole responsibility of the Developer. The Developer shall bear the costs of construction and connection of the new facilities to the existing drainage facilities. Section 3.03. Taxes, Assessments. Encumbrances and Liens. The Developer shall pay prior to the delinquency all real property taxes and assessments assessed and levied on or against the Property, utility user taxes and business license taxes, subsequent to the close of the escrow and the conveyance to the Developer of title to the Property hereunder. The Developer shall not place and shall not allow to be placed on the Property 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, related to acts or omissions occurring subsequent to the close of escrow and the conveyance to the Developer of title to the Property hereunder, or shall assure the satisfaction thereof, within a reasonable time but in any event prior to a sale of the Property, or any portion thereof, thereunder. 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. M] Section 3.04. [Omitted] Section 3.05. Prohibition Against Transfer. a. Prior to the recordation of a Certificate of Completion with respect to the Property as set forth in Section 3.08 of this Agreement, the Developer shall not, without prior written approval of the Agency, which approval shall not be unreasonably withheld, or except as permitted by this Agreement and the Lease, (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 or the improvements thereon. This prohibition shall not apply the reasonable grant of limited easements or permits to facilitate the development of the Property. b. It is understood and agreed by the Developer that neither the Developer, nor its assigns or successors in interest to the Property or this Agreement, shall sell transfer, convey, assign, lease, leaseback or hypothecate the Property or any portion thereof to any entity or party, or for any use of the Property, that is partially or wholly exempt from the payment of real property taxes pertinent to the Property, or any portion thereof, or which would cause the exemption of the payment of all or any portion of such real property taxes. Performance of the Lease is hereby agreed not to violate any provision of this Section. 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 shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. Section 3.06. Security Financing Right of Holders. a. Notwithstanding any provision set forth in Section 3.05 hereof to the contrary, mortgages, deeds of trust, or any other form of lien required for any reasonable method of financing are permitted before the recordation of the Certificate of Completion (referred to in Section 3.08 of this Agreement), but only for the purpose of securing loans of funds to be used for financing the acquisition of the Property, and any other expenditures necessary and appropriate to develop or hold the Property 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 shall not be unreasonably withheld. In the event the Agency approves said instrument of conveyance as herein provided, the Agency shall execute all necessary agreements to subordinate its interests hereunder to said instruments of conveyance as necessary to obtain such financing. b. In any event, the Developer shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien that has been created 19 or attached thereto prior to completion of the construction of the improvements on the Property whether by voluntary act of the Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer to the Agency prior to suit being filed to foreclose such mechanic's lien. C. The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate 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 and as permitted under the Lease. 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 guarantee such construction or completion; nor shall any covenant or any other provision in the grant deed for the Property 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 to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement during the term of the Lease. Section 3.07. Right of the Agency to Satisfy Other Liens on the Property after Conveyance of Title. After the conveyance of title to the Property by the Agency to the Developer and prior to the recordation of the Certificate of Completion (referred to in Section 3.08 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, 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 any portion thereof, to forfeiture or sale. Section 3.08. 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 minor building "punch -list" items, to be completed by the Developer upon the Property, the Agency shall furnish the Developer with a Certificate of Completion for the Property, substantially in the form of Exhibit "F" attached hereto. Notwithstanding any provision set forth herein to the contrary, the completion of construction and development of improvements on the Property shall be deemed to include the completion of construction and development of any and all buildings on said Property 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 said Property. 20 b. The Agency shall not unreasonably withhold the issuance of such Certificate of Completion. The Certificate of Completion shall be, and shall so 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 Property. After the recordation of the Certificate of Completion, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by any covenants contained in the grant deed, 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 Property, 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 Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder's Office of the County where the Property is located. d. If the Agency refuses or fails to furnish a Certificate of Completion for the Property after written request from the Developer, the Agency shall, within fifteen (15) calendar days of the written request or within three (3) calendar days after the next regular meeting of the Agency, whichever date occurs later, provide to the Developer a written statement setting forth the reasons with respect to the Agency's refusal or failure to furnish a Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building "punch -list" items, the Agency will issue its Certificate of Completion upon the posting of a bond or irrevocable letter of credit, reasonably approved as to form and substance by the Agency Counsel and obtained by the Developer in an amount representing a fair value of the work not yet completed as reasonably determined by the Agency. If the Agency shall have failed to provide such written statement within the foregoing period, the Developer shall be deemed conclusively and without further action of the Agency to have satisfied the requirements of this Agreement with respect to the applicable portion of the Property as if a Certificate of Completion had been issued therefor. 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 "D ". 21 ARTICLE IV USE OF THE SITE Section 4.01. Uses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that upon completion of construction, Developer shall cause to be opened on the Property an office building in accordance with the specifications provided by the Lessee under the Lease. Section 4.02. Maintenance of the Property. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that the Developer, such successors and such assigns shall 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 required to be planted in accordance with the Scope of Development. Section 4.03. Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property; nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the Property. Section 4.04. Form of Nondiscrimination and Nonsegrec ation Clauses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that the Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person; provided, however, that use of Property for the purposes in the Lease is hereby agreed not to violate any provision of this Section. 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, 22 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." 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 shall remain in effect for the duration of the Lease. 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 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 23 default commences to cure, correct or remedy such default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently and 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 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 or the Agency, or in such other manner as may be provided by law. d. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service on Ralph Affaitati at the address provided in Section 6.01(a) hereof, or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. Section 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. OW Section 5.04. Da mages. 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 (or such specific 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. Section 5.06. Rights and Remedies of Termination. a. Termination by the Developer. The Developer may terminate this Agreement if (i) the Agency does not tender conveyance of title to and possession of the Property 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 Developer to the Agency (any written demand shall specify the Agency's default and the action required to cure same), (ii) the GSA fails to execute the Lease upon the terms and conditions set forth in the Scope of Development prior to the Close of Escrow, (iii) prior to the Close of Escrow, the Agency or the City fails to approve or disapprove any modifications or variances to City codes pursuant to Section 3.01(i) hereof or Section 3.01(b) hereof or any plans, drawings or related documents pursuant to Section 3.010) hereof, which are not inconsistent with the Lease, or (iv) if one or more of the conditions set forth in Section 2.06(b) of this Agreement have not been satisfied, or otherwise waived by Developer, by the date set for Close of Escrow (any termination to shall be effective ten (10) calendar days after receipt by Agency of written notice from Developer specifying the one or more conditions set forth in Section 2.06(b) 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 ten (10) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at 25 its option may terminate this Agreement if following satisfaction of all conditions precedent for conveyance of the Property by the Agency to the Developer and at the time the Developer is required to deposit into escrow the Purchase Price, the Developer has not in fact made such deposit. 2. Subject to written notice of default which shall specify the Developer's default and the action required to cure same and upon ten (10) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer in breach of this Agreement assigns or attempts to assign this Agreement, or any right therein, or attempts to make any total or partial sale, lease or leaseback, transfer or conveyance of the whole or any part of the Property or the improvements to be developed thereon in violation of the terms of this Agreement, and the Developer does not correct such violation within thirty (30) calendar days from the date of receipt of such notice. 3. Subject to written notice of default, which shall specify the Developer's default and the action required to cure same and upon ten (10) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer: (a) does not within the time limits set forth in this Agreement or as specifically provided in the Schedule of Performance, subject to extensions authorized by this Agreement due to force majeure or otherwise, submit development plans, construction drawings and related documents acceptable to the Planning Department and Building Division of the City for plan check purposes and in order to obtain building permits for the Project, 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 ten (10) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its 26 option may terminate this Agreement if upon satisfaction of all conditions precedent and concurrent therefor under this Agreement, the Developer does not take title to the Property under tender of conveyance by the Agency, and such breach is not cured within thirty (30) calendar days after the date of receipt by the Developer of written demand therefor from the Agency. Section 5.07. [Intentionally Omitted]. Section 5.08. Oblations of Developer After Termination. In the event that the Agency terminates this Agreement pursuant to Section 5.06(b) hereof, the Default Assignment Agreement shall become effective as provided in the conditions subsequent contained therein and all professional service agreements and any other agreements entered in connection with the construction of the Project (upon written acceptance of the Agency) shall be assigned to the Agency and a Quitclaim Deed in the form of attached Schedule "I" to the Default Assignment Agreement shall be executed by Assignor, acknowledged in the presence of a notary public and delivered to Assignee and may be recorded by the Agency. Notwithstanding the foregoing, Developer shall remain liable for the obligations hereunder and under the Lease. Section 5.09. Limitation on Rights and Remedies After Issuance of Certificate of Completion. After issuance by the Agency of the Certificate of Completion under Section 3.08 of this Agreement, the rights and remedies contained in this Article V shall be applicable only with respect to the covenants and agreements contained in Article IV of this Agreement. ARTICLE VI GENERAL PROVISIONS Section 6.01. Notices Demands and Communications Between the Parties. a. Any and all notices, demands or communications submitted by any party to another party pursuant to or as required by this Agreement shall be proper if in writing and dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, return receipt requested, to the principal office of the Agency and the Developer, as applicable, as designed in Section 1.03 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, on the day that it is dispatched by messenger for immediate personal delivery, or five (5) days after it is placed in the United States mail as heretofore provided. 27 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 the Developer) Affaitati LLC 393 West Athol Street, Suite 2 San Bernardino, CA 92401 (if the Agency) San Bernardino Redevelopment Agency 201 N. "E" Street, 3rd Floor San Bernardino, CA 92401 -1507 Attn: Executive Director (with copy to) Sabo & Green, A Professional Corporation 23801 Calabasas Road, Suite 1015 Calabasas, CA 91302 Section 602. Conflict of Interest. No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Agreement and the development of the Property shall participate in any decision relating to the Agreement. The parties represent and warrant that they do not have knowledge of any such conflict of interest. Section 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 i.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 M 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, 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 a reasonable time after the commencement of the cause but no later than sixty (60) days thereafter. Times of performance under this 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 Property and /or the development thereof as necessary for the Agency, in its reasonable discretion, to enforce its rights under this Agreement. Matters discovered by the Agency shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of the Agency hereunder. The Developer shall also have the right at all reasonable times to inspect the books and records of the Agency pertaining to the Property and/or the development thereof as pertinent to the purposes of this Agreement. Section 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 Chairman of the Commission, the Secretary of the Agency and the Executive Director of the Agency are each authorized to make such determinations as are provided for herein on behalf of the Agency. Each of the preceding officers when acting with the consent of legal counsel is further authorized to execute such documents and instruments as are necessary to carry and the intent of this Agreement . Each such officer is further 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. 29 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 Property or negotiation of this Agreement. ecti n 6.09. Indemnification. The Developer agrees to indemnify and hold the City and the Agency, and their officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Developer in performing its obligations hereunder. The Agency, agrees to indemnify and hold the Developer and its officers, employees and agerlts, harmless from and against all damages, judgments, costs, expenses and fees ari g ffiom or related to any act or omission of the Agency in performing its obligations her der. Section (3-10. Release of Developer from Liability. Notwithsta in any provision herein to the contrary, the Developer shall be relieved of any and all liability for the obligations of the evel per hereunder with regard to the Property when a Certificate of Completion has been issued by the Agency hereunder, other than any covenants and obligations provided by the grant deed by which the Property 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 E3.12. Dispute Resolution. If any dispute shall arise concerning the provisions of this Agreement including, but not limited to, those provisions set forth in the Scope of Development attached hereto, such dispute shall be submitted to reference pursuant to Code of Civil Procedure Sections 638 to 645.1, inclusive, or, alternatively, to arbitration, on written notice of demand for arbitration ( "Notice of Demand ") of either party hereto given to the other. The arbitration shall be conducted pursuant to the provisions of Title 9 of Part 3 of the California Code of Civil Procedure (statutory section references in this Section shall be deemed to be references to the Code of Civil Procedure), as amended, amplified and modified by the following provisions: The arbitration shall be by a single neutral arbitrator. If the parties hereto have not agreed on the selection of the arbitrator within five (5) calendar days after giving of Notice of Demand, then either party hereto may petition the court to select the arbitrator pursuant to Section 1281.6. Each party hereto shall submit its nominees, if any, to the court within five (5) calendar days after said petition is served and filed. The arbitrator shall make his award within forty -five (45) calendar days after his appointment. Certain periods of time set forth in said Title 9 shall be shortened as follows: Section 1284, 1288.4, 1290.2 and 1290.6 -- halved; Section 1288 —four (4) years to, sixty (60) calendar days, and one hundred (100) days to thirty (30) 30 calendar days; and Section 1288.2 - -one hundred (100) days to thirty (30) calendar days. Venue of the arbitration hearing and any court proceedings referenced below shall be in the county where the (Property is located. The parties hereto as parties to any such arbitration shall have the right to petition the court to confirm, correct or vacate the arbitrator's award pursuant to Section 1285 and to appeal the decisions of the Superior Court in any such proceeding as provided in Section 1294 and 1294.2; provided, however, that any such appeal shall not stay or have the effect of staying the decision of the Superior Court. The costs of the arbitration and reimbursement to the other party for any and all legal fees related thereto pursuant to this Agreement, shall be borne by the losing party or in such proportions as the arbitrator shall decide. Nothing contained in this Agreement shall preclude either party hereto from seeking judicial relief which may not be obtainable or enforceable in, or which is in aid of, the arbitration proceedings referenced in this Section; provided that such judicial relief shall be sought in good faith and not as a subterfuge to avoid the arbitration procedures. 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 includes 34 pages and 9 attachments, which 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. C. None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with the grant deed conveying title to the Property, and this Agreement shall continue in full force and effect before and after such conveyance until issuance of the Certificate of Completion for the Property. 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. 31 AND RECORDATION •i : • .i. 'WENSTre - •� 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 forty -five (45) calendar days after the date of signature by the Developer. In the event that the Agency has not approved, executed and delivered the Agreement to the Developer within the foregoing period, then 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 Property in the Office of the County Recorder for the County where the Property is located. WN IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. A R VED �TO F RM: SABO & GREEN, A Professional Corporation Agency Special Counsel Date: SBEO/0001- 1691DOC/9.7 3/8/9912:00 ik "AGENCY" REDEVELOPMENT AGENCY OF THE CITY F SAN BERNARDINO By: 1< Ch pe son "DEVELOPER" AFFAITATI LLC a California limited liability company (All Signatures Must Be Notarized) 33 STATE OF CALIFORNIA COUNTY OF SAN BER'.NARDINO On March 23 1999 before me, Lisa A. Gomez, Notary Public , personally appeared Judith Valles , personally known to me (9F pFeved to Me eR the basis of satic, . 4G-teFy to be the personO whose name(O isk-re subscribed to the within instrument and acknowledged to me that 14e /she /tie} executed the same in #ie /her /thei-F authorized capacity0ee4, and that by #ie /her /th& signature() on the instrument the personfs), or the entity upon behalf of which the personw acted, executed the instrument. WITNESS my hand and official seal. Signatur 34 (Seal) !� SptQ P bC #� r mkt STATE OF CALIFORNIA COUNTY OF tlw ,>ic L //'Z On � ! before me (here insert name and title of the officer), personally ap red f r ct- - personally known to me (or proved to me on th basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he /shefthey executed the same in his /herlthefr authorized capacity(ies), and that by his /hef## t 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. Signature. i 35 (Seal) PHYLLIS M. JACKSON Commission # 1171607 Notary Puolic - California Z ?= Sor Bemardino County My Comr^, Expires Jon 30, 2002 EXHIBIT "A" SCOPE OF DEVELOPMENT Construction of an approximate 43,632 square foot commercial office building for the Immigration and Naturalization Service as per specifications contained in that certain Lease Agreement LCA 98157 between the Redevelopment Agency of the City of San Bernardino and the General Services Administration, as amended. Exhibit "A" - Page 1 W EXHIBIT "B" LEGAL DESCRIPTION Exhibit "B" - Page 1 EXHIBIT "B" PARCEL NO. 1 THAT PORTION OF LOT 18, BLOCK 11. RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE EAST ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES, 125 FEET; THENCE NORTH 60 FEET; THENCE WEST 125 FEET TO THE EAST LINE OF "G' STREET; THENCE SOUTH ALONG THE EAST LINE OF 'G' STREET, 60 FEET TO THE POINT OF BEGINNING. PARCEL NO. 2: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTH LINE OF SAID LOT. 198 FEET WEST OF THE NORTHEAST CORNER THEREOF; THENCE SOUTH 210.30 FEET, BUT NOT SOUTH OF THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE WEST 316.5 FEET, MORE OR LESS, TO A POINT 125 FEET EAST OF THE WEST LINE OF SAID LOT 18; THENCE NORTH 60 FEET, MORE OR LESS, TO A POINT ON TTIE SOUTH LINE OF THE PROPERTY CONVEYED TO GOLDEN STATE CLUB OF SAN BERNARDINO. A CORPORATION. BY DEED RECORDED SEPTEMBER 14, 1938. IN BOOK 1302, PAGE 85. OFFICIAL RECORDS: THENCE EAST ALONG SAID SOUTH LINE 74.3 FEET TO THE SOUTHEAST CORNER OF SAID GOLDEN STATE CLUB PROPERTY; THENCE NORTHERLY ALONG THE EASTERLY LINE OF SAID GOLDEN STATE CLUB PROPERTY 150.6 FEET, MORE OR LESS, TO THE NORTH LINE OF SAID LOT, BEING 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT; THENCE EAST ALONG THE NORTH LINE OF SAID LOT 236.19 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. PARCEL NO. 3: THAT PORTION OF LOT 18. BLOCK 11 OF FIVE ACRE SURVEY OF RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 2, RECORDS OF SAID COUNTY, DFSC:RIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF SAID LOT. THENCE WEST 16 FEET; THENCE SOUTH 80 FEET. THENCE WEST 105 FEET; THENCE SOUTH 50 FEET, THENCE WEST 76 FEET; THENCE SOUTH TO THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT; TIIENCE ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES OF SAID LOT TO A POINT 440 FEET LAST FROM THE WEST LINE OF SAID LOT; THENCE SOUTH 115 FEET, MORE OR LESS. TO A POINT 25 FEET NORTH FROM THE SOUTH LINE OF SAID LOT. SAID POINT BEING ON THE NORTH LINE OF THE RIGHT OF WAY CONVEYED TO THE CALIFORNIA CENTRAL RAILWAY CO., BY DEED RECORDED IN BOOK 62, PAGE 294. OF DEEDS; THENCE EAST ALONG THE NORTH LINE OF SAID RIGHT OF WAY, 20c1 FEET, MORE OR LESS, TO THE EAST LINE 01: SAID LOT; THENCE NORTH TO TIIE NORTHEAST CORNER OF SAID LOT TO THE POINT OF BEGINNING. PARCEL NO. 4: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 2. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS COMMENCING ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE NORTH 80 FEET TO THE SOUTH LINE OF FIRST STREET; THENCE EAST 105 FEET TO THE POINT OF BEGINNING. PARCEL NO. 5: ALL OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT THAT IS 60 FEET NORTH AND 71 FEET EAST OF THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18 FOR THE TRUE POINT OF BEGINNING; THENCE NORTH 0 DEG. 17' EAST; 25.5 FEET; THENCE WEST 2.10 FEET; THENCE NORTH 0 DEG. 17' EAST 125 FEET TO THE SOUTH LINE OF RIALTO AVENUE; THENCE EAST ALONG THE SOUTH LINE OF RIALTO AVENUE, 135.40 FEET TO A POINT TIiAT IS 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 18; THENCE SOUTH 150.6 FEET TO A POINT T11AT IS 128.3 FEET EAST OF TIIE POINT OF BEGINNING; THENCE WEST 128.3 FEET TO THE TRUE POINT OF BEGINNING. PARCEL NO. 6: THE WEST 77 FEET OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18, THENCE SOUTH 80 FEET; THENCE WEST 105 FEET: THENCE SOUTH 50 FEET; THENCE WEST 77 FEET; THENCE NORTH 130 FEET TO THE SOUTH L1NF. OF FIRST STREET; THENCE EAST 182 FEET TO THE POINT OF BEGINNING. EXHIBIT "C" ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (this "Assignment ") is entered as of February 15, 1999. FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Redevelopment Agency of the City of San Bernardino ( "Assignor") hereby assigns, transfers and conveys to AFFAITATI, LLC., a California limited liability company ( "Assignee "), pursuant to and as required by that certain Disposition and Development Agreement dated as of February 15, 1999, by and between the Assignor and Assignee (the "DDA "), as follows: RECITALS WHEREAS, the Assignor has agreed to transfer to the Assignee certain real property (the "Property ") pursuant to that certain DDA; and WHEREAS, there are existing documents and other obligations incurred by Assignor with respect to the Property as set forth herein which, pursuant to the DDA, are to be assumed by Assignee in addition to the other performance and financial obligations incurred by Assignor pursuant to the DDA as set forth therein; and WHEREAS, Assignor desires to fully transfer and convey all of its right, title and interest in, and obligations under, the various documents and the Property, and any and all other agreements existing with respect to the Property, to Assignee. NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS HEREINAFTER SET FORTH: Section 1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in, and obligations under, and Assignee hereby assumes all of Assignor's right, title and interest in, and obligations under that certain Lease Agreement LCA 98157 by and between the Assignor and the General Services Administration ( "GSA ") (the "Lease "). Section 2. Covenants. Assignee shall perform each and every covenant of the Assignor contained in the Lease. Section 3. Release. Assignee hereby irrevocably and unconditionally releases and forever discharges Assignor, and its predecessors, successors, assigns, executors and administrators, agents, employees, representatives, attorneys, conversion consultants, engineers, affiliates, officers, directors, elected officials, and all persons acting by, through, under or in concert with any of them, or any of them (collectively, the "Releasees "), from all actions, causes of action, suits, debts, liens, contracts, agreements, Exhibit "C" - Page 1 obligations, promises, liabilities, claims, rights, demands, damages, judgments, losses, costs, and expenses, including, without limitation, attorneys' fees, of any nature whatsoever, known or unknown, suspected or unsuspected, fixed or contingent which it now has, owns, holds or claims to have, own or hold against the Releasees, which arise from, are based upon or are in any manner related to: the formation, drafting, construction or interpretation of the Lease; the actions of any third person related to the Property, the Lease; or the accuracy of any document prepared by a third party, including consultants to Assignor, and relied upon by Assignee (all of which are collectively referred to herein as the "Released Claims "); provided that Assignor shall remain responsible for the environmental remediation of the Property and nothing herein shall relieve Assignor of said liability. Assignee specifically assumes any and all risk related to the Released Claims. It is expressly understood, acknowledged and agreed by Assignee that the facts in connection with which the release herein is given may hereafter turn out to be other than or different from the facts in that connection now known or believed by Assignee to be true, and Assignee expressly assumes the risk that the facts may turn out to be different, and agrees that this release shall, in all respects, be effective and not subject to termination or rescission by reason of such different facts. Assignor hereby acknowledges that it has due authorization to assign the Lease. Section 4. Indemnification. Assignor and Assignee each hereby indemnify the other against any causes of action, suits, debts, liens, liabilities, claims, demands, damages, judgments and costs, including, without limitation, attorneys' fees or costs, which arise out, are caused by or result from any act by said party which: is in contravention of the provisions of this Assignment or the Lease; arises from the ownership, maintenance, repair or rehabilitation of the Property by said party; or is based on any repr sen�iion made by said party to any third party. , Section 5. Unknown Claims. Assignee acknowledges th=nmt a'641( that subsequent to the execution of the release provisions of this As may discover, incur or suffer from claims which were unknown or unanticipated at the time the release provisions of this Assignment are executed, including, without limitation, unknown or unanticipated claims which arose from, are based upon or relate to the Released Claims, and which, if known by Assignee on the date of execution of the mutual release provisions of this Assignment, may have materially affected the decision of the party to execute the release provisions of this Assignment. Assignee acknowledges that it is assuming the risk of such unknown and unanticipated claims and agrees that this release of the Releasees applies thereto. Assignee expressly waives the benefits of Section 1542 of the California Civil Code, which reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Exhibit "C" - Page 2 Section 6. Full and Independent Knowledge. Each party represents that it has been, or had the opportunity to be represented by independent counsel of its own choosing in connection with its execution of this Assignment, that it has specifically discussed or had the opportunity to discuss with such counsel the meaning and effect of the release provisions of this Assignment and that it has carefully read and understands the scope and effect of each provision contained herein. Section 7. Binding Agreement. This Assignment shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 8. Governing Law. This Assignment shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 9. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. Section 10. Counterparts. This Assignment may be signed in counterparts. Any and all amendments to this Assignment shall be in writing, signed by each of the parties hereto. Section 11. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Assignment, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 12. Severability. In the event that any provision of this Assignment is found by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Assignment shall continue to be in effect as if the invalid provision had not been a part hereof. Exhibit "C" - Page 3 The parties hereto have caused this Assignment to be executed by their authorized representatives as set forth below. (SEAL) ATTEST: By: Secretary P:\ APPS \WPDATA\SBEOW001- 169\DOC\009.7 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Chairperson AFFAITATI, LLC a California limited liability company Ralph Affaitati, Manager Exhibit "C" - Page 4 Recording Requested by: AFFAITATI LLC After Recordation, Mail to and Mail Tax Statements to: AFFAITATI LLC 393 West Athol Street, Suite 2 San Bernardino, CA 92401 EXHIBIT "D" GRANT DEED 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 Affaitati LLC, a California limited liability company (the "Grantee "), the real property (the "Property ") legally described in the document attached hereto, labeled Exhibit A, and incorporated herein by this reference. 1. The Property is conveyed subject to the Disposition and Development Agreement entered into between the Grantor and the Grantee, dated as of February 15, 1999 (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 Property, 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, sublessees or vendees in the Property. The foregoing covenants shall run with the land. Exhibit "D" - Page 1 All deeds, leases or contracts made relative to the Property, shall contain the following nondiscrimination 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, sublessees 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, subtenants, sublessees or vendees in the premises 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, 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, subtenants, sublessees or vendees of the premises herein transferred." 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 security instrument permitted by the Agreement; provided, however, that any successor of Grantee to the 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 Exhibit "D" - Page 2 of five (5) 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. Exhibit "D" - Page 3 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: go Counsel for Grantor The provisions of this Grant Deed are hereby approved and accepted. APPROVED AS TO FORM: By: Counsel for Grantee P AA P P S \W P DATA \S B EO\0001- 169\DOC\009.7 Grantee: By: _ Title: By: _ Title: Exhibit "D" - Page 4 r EXHIBIT "E" Schedule of Performance Note: The summary of action items listed in this Schedule of Performance shall not be construed as making any substantive changes in the provisions of the Agreement to which such action items refer. ACTION A. 012ening. of Escrow Agency and Developer shall establish an escrow for the purchase and sale of the Property. (Section 2.02) B. Close of Escrow DATE On or before 3 days after entering into the Agreement. Agency and Developer shall take all steps Subject to the conditions necessary to convey to Developer title to set forth in the Agreement the Property. and any agreed upon (Section 2.03) extension of time, on or before May 1, 1999. C. Evidence of Insurance Developer shall furnish Agency evidence Prior to commencement of insurance. of construction on the (Section 3.0l.$) Property. 1. Developer shall submit Within 120 days of the development plans, construction execution of this Agreement. drawings and related documents to City, Agency and Lessee for concurrent approval. (Section 3.01 -g) 2. City, Agency and Lessee shall comment Within 30 days of submission on plans. of plans. (Sections 3.0l.g and 3.01J) 3. Developer shall work with City, Agency and As provided in Sections Lessee to finalize plans. 3.01.g through 3.01 J- Exhibit "E" - Page 1 E. F G (Sections 3.01.g, 3.01.h, 3.01.1 and 3.01j) F-TOMORMI, 4. City shall approve final plans, drawings and specifications. (Sections 3.0l.g and 3.01j) Landscaping Plans Developer shall submit preliminary landscaping plans to Agency, Agency shall comment on preliminary landscaping plans, Developer shall submit final landscaping plans to Agency and Agency shall approve final landscaping plans. (Section 3.01J) Construction of Improvements 1. Developer shall secure permits for construction. (Section 3.01.v) 2. Developer shall commence development and construction of improvements. (Section 3.0l.q) 3. Developer shall complete development and construction of improvements. (Section 3.01.q) Issuance of Certificate of Completion by Agency The Agency shall furnish the Developer with a certificate of completion. (Section 3.08) Within 30 days of submission of final plans by Developer. According to the same schedule as set forth above for review and approval of development plans, construction drawings and related documents. Exhibit "E" - Page 2 Before commencement of construction and development. Within a reasonable time after issuance of permits for construction. As required by the Lease. Upon written request by Developer and completion of construction and development of the improvements, excluding tenant improvements and punch list items. When Recorded, Mail to: EXHIBIT "F" CERTIFICATE OF COMPLETION We, , Chairperson 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. The improvements required to be constructed in accordance with that certain Disposition and Development Agreement (the "Agreement ") dated , by and between the Agency and (the "Developer ") on that certain real property (the "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 Property, excluding any normal and customary tenant improvements and minor building "punch -list" items, 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 Property, whether or not said improvements are on the 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 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 Agreement and the grant deed pursuant to which the Property was conveyed under the Agreement. Said Agreement is an official record of the Agency and a copy of said 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 Property to which this Certificate of Completion pertains is more fully described in Exhibit "A" attached hereto. Exhibit "F" - Page 1 EXHIBIT "G" PERSONAL GUARANTEE OF RALPH AFFAITATI TO A PUBLIC AGENCY ON BEHALF OF AFFAITATI, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR OBLIGATION UNDER DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND AFFAITATI LLC, A CALIFORNIA LIMITED LIABILITY COMPANY 1. For valuable consideration, the undersigned RALPH AFFAITATI (hereinafter called "Guarantor ") unconditionally guarantees the performance of, and promises to pay to the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (hereinafter called "Agency "), or order, on demand, in lawful money of the United States, any and all indebtedness of, AFFAITATI LLC, a California limited liability company , (hereinafter called "Developer ") to Agency. The word "indebtedness" is used herein in its most comprehensive sense and includes any and all advances, debts, obligations, and liabilities of Developer, heretofore, now, or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Developer may be liable individually or jointly with others. 2. The Agency has approved at a duly called and held meeting of the Agency on November 16, 1998 (the "Meeting ") the transfer of certain property as described in that certain Disposition and Development Agreement dated as of February 15, 1999 between the Agency and Developer (the "DDA "). The obligations of Developer under the DDA shall be secured by this guarantee (this "Guarantee "), executed by Guarantor. This is a continuing guarantee relating to any indebtedness, including that arising under successive transactions which shall either continue the indebtedness or from time to time renew it after it has been satisfied. This Guarantee shall not apply to any indebtedness created after actual receipt by Agency of written notice of its revocation as to future transactions. Any payment by Guarantor shall not reduce its maximum obligation hereunder unless written notice to that effect be actually received by Agency at or prior to the time of such payment and agreed to in writing by Agency. 3. The obligations hereunder are joint and several, and independent of the obligations of Developer, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Developer or whether Developer be joined in any such action or actions. 4. Guarantor authorizes Agency, upon written notice or demand and without affecting its liability hereunder, from time to time to (a) renew, compromise, extend, accelerate, or otherwise change the time for performance, or otherwise change the terms Exhibit "G" - of the indebtedness or any part thereof, including increase or decrease of the rate or rates of interest thereon; (b) take and hold security for the payment of this Guarantee or the indebtedness guaranteed, and exchange, enforce, waive, and release any such security; (c) apply such security and direct the order or manner of sale thereof as Agency in its discretion may determine; and (d) release or substitute any one or more of the endorsers or guarantors. Agency may without notice assign this Guarantee in whole or in part. 5. Guarantor waives, to the fullest extent permitted by law, all defenses which at any time may be available to it or Developer by virtue of any statute of limitations. Guarantor waives any right to raise as a defense to the enforcement of this Guarantee any defense arising by reason of any disability or other defense of Developer or by reason of the cessation from any cause whatsoever of the liabilities of Developer and further waives the right to interpose any counterclaim or setoff of any nature. Guarantor also waives all rights of subrogation against Developer until all obligations, whether or not subject to this Guarantee, are satisfied in full. Guarantor further waives notice of default by Developer, notice of acceptance of this Guarantee, presentments, notices of protest and notices of every kind and nature including those of any action or nonaction on the part of Developer or the Agency. Specifically, Guarantor acknowledges that Guarantor may have certain rights under applicable law which, if not waived by Guarantor as hereinafter provided, might provide Guarantor with defenses against Guarantor's liability under this Guarantee under certain circumstances, including, without limitation, (a) any defense Guarantor may have pursuant to Civil Code Section 2810, or otherwise, based upon (i) the cessation of liability on the part of Developer at any time after the DDA is executed and delivered, or (ii) any other disability or defense of Developer or any other guarantor, whatever the cause, whether by operation of law or otherwise; (b) any right Guarantor may have pursuant to Civil Code Section 2825, or otherwise, to be exonerated by any discharge of the Developer from liability under the DDA by operation of law, even without intervention or omission on the part of Agency; (c) any right Guarantor may have pursuant to Civil Code Section 2845, or otherwise, to require Agency to proceed against Developer, or any other guarantor, endorser, co- signor or other person, or to pursue or to refrain from pursuing any other remedy in Agency's power whatsoever, including without limitation, any remedy which Guarantor cannot pursue or which would lighten Guarantor's burden, and the right to be exonerated to the extent Guarantor is prejudiced by any failure by Agency to do so; (d) until the obligation under the DDA is fully satisfied, any right of reimbursement or subrogation Guarantor may have pursuant to Sections 2847 and 2848, or otherwise, or any right to otherwise enforce any remedy which Agency has against the Developer or against any other guarantor, endorser or co- signor, and any right pursuant to statute or by contract or otherwise to require other guarantors, endorsers or co- signors, to contribute to or reimburse Guarantor therefor; Exhibit "G" - 2 V (e) any defense Guarantor may have based on Civil Code Section 2855, or otherwise, that any arbitration award rendered against the Developer alone will not be, or be deemed to be, or be utilized as, an award against Guarantor, or any other guarantor, endorser or co- signor; and HAVING BEEN MADE AWARE OF THE FOREGOING RIGHTS AND DEFENSES, GUARANTOR AGREES THAT GUARANTOR SHALL NOT HAVE, AND GUARANTOR DOES HEREBY WAIVE, ANY AND ALL OF THE FOREGOING RIGHTS AND DEFENSES SET FORTH ABOVE. 6. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Agency, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing; and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by an instrument in writing executed by Agency. 7. In the event of litigation for the enforcement of this Guarantee, the prevailing party shall be entitled to costs including reasonable attorneys fees and court costs. 8. This Guarantee shall remain in effect until such time as the obligations of the Developer under the DDA are satisfied in full. At such time as all performance and financial responsibilities of Developer to Agency have been extinguished, this Guarantee shall be of no force and effect and shall be delivered to the Guarantor. 9. In all cases where there is but a single Developer or a single Guarantor, then all words used herein in the plural shall be deemed to have been used in the singular where the context and construction so require; and when there is more than one Developer named herein, or when this Guarantee is executed by more than one Guarantor, the word "Developer" and the word "Guarantor" respectively shall mean all and any one or more of them. Exhibit "G" - 3 �J IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guarantee as of February 15, 1999. GUARANTOR Ralph Affaitati I , as the wife of Ralph Affaitati, hereby expressly guarantee the obligations of Affaitati, LLC, a California Limited Liability Company, and I jointly and severally guarantee the obligations of Ralph Affaitati, a married man. I, the undersigned, as a married woman executing this Guarantee, hereby expressly agree that recourse may be had against my separate property and community property for all my obligations under this Guarantee. Signed: Dated: P:APPS \WPDATA \SBE0\0001 - 1690=009.7 ACCEPTED BY AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Chairperson Exhibit "G" - 4 EXHIBIT "H" HOLD HARMLESS AGREEMENT THIS HOLD HARMLESS AGREEMENT (this "Agreement ") is entered into by and between the Redevelopment Agency of the City of San Bemardino (the "Agency ") and Affaitati LLC, a California limited liability company (the "Developer "). The Agency and the Developer agree, as follows: WHEREAS, the Agency and the Developer entered into that certain Disposition and Development Agreement dated as of February 15, 1999 (the "DDA "); and WHEREAS, the Developer and Agency have agreed in the DDA that the Agency has the sole responsibility to deliver the property which is the subject of the DDA (the "Property ") to Developer free and clear of any contamination by any kind of toxic or hazardous material which exceeds any regulatory standard or threshold or which would pose any risk to humans through acute or chronic exposure; and WHEREAS, the Agency and the Developer have agreed under the DDA that notwithstanding the above, Developer shall remediate, or cause the remediation of the Property on behalf of the Agency at the Agency's sole cost and expense; and WHEREAS, the Agency desires to hold the Developer harmless for (i) the liability for environmental hazards discovered on the Property as a result of acts occurring prior to the execution of this Agreement and (ii) for the costs of remediation to said Property; and WHEREAS, in order to establish the terms and conditions upon whigl the indemnities hereunder shall be made, the parties hereto wish to enter this Agree t.,,' NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLO including, without limitation Section 1. Indemnity. The Agency hereby agrees to indemni efen and hold harmless the Developer from and against any and all liability, loss, costs, damages, fees of attorneys and other expenses which Developer may incur by reason of, or consequence of the remediation of the Property edcontamination of the Property by any kind of toxic or hazardous material discovered on the Property which exceeds any regulatory standard or threshold or which would pose any risk to humans through acute or chronic exposure; provided, however, that this indemnity shall not apply to any condition on the Property caused by acts occurring after the Close of Escrow (as defined in the DDA). - , or the condition of, Exhibit "H" -Page 1 Section 2. Developer Covenant. The Developer hereby agrees to observe and carry out the covenants made in Section 3.01(x) of the DDA. Section 3. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 4. Governing Law. This Agreement shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 5. Counterparts. This Agreement may be signed in counterparts. Any and all amendments to this Agreement shall be in writing, signed by each of the parties hereto. Section 6. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Agreement, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 7. Severability. In the event that any provision of this Agreement is fund by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Agreement shall continue to be in effect as if the invalid provision had not been a part hereof. Section 8. Attorney's Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, the prevailing party shall be entitled to recover as an element of its costs of suit reasonable attorney's fees as fixed by the court in such action or proceeding or in a separate action or proceeding brought to recover such attorney's fees. ATTEST: M Secretary REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO In Executive Director AFFAITATI, LLC a California limited liability company Ralph Affaitati, Manager Exhibit "H" -Page 2 EXHIBIT "I" DEFAULT ASSIGNMENT AGREEMENT FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, as of the effective date of this Default Assignment Agreement, Affaitati LLC, a California Limited Liability Company ( "Assignor ") hereby assigns, transfers and conveys to the Redevelopment Agency of the City of San Bernardino ( "Assignee "), pursuant to and as required by the Disposition and Development Agreement dated as of February 15, 1999, by and between the Assignor and Assignee (the "DDA "), pursuant to this Default Assignment Agreement (this "Default Assignment Agreement "), as follows: RECITALS WHEREAS, the Assignee transferred to the Assignor certain real property (the "Property ") pursuant to the DDA; and WHEREAS, in Section 5.08 of the DDA, the parties agreed that in the event the Agency terminates the DDA pursuant to Section 5.06(b) thereof, this Default Assignment Agreement shall become effective as herein provided and the Property and Project, the Lease (as herein defined) and all professional service agreements and any other agreements entered in connection with the construction of the Project (as defined in the DDA) shall be assigned to the Assignee and a Quitclaim Deed in the form of attached Schedule 1" shall be executed by Assignor, acknowledged in the presence of a notary public and delivered to Assignee and may be recorded by the Assignee; and WHEREAS, in order to establish and declare the terms and conditions upon which the assignments hereunder shall be made, the parties hereto wish to enter this Default Assignment Agreement. NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS HEREINAFTER SET FORTH: Section 1. Conveyance. As of the effective date of this Default Assignment Agreement, Assignor hereby conveys its property interest in the Property and the Project to Assignee. Five (5) days following the date that Assignee notifies Assignor in writing that the conditions set forth in Section 3 hereof have been satisfied and that this Default Assignment Agreement has become effective, Assignor shall execute a Quitclaim Deed in the form of the attached Schedule "11" which Quitclaim Deed shall be delivered to Assignee and recorded only upon the conditions set forth in Section 3 hereof. Section 2. Assianment. As of the effective date of this Default Assignment Agreement, Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in, and Assignee hereby assumes all of Assignor's right, title and interest in, (a) that certain Lease Agreement LCA 98157 by and between the Assignor and the General Services Administration ( "GSA ") (the "Lease ") and (b) all professional service Exhibit "I" - Page agreements and any other agreements entered in connection with the construction of the Project. The assignment hereunder shall be valid upon written acceptance of the Agency and as provided in Section 3 hereof. Section 3. Effective Date. A default under Section 5.06 of the DDA shall constitute a condition precedent to the effectiveness of this Default Assignment Agreement and this Default Assignment Agreement shall become effective if and only if the Agency terminates the DDA pursuant to Section 5.06 of the DDA. In no event shall this Default Assignment Agreement be effective at any time after Assignor is entitled to obtain a Certificate of Completion in accordance with terms and conditions of the DDA. Section 4. Binding Agreement. This Default Assignment Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 5. Governing Law. This Default Assignment Agreement shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 6. Successors and Assigns. This Default Assignment Agreement shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. Section 7. Counterparts. This Default Assignment Agreement may be signed in counterparts. Any and all amendments to this Default Assignment Agreement shall be in writing, signed by each of the parties hereto. Section 8. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Default Assignment Agreement, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 9. Severability. In the event that any provision of this Default Assignment Agreement is found by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Default Assignment Agreement shall continue to be in effect as if the invalid provision had not been a part hereof. Exhibit "I" -Page 2 Section 10. Date of Agreement. This Default Assignment Agreement shall be dated as of February 15, 1999. The parties hereto have caused this Default Assignment Agreement to be executed by their authorized representatives as set forth below. ATTEST: 2 Secretary AFFAITATI, LLC a California limited liability company By: Ralph Affaitati, Manager REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO M Chairperson Exhibit "I" -Page 3 STATE OF CALIFORNIA COUNTY OF On , 1999, before me, , Notary Public, personally appeared, , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their 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. Signature Exhibit "I" -Page 4 (Seal) STATE OF CALIFORNIA ) COUNTY OF ) On , 1999, before me, , Notary Public, personally appeared, , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their 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. Signature, Exhibit "I" -Page 5 (Seal) SCHEDULE 1 Order No. Escrow No. Loan No. WHEN RECORDED MAIL TO: DOCUMENTARY TRANSFER TAX $ SPACE ABOVE THIS LINE FOR RECORDER'S USE .....Computed on the consideration or value of property conveyed; OR .....Computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name QUITCLAIM DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, AFFAITATI, LLC a California Limited Liability Company, does hereby REMISE, RELEASE AND QUITCLAIM to the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, the real property in the City of San Bernardino, County of San Bernardino, State of California, described on Exhibit "A ", attached hereto and incorporated herein by reference. Dated: AFFAITATI, LLC, a California limited liability company } STATE OF CALIFORNIA } COUNTY OF } By: Ralph Affaitati Its Manager On before me, ACCEPTED BY REDEVELOPMENT AGENCY OF THE CITY personally appeared OF SAN BERNARDINO BY RESOLUTION ADOPTED NOVEMBER 18, 1998 personally known to me (or proved to me on the basis of satis- factory evidence) to be the person(s) whose names(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature MAIL TAX STATEMENTS AS DIRECTED TO: Chairperson (ibis area for official notarial seal) 1145(1/94) STATE OF COUNTY OF On _, 19_ before me, the undersigned, a Notary Public in and for said County and State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public EXHIBIT "A" PARCEL NO. 1: THAT PORTION OF LOT 18, BLOCK 11. RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE EAST ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES, 125 FEET; THENCE NORTH 60 FEET; THENCE WEST 125 FEET TO THE FAST LINE OF 'G' STREET; THENCE SOUTH ALONG THE EAST LINE OF 'G" STREET, 60 FEET TO THE POINT OF BEGINNING. PARCEL NO. 2: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO. IN THE COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2. RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON TI4E NORTH LINE OF SAID LOT, 198 FEET WEST OF THE NORTHEAST CORNER THEREOF; THENCE SOUTH 210.30 FEET, BUT NOT SOUTH OF THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE WEST 316.5 FEET, MORE OR LESS, TO A POINT 125 FEET EAST OF THE WEST LINE OF SAID LOT 18; THENCE NORTH 60 FEET, MORE OR LESS, TO A POINT ON THE SOUTH LINE OF THE PROPERTY CONVEYED TO GOLDEN STATE CLUB OF SAN BERNARDINO. A CORPORATION. BY DEED RECORDED SEPTEMBER 14, 1938, IN BOOK 1302, PAGE 85. OFFICIAL RECORDS; THENCE EAST ALONG SAID SOUTH LINE 74.3 FEET TO THE SOUTHEAST CORNER OF SAID GOLDEN STATE CLUA PROPERTY; THENCE NORTHERLY ALONG THE EASTERLY LINE OF SAID GOLDEN STATF CLUB PROPERTY 150.6 FEET, MORE OR LESS, TO THE NORTH LINE OF SAID LOT. BEING 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT; THENCE EAST ALONG THE NORTH LINE OF SAID LOT 236.19 FEET, MORE OR LESS, TO THE POINT OF BEGTNNING, PARCEL NO. 3: THAT PORTION OF LOT 18, BLOCK 11 OF FIVE ACRE SURVEY OF RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 2, RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF SAID LOT; THENCE WFST 16 FEET; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE SOUTH 50 FEET; THENCE WEST 76 FEET; THENCE SOUTH TO THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT; THENCE ALONG TILE NORTH LINE OF SAID SOUTH 2 ACRES OF SAID LOT TO A POINT 440 FEET LAST FROM THE WEST LINE OF SAID LOT; THENCE SOUTH 115 FEET, MORE OR LESS, TO A POINT 25 Fm NORTH FROM THE SOUTH LINE OF SAID LOT, SAID POINT BEING ON THE NORTH LINE OF THE RIGHT OF WAY CONVEYED TO THE CALIFORNIA CENTRAL RAILWAY CO., BY DEED RECORDED IN BOOK 62, PAGE 294, OF DEEDS; THENCE EAST ALONG THE NORTH LINE OF SAID RIGHT OF WAY, 200 FEET, MORE OR LFSS, TO THE EAST LIME OF SAID LOT; THF,NCE. NORTH TO TIIE NORTHEAST CORNER OF SAID LOT TO THE POINT OF BEGINNING. PARCEL NO. 4: THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: COMMENCING ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE NORTH 80 FEET TO THE SOUTH LINE OF FIRST STREET; THENCE EAST 105 FEET TO THE POINT OF BEGINNING. PARCEL NO. 5: ALL OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT THAT IS 60 FEET NORTH AND 71 FEET EAST OF THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18 FOR THE TRUE POINT OF BEGINNING; THENCE NORTH 0 DEG. 17' EAST: 25.5 FEET; THENCE WEST 2.10 FEET; THENCE NORTH 0 DEG. 17' EAST 125 FEET TO THE SOUTH LINE OF RIALTO AVENUE; THENCE EAST ALONG THE SOUTH LINE OF RIALTO AVI =NUE, 135.40 FEET TO A POINT THAT IS 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 18; THENCE SOUTH 150.6 FEET TO A POINT DIAT IS 128.3 FEET EAST OF THE POINT OF BEGINNING; THENCE WEST 128.3 FEET TO THE TRUE POINT OF BEGINNING. PARCEL NO. 6: THE WEST 77 FEET OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE SOUTH 50 FEET; THENCE WEST 77 FEET; THENCE NORTH 130 FEET TO THE SOUTH L1NF. OF FIRST STREET; THENCE EAST 182 FEET TO THE POINT OF BEGINNING. ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (this "Assignment ") is entered as of February 15, 1999. FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Redevelopment Agency of the City of San Bernardino ( "Assignor") hereby assigns, transfers and conveys to AFFAITATI, LLC., a California limited liability company ( "Assignee "), pursuant to and as required by that certain Disposition and Development Agreement dated as of February 15, 1999, by and between the Assignor and Assignee (the "DDA "), as follows: RECITALS WHEREAS, the Assignor has agreed to transfer to the Assignee certain real property (the "Property ") pursuant to that certain DDA; and WHEREAS, there are existing documents and other obligations incurred by Assignor with respect to the Property as set forth herein which, pursuant to the DDA, are to be assumed by Assignee in addition to the other performance and financial obligations incurred by Assignor pursuant to the DDA as set forth therein; and WHEREAS, Assignor desires to fully transfer and convey all of its right, title and interest in, and obligations under, the various documents and the Property, and any and all other agreements existing with respect to the Property, to Assignee. NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS HEREINAFTER SET FORTH: Section 1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in, and obligations under, and Assignee hereby assumes all of Assignor's right, title and interest in, and obligations under that certain Lease Agreement LCA 98157 by and between the Assignor and the General Services Administration ( "GSA ") (the "Lease "). Section 2. Covenants. Assignee shall perform each and every covenant of the Assignor contained in the Lease. Section 3. Release. Assignee hereby irrevocably and unconditionally releases and forever discharges Assignor, and its predecessors, successors, assigns, executors and administrators, agents, employees, representatives, attorneys, conversion consultants, engineers, affiliates, officers, directors, elected officials, and all persons acting by, through, under or in concert with any of them, or any of them (collectively, the "Releasees "), from all actions, causes of action, suits, debts, liens, contracts, agreements, obligations, promises, liabilities, claims, rights, demands, damages, judgments, losses, costs, and expenses, including, without limitation, attorneys' fees, of any nature whatsoever, known or unknown, suspected or unsuspected, fixed or contingent which it now has, owns, holds or claims to have, own or hold against the Releasees, which arise from, are based upon or are in any manner related to: the formation, drafting, construction or interpretation of the Lease; the actions of any third person related to the Property, the Lease; or the accuracy of any document prepared by a third party, including consultants to Assignor, and relied upon by Assignee (all of which are collectively referred to herein as the "Released Claims "); provided that Assignor shall remain responsible for the environmental remediation of the Property and nothing herein shall relieve Assignor of said liability. Assignee specifically assumes any and all risk related to the Released Claims. It is expressly understood, acknowledged and agreed by Assignee that the facts in connection with which the release herein is given may hereafter turn out to be other than or different from the facts in that connection now known or believed by Assignee to be true, and Assignee expressly assumes the risk that the facts may turn out to be different, and agrees that this release shall, in all respects, be effective and not subject to termination or rescission by reason of such different facts. Assignor hereby acknowledges that it has due authorization to assign the Lease. Section 4. Indemnification. Assignor and Assignee each hereby indemnify the other against any causes of action, suits, debts, liens, liabilities, claims, demands, damages, judgments and costs, including, without limitation, attorneys' fees or costs, which arise out, are caused by or result from any act by said party which: is in contravention of the provisions of this Assignment or the Lease; arises from the ownership, maintenanc repair or rehabilitation of the Property by said party; or is based on any representa made by said party to any third party. A Section 5. Unknown Claims. Assignee acknowledges that there s a risk that subsequent to the execution of the release provisions of this Assignment, ay discover, incur or suffer from claims which were unknown or unanticipated at the time the release provisions of this Assignment are executed, including, without limitation, unknown or unanticipated claims which arose from, are based upon or relate to the Released Claims, and which, if known by Assignee on the date of execution of the mutual release provisions of this Assignment, may have materially affected the decision of the party to execute the release provisions of this Assignment. Assignee acknowledges that it is assuming the risk of such unknown and unanticipated claims and agrees that this release of the Releasees applies thereto. Assignee expressly waives the benefits of Section 1542 of the California Civil Code, which reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. 2 Section 6. Full and Independent K=nowledge. Each party represents that it has been, or had the opportunity to be represented by independent counsel of its own choosing in connection with its execution of this Assignment, that it has specifically discussed or had the opportunity to discuss with such counsel the meaning and effect of the release provisions of this Assignment and that it has carefully read and understands the scope and effect of each provision contained herein. Section 7. Binding Agreement. This Assignment shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 8. Governing Law. This Assignment shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 9. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. Section 10. Counterparts. This Assignment may be signed in counterparts. Any and all amendments to this Assignment shall be in writing, signed by each of the parties hereto. Section 11. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Assignment, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 12. Severability. In the event that any provision of this Assignment is found by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Assignment shall continue to be in effect as if the invalid provision had not been a part hereof. 3 The parties hereto have caused this Assignment to be executed by their authorized representatives as set forth below. (SEAL) AT-I By: P:\ APPS \W P DATA\SBEO\0001- 169\DOC\009.7 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO in AFFAITATI, LLC a California limited liability company 4 d — STATE OF CALIFORNIA COUNTY OF SAN BERNARDINO On March 23, 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Judith Valles , personally known to me {er- pFevedte Y,-„ e 9R the to be the person{} whose names} is/afe subscribed to the within instrument and acknowledged to me that he/she/" executed the same in his /her /the+F authorized capacity(L-4, and that by 4+s /her /t4& signature{} on the instrument the person{6}, or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature , (Seal) 5 USA A. GOMQ Commission # 1198927 Z Z Notary Public - California io' z San 6emardno County My Comm. Bcpires Oct 18, 2= STATE OF CALIFORNIA COUNTY OF On y3l �-7l i i , 1999, before me, �' /, PIS /i ,,,1 ( . �' ��,Motary Public, personally appeared, ci )t&�r' ; personally known tome (or proved to me on the basis of sa isfactory evidence) to be the person(s) whose name(s) is /ars- subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /hadthe+r authorized capacity(ies), and that by his /he4the4i-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. J Signature _, � .-t r _ '� (Seal) PHYLLIS M. JACKSON } Commission ;- 1171607 Z `t � Notary Pub';.- - California Zz 7 '" San Bemarbl. 'O County 4Z MY CO-, rl. Exoires Jan 30, 2002 0 Recording Requested by: AFFAITATI LLC After Recordation, Mail to and Mail Tax Statements to: AFFAITATI LLC 393 West Athol Street, Suite 2 San Bernardino, CA 92401 GRANT DEED 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 Affaitati LLC, a California limited liability company (the "Grantee "), the real property (the "Property ") legally described in the document attached hereto, labeled Exhibit A, and incorporated herein by this reference. 1. The Property is conveyed subject to the Disposition and Development Agreement entered into between the Grantor and the Grantee, dated as of February 15, 1999 (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 Property, 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, sublessees or vendees in the Property. The foregoing covenants shall run with the land. 1 All deeds, leases or contracts made relative to the Property, shall contain the following nondiscrimination 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, sublessees 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, subtenants, sublessees or vendees in the premises 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, 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, subtenants, sublessees or vendees of the premises herein transferred." 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 security instrument permitted by the Agreement; provided, however, that any successor of Grantee to the 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 2 of five (5) 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. 3 f 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 APPROVED AS TO FORM: B� Counsel for 6fantor The provisions of this Grant Deed are hereby approved and accepted. f APPROVED AS TO FORM: Byf- �'-Ir -f'/ Counsel for Grantee PAAPPS=PDATA\SB E010001- 169\DOC\A09.7 El Title: By: Title: STATE OF CALIFORNIA COUNTY OF SAN BERNARDINO On March 23. 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Judith Valles , personally known to me (OF PFGved t-9 FAe GR the to be the person{&} whose names} is/afe subscribed to the within instrument and acknowledged to me that he/she/" executed the same in 4Wher /the# authorized capacityoes�, and that by 4i& /her /theif signatures} on the instrument the person(o, or the entity upon behalf of which the person{} acted, executed the instrument. WITNESS my hand and official seal. Signature ;_ Cam( C" ' (seal) i i USA A GOMEZ Commission # 1198927 z a Notary Public - California s z Son Bernardino County My Comm. Bores Oct 18, 2002 STATE OF CAL ,FORNIA COUNTY OF C6, On / L49 before me, 1 1 U0-"-"16 5 (here insert name and title of the officer), personally app ared _ —1 personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/aFL- subscribed to the within instrument and acknowledged to me that he /shefthey executed the same in his/her /their authorized capacity(ies), and that by his /hefAhei-r 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. Signature 4 9 yn (Seal) PHYLLIS M. JACKSON Commission # 1171607 Z Z -d Notary Public - Calif San Bemordino County My Comm. Expires Jan 30, 2002 EXHIBIT "A" PARCEL NO. 1: THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGES) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE EAST ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES. 125 FEET; THENCE NORTH 60 FEET; THENCE WEST 125 FEET TO THE EAST LINE OF 'G' STREET; THENCE SOUTH ALONG THE EAST LINE OF 'G' STREET, 60 FEET TO THE POINT OF BEGINNING. PARCEL NO. 2: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO. IN THE COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTH LINE OF SAID LOT, 198 FEET WEST OF THE NORTHEAST CORNER THEREOF; THENCE SOUTH 210.30 FEET, BUT NOT SOUTH OF THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE WEST 316.5 FEET, MORE OR LESS, TO A POINT 125 FEET EAST OF THE WEST LINE OF SAID LOT 18; THENCE NORTH 60 FEET, MORE OR LESS, TO A POINT ON THE SOUTH LINE OF THE PROPERTY CONVEYED TO GOLDEN STATE CLUB OF SAN BERNARDINO. A CORPORATION. BY DEED RECORDED SEPTEMBER 14, 1938, IN BOOK 1302, PAGE 85. OFFICIAL RECORDS; THENCE EAST ALONG SAID SOUTH LINE 74.3 FEET TO THE SOUTHEAST CORNER OF SAID GOLDEN STATE CLUB PROPERTY; THENCE NORTHERLY ALONG THE EASTERLY LINE OF SAID GOLDEN STATE. CLUB PROPERTY 150.6 FEET, MORE OR LESS. TO THE NORTH LINE OF SAID LOT, 9FING 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT; THENCE EAST ALONG THE NORTH LINE OF SAID LOT 236.19 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. PARCEL NO. 3: THAT PORTION OF LOT 19, BLOCK 11 OF FIVE ACRE SURVEY OF RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: - COMMENCING AT THE NORTHEAST CORNER OF SAID LOT; THENCE WFST 16 FEET; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET, THENCE SOUTH 50 FEET; THENCE WEST 76 FEET; THENCE SOUTH TO THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT; TIIENCE ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES OF SAID LOT TO A POINT 440 FEET LAST FROM THE WEST LINE OF SAID LOT; THENCE SOUTH 115 FEET, MORE OR LESS. TO A POINT 25 FEET NORTH FROM THE SOUTH LINE OF SAID LOT, SAID POINT BEING ON THE NORTH LINE OF THE RIGHT OF WAY CONVEYED TO THE CALIFORNIA CENTRAL RAILWAY CO., BY DEED RECORDED IN BOOK 62. PAGE 294, OF DEEDS; THENCE EAST ALONG THE NORTH LINE OF SAID RIGHT OF WAY, 200 FEET, MORE OR LESS, TO THE EAST LINE OF SAID LOT; THENCE. NORTH TO ME NOR'fH1 AST CORNER OF SAID LOT TO THE POINT OF BEGINNING. PARCEL NO. 4: THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAKI BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: COMMENCING ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE NORTH 80 FEET TO THE SOUTH LINE OF FIRST STREET; THENCE EAST 105 FEET TO THE POINT OF BEGINNING. PARCEL NO. 5: ALL OF THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT THAT IS 60 FEET NORTH AND 71 FEET EAST OF THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18 FOR THE TRUE POINT OF BEGINNING; THENCE NORTH 0 DEG. 17' EAST; 25.5 FEET; THENCE WEST 2.10 FEET; THENCE NORTH 0 DEG. 17' EAST 125 FEET TO THE SOUTH LINE OF RIALTO AVENUE; THENCE EAST ALONG THE SOUTH LINE OF RIALTO AVI =NUF, 135.40 FEET TO A POINT THAT IS 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 18; THENCE SOUTH 150.6 FEET TO A POINT THAT IS 128.3 FEET EAST OF THE POINT OF BEGINNING; THENCE WEST 128.3 FEET TO THE TRUE POINT OF BEGINNING. PARCEL NO. 6: THE WEST 77 FEET OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET: THENCE SOUTH 50 FEET; THENCE WEST 77 FEET; THENCE NORTH 130 FEET TO THE SOUTH L1NF. OF FIRST STREET; THENCE EAST 182 FEET TO THE POINT OF BEGINNING. PERSONAL GUARANTEE OF RALPH AFFAITATI TO A PUBLIC AGENCY ON BEHALF OF AFFAITATI, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR OBLIGATION UNDER DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND AFFAITATI LLC A CALIFORNIA LIMITED LIABILITY COMPANY 1. For valuable consideration, the undersigned RALPH AFFAITATI (hereinafter called "Guarantor ") unconditionally guarantees the performance of, and promises to pay to the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (hereinafter called "Agency "), or order, on demand, in lawful money of the United States, any and all indebtedness of, AFFAITATI LLC, a California limited liability company , (hereinafter called "Developer ") to Agency. The word "indebtedness" is used herein in its most comprehensive sense and includes any and all advances, debts, obligations, and liabilities of Developer, heretofore, now, or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Developer may be liable individually or jointly with others. 2. The Agency has approved at a duly called and held meeting of the Agency on November 16, 1998 (the "Meeting ") the transfer of certain property as described in that certain Disposition and Development Agreement dated as of February 15, 1999 between the Agency and Developer (the "DDA "). The obligations of Developer under the DDA shall be secured by this guarantee (this "Guarantee "), executed by Guarantor. This is a continuing guarantee relating to any indebtedness, including that arising under successive transactions which shall either continue the indebtedness or from time to time renew it after it has been satisfied. This Guarantee shall not apply to any indebtedness created after actual receipt by Agency of written notice of its revocation as to future transactions. Any payment by Guarantor shall not reduce its maximum obligation hereunder unless written notice to that effect be actually received by Agency at or prior to the time of such payment and agreed to in writing by Agency. 3. The obligations hereunder are joint and several, and independent of the obligations of Developer, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Developer or whether Developer be joined in any such action or actions. 4. Guarantor authorizes Agency, upon written notice or demand and without affecting its liability hereunder, from time to time to (a) renew, compromise, extend, accelerate, or otherwise change the time for performance, or otherwise change the terms of the indebtedness or any part thereof, including increase or decrease of the rate or rates of interest thereon; (b) take and hold security for the payment of this Guarantee or the indebtedness guaranteed, and exchange, enforce, waive, and release any such security; (c) apply such security and direct the order or manner of sale thereof as Agency in its discretion may determine; and (d) release or substitute any one or more of the endorsers or guarantors. Agency may without notice assign this Guarantee in whole or in part. 5. Guarantor waives, to the fullest extent permitted by law, all defenses which at any time may be available to it or Developer by virtue of any statute of limitations. Guarantor waives any right to raise as a defense to the enforcement of this Guarantee any defense arising by reason of any disability or other defense of Developer or by reason of the cessation from any cause whatsoever of the liabilities of Developer and further waives the right to interpose any counterclaim or setoff of any nature. Guarantor also waives all rights of subrogation against Developer until all obligations, whether or not subject to this Guarantee, are satisfied in full. Guarantor further waives notice of default by Developer, notice of acceptance of this Guarantee, presentments, notices of protest and notices of every kind and nature including those of any action or nonaction on the part of Developer or the Agency. Specifically, Guarantor acknowledges that Guarantor may have certain rights under applicable law which, if not waived by Guarantor as hereinafter provided, might provide Guarantor with defenses against Guarantor's liability under this Guarantee under certain circumstances, including, without limitation, (a) any defense Guarantor may have pursuant to Civil Code Section 2810, or otherwise, based upon (i) the cessation of liability on the part of Developer at any time after the DDA is executed and delivered, or (ii) any other disability or defense of Developer or any other guarantor, whatever the cause, whether by operation of law or otherwise; (b) any right Guarantor may have pursuant to Civil Code Section 2825, or otherwise, to be exonerated by any discharge of the Developer from liability under the DDA by operation of law, even without intervention or omission on the part of Agency; (c) any right Guarantor may have pursuant to Civil Code Section 2845, or otherwise, to require Agency to proceed against Developer, or any other guarantor, endorser, co- signor or other person, or to pursue or to refrain from pursuing any other remedy in Agency's power whatsoever, including without limitation, any remedy which Guarantor cannot pursue or which would lighten Guarantor's burden, and the right to be exonerated to the extent Guarantor is prejudiced by any failure by Agency to do so; (d) until the obligation under the DDA is fully satisfied, any right of reimbursement or subrogation Guarantor may have pursuant to Sections 2847 and 2848, or otherwise, or any right to otherwise enforce any remedy which Agency has against the Developer or against any other guarantor, endorser or co- signor, and any right pursuant to statute or by contract or otherwise to require other guarantors, endorsers or co- signors, to contribute to or reimburse Guarantor therefor; 2 (e) any defense Guarantor may have based on Civil Code Section 2855, or otherwise, that any arbitration award rendered against the Developer alone will not be, or be deemed to be, or be utilized as, an award against Guarantor, or any other guarantor, endorser or co- signor; and HAVING BEEN MADE AWARE OF THE FOREGOING RIGHTS AND DEFENSES, GUARANTOR AGREES THAT GUARANTOR SHALL NOT HAVE, AND GUARANTOR DOES HEREBY WAIVE, ANY AND ALL OF THE FOREGOING RIGHTS AND DEFENSES SET FORTH ABOVE. 6. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Agency, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing; and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by an instrument in writing executed by Agency. 7. In the event of litigation for the enforcement of this Guarantee, the prevailing party shall be entitled to costs including reasonable attorneys fees and court costs. 8. This Guarantee shall remain in effect until such time as the obligations of the Developer under the DDA are satisfied in full. At such time as all performance and financial responsibilities of Developer to Agency have been extinguished, this Guarantee shall be of no force and effect and shall be delivered to the Guarantor. 9. In all cases where there is but a single Developer or a single Guarantor, then all words used herein in the plural shall be deemed to have been used in the singular where the context and construction so require; and when there is more than one Developer named herein, or when this Guarantee is executed by more than one Guarantor, the word "Developer" and the word "Guarantor" respectively shall mean all and any one or more of them. 3 IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guarantee as of February 15, 1999. GUARANTOR i , as the wife of Ralph Affaitati, hereby expressly guarantee the obligations of Affaitati, LLC, a California Limited Liability Company, and I jointly and severally guarantee the obligations of Ralph Affaitati, a married man. I, the undersigned, as a married woman executing this Guarantee, hereby expressly agree that recourse may be had against my separate property and community property for all my obligations under this Guarantee. Signed:: - -� Dated: —� -- %z - 9 PAAPPS \WPDATA \SBE0\0001 - 169 \DOC \009.7 ACCEPTED BY AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 4 rperson HOLD HARMLESS AGREEMENT THIS HOLD HARMLESS AGREEMENT (this "Agreement ") is entered into by and between the Redevelopment Agency of the City of San Bernardino (the "Agency ") and Affaitati LLC, a California limited liability company (the "Developer "). The Agency and the Developer agree, as follows: WHEREAS, the Agency and the Developer entered into that certain Disposition and Development Agreement dated as of February 15, 1999 (the "DDA "); and WHEREAS, the Developer and Agency have agreed in the DDA that the Agency has the sole responsibility to deliver the property which is the subject of the DDA (the "Property ") to Developer free and clear of any contamination by any kind of toxic or hazardous material which exceeds any regulatory standard or threshold or which would pose any risk to humans through acute or chronic exposure; and WHEREAS, the Agency and the Developer have agreed under the DDA that notwithstanding the above, Developer shall remediate, or cause the remediation of the Property on behalf of the Agency at the Agency's sole cost and expense; and WHEREAS, the Agency desires to hold the Developer harmless for (i) the liability for environmental hazards discovered on the Property as a result of acts occurring prior to the execution of this Agreement and (ii) for the costs of remediation to said Property; and WHEREAS, in order to establish the terms and conditions upon which the indemnities hereunder shall be made, the parties hereto wish to enter this Agreem t. and hold damages, NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLO including without 1 it tion,� Section 1. Indemnity. The Agency hereby agrees to indemnif Jefend harmless the Developer from and against any and all liability, loss, costs, fees of attorneys and other expenses which Developer may incur by reason of, aence of the remediation ofithe Property ontamination of the Property by any kind of toxic or hazardous material discovered on the Property which exceeds any regulatory standard or threshold or which would pose any risk to humans through acute or chronic exposure; provided, however, that this indemnity shall not apply to any condition on the Property caused by acts occurring after the Close of Escrow (as defined in the DDA). , or the condition of, Section 2. Developer Covenant. The Developer hereby agrees to observe and carry out the covenants made in Section 3.01(x) of the DDA. Section 3. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 4. Governing Law. This Agreement shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 5. Counterparts. This Agreement may be signed in counterparts. Any and all amendments to this Agreement shall be in writing, signed by each of the parties hereto. Section 6. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Agreement, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 7. Severability. In the event that any provision of this Agreement is found by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Agreement shall continue to be in effect as if the invalid provision had not been a part hereof. Section 8. Attorney's Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, the prevailing party shall be entitled to recover as an element of its costs of suit reasonable attorney's fees as fixed by the court in such action or proceeding or in a separate action or proceeding brought to recover such attorney's fees. i I REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ai0person AFFAITATI LLC 6 Raf0 AffaitaV, Wanager DEFAULT ASSIGNMENT AGREEMENT FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, as of the effective date of this Default Assignment Agreement, Affaitati LLC, a California Limited Liability Company ( "Assignor ") hereby assigns, transfers and conveys to the Redevelopment Agency of the City of San Bernardino ( "Assignee "), pursuant to and as required by the Disposition and Development Agreement dated as of February 15, 1999, by and between the Assignor and Assignee (the "DDA "), pursuant to this Default Assignment Agreement (this "Default Assignment Agreement "), as follows: RECITALS WHEREAS, the Assignee transferred to the Assignor certain real property (the "Property ") pursuant to the DDA; and WHEREAS, in Section 5.08 of the DDA, the parties agreed that in the event the Agency terminates the DDA pursuant to Section 5.06(b) thereof, this Default Assignment Agreement shall become effective as herein provided and the Property and Project, the Lease (as herein defined) and all professional service agreements and any other agreements entered in connection with the construction of the Project (as defined in the DDA) shall be assigned to the Assignee and a Quitclaim Deed in the form of attached Schedule 1" shall be executed by Assignor, acknowledged in the presence of a notary public and delivered to Assignee and may be recorded by the Assignee; and WHEREAS, in order to establish and declare the terms and conditions upon which the assignments hereunder shall be made, the parties hereto wish to enter this Default Assignment Agreement. NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS HEREINAFTER SET FORTH: Section 1. Conveyance. As of the effective date of this Default Assignment Agreement, Assignor hereby conveys its property interest in the Property and the Project to Assignee. Five (5) days following the date that Assignee notifies Assignor in writing that the conditions set forth in Section 3 hereof have been satisfied and that this Default Assignment Agreement has become effective, Assignor shall execute a Quitclaim Deed in the form of the attached Schedule "1" which Quitclaim Deed shall be delivered to Assignee and recorded only upon the conditions set forth in Section 3 hereof. Section 2. Assignment. As of the effective date of this Default Assignment Agreement, Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in, and Assignee hereby assumes all of Assignor's right, title and interest in, (a) that certain Lease Agreement LCA 98157 by and between the Assignor and the General Services Administration ( "GSA ") (the "Lease ") and (b) all professional service Page 1 agreements and any other agreements entered in connection with the construction of the Project. The assignment hereunder shall be valid upon written acceptance of the Agency and as provided in Section 3 hereof. Section 3. Effective Date. A default under Section 5.06 of the DDA shall constitute a condition precedent to the effectiveness of this Default Assignment Agreement and this Default Assignment Agreement shall become effective if and only if the Agency terminates the DDA pursuant to Section 5.06 of the DDA. In no event shall this Default Assignment Agreement be effective at any time after Assignor is entitled to obtain a Certificate of Completion in accordance with terms and conditions of the DDA. Section 4. Binding Agreement. This Default Assignment Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns. Section 5. Governing Law. This Default Assignment Agreement shall be construed in accordance with and all disputes hereunder shall be governed by the Constitution and laws of the State of California. Section 6. Successors and Assigns. This Default Assignment Agreement shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. Section 7. Counterparts. This Default Assignment Agreement may be signed in counterparts. Any and all amendments to this Default Assignment Agreement shall be in writing, signed by each of the parties hereto. Section 8. Integration. All prior agreements, discussions, promises or representations made or given by either party with respect to the subject matter of this Default Assignment Agreement, are contained herein, and such prior agreements, discussions, promises or representations are superseded and of no further force or effect. Section 9. Severability. In the event that any provision of this Default Assignment Agreement is found by a court of competent jurisdiction to have no force or effect, or to be invalid, the remaining provisions of this Default Assignment Agreement shall continue to be in effect as if the invalid provision had not been a part hereof. Page 2 Section 10. Date of Agreement. This Default Assignment Agreement shall be dated as of February 15, 1999. The parties hereto have caused this Default Assignment Agreement to be executed by their authorized representatives as set forth below. AFFAITATI, LLC a California limited liability company REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO in ATTES /T By: Sectary �41 STATE OF CALIFORNIA ) COUNTY OF JhiC�r` i ) On 6/ #. c , 1999, before me, hi c , Cc. /C tL, Notary Public, personally appeared, & �a ; -/ - i , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is /are- subscribed to the within instrument and acknowledged to me that he /sheAbey executed the same in his /hefAheir authorized capacity(ies), and that by his /her /their 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. Signature e (Seal) PHYLLIS M. JACKSON Commission # 1171607 z < ..- z z r -m Notary Public - California � z ` �^ Son Bernardino County My Comm. Exp res Jon 30, 2002 — "Rr"W'"W-W — i 4 d � STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On March 23. 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Judith Valles , personally known to me (erpeved to ., r,e OR the to be the person{&} whose name(&} is/afe subscribed to the within instrument and acknowledged to me that die /she /" executed the same in 4+s /her /tI4& authorized capacityoes , and that by 4ims /her /them signature{} on the instrument the personks), or the entity upon behalf of which the person(-) acted, executed the instrument. WITNESS my hand and official seal. Signature 5 (Seal) USA A. GOMEZ Commission # 11989 Z Notary Pubric - CaRcmia CE:San Bem Ino County my Comm. BPirm Oct 18, 2M2 a — SCHEDULE 1 LEGAL DESCRIPTION AND FORM OF QUITCLAIM DEED SCHEDULE 1 Order No. Escrow No. Loan No. WHEN RECORDED MAIL TO: DOCUMENTARY TRANSFER TAX $ SPACE ABOVE THIS LINE FOR RECORDER'S USE .....Computed on the consideration or value of property conveyed; OR .....Computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name QUITCLAIM DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, AFFAITATI, LLC a California Limited Liability Company, does hereby REMISE, RELEASE AND QUITCLAIM to the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, the real property in the City of San Bernardino, County of San Bernardino, State of California, described on Exhibit "A ", attached hereto and incorporated herein by reference. Dated: STATE OF CALIFORNIA COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satis- factory evidence) to be the person(s) whose names(s) is /are subscribed to the within instrument and acknowledged to me that he /she/they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature MAIL TAX STATEN1MNTS AS DIRECTED TO: AFFAITATI, LLC, a Califomia limited liability company By: Ralph Affaitati Its Manager ACCEPTED BY REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO BY RESOLUTION ADOPTED NOVEMBER 18, 1998 Chairperson (This area for official notarial seal) 1145(1/94) STATE OF ) COUNTY OF ) On _, 19_ before me, the undersigned, a Notary Public in and for said County and State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he/she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public EXHIBIT "A" PARCEL NO. 1: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE EAST ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES, 125 FEET; THENCE NORTH 60 FEET; THENCE WEST 125 FEET TO THE EAST LINE OF 'G' STREET; THENCE SOUTH ALONG THE EAST LINE OF 'G' STREET, 60 FEET TO THE POINT OF BEGINNING. PARCEL NO. 2: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGES) 2. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTH LINE OF SAID LOT. 198 FEET WEST OF THE NORTHEAST CORNER THEREOF; THENCE SOUTH 210.30 FEET, BUT NOT SOUTH OF THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT 18; THENCE WEST 316.5 FEET, MORE OR LESS, TO A POINT 125 FEET EAST OF THE WEST LINE OF SAID LOT 18. THENCE NORTH 60 FEET, MORE OR LESS, TO A POINT ON TIIE SOUTH LINE OF THE PROPERTY CONVEYED TO GOLDEN STATE CLUB OF SAN BERNARDINO. A CORPORATION. BY DEED RECORDED SEPTEMBER 14, 1938. IN BOOK 1302, PAGE 85, OFFICIAL RECORDS; THENCE EAST ALONG SAID SOUTH LINE 74.3 FEET TO THE SOUTHEAST CORNER OF SAID GOLDEN STATE CLUB PROPERTY; THENCE NORTHERLY ALONG THE EASTERLY LINE OF SAID GOLDEN STATE CLUB PROPERTY 150.6 FEET, MORE OR LESS, TO THE NORTH LINE OF SAID LOT. BEING 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT; THENCE EAST ALONG THE NORTH LINE OF SAID LOT 236.19 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. PARCEL NO. 3: THAT PORTION OF LOT 18, BLOCK 11 OF FIVE ACRE SURVEY OF RANCHO SAN BERNARDINO. IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 7 OF MAPS. PAGE(S) 2, RECORDS OF SAID COUNTY, DFSC:RIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF SAID LOT; THENCE WEST 16 FEET; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE SOUTH 50 FEET; THENCE WEST 76 FEET; THENCE SOUTH TO THE NORTH LINE OF THE SOUTH 2 ACRES OF SAID LOT; THENCE ALONG THE NORTH LINE OF SAID SOUTH 2 ACRES OF SAID LOT TO A POINT 440 FEET LAST FROM THE WEST LINE OF SAID LOT; THENCE SOUTH 115 FEET, MORE OR LESS. TO A POINT 25 FEET NORTH FROM THE SOUTH LINE OF SAID LOT, SAID POINT BEING ON THE NORTH LINE OF THE RIGHT OF WAY CONVEYED TO THE CALIFORNIA CENTRAL RAILWAY CO., BY DEED RECORDED IN BOOK 62. PAGE 294. OF DEEDS. THENCE. LAST ALONG TBE NORTH LINE OF SAID RIGHT OF WAY, 200 MEET, MORE OR LESS, TO THE EAST LIME OF SAID LOT; THENCE• NORTH TO THE NORTHEAST CORNER OF SAID LOT TO THE POINT OF BEGINNING. PARCEL NO. 4: THAT PORTION OF LOT 18. BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2. RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: COMMENCING ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18; THENCE SOUTH 80 FEET; THENCE WEST 105 FEET; THENCE NORTH 80 FEET TO THE SOUTH LINE OF FIRST STREET; THENCE EAST 105 FEET TO THE POINT OF BEGINNING. PARCEL NO. 5: ALL OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY. DESCRIBED AS FOLLOWS: BEGINNING AT A POINT THAT IS 60 FEET NORTH AND 71 FEET EAST OF THE NORTHWEST CORNER OF THE SOUTH 2 ACRES OF SAID LOT 18 FOR THE TRUE POINT OF BEGINNING; THENCE NORTH 0 DEG. 17' EAST: 25.5 FEET; THENCE WEST 2. 10 FEET; THENCE NORTH 0 DEG. 17' EAST 125 FEET TO THE SOUTH LINE OF RIALTO AVENUE; THENCE EAST ALONG THE SOUTH LINE OF RIALTO AVI =NUR, 135.40 FEET TO A POINT TIiAT IS 204.6 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 18; THENCE SOUTH 150.6 FEET TO A POINT TTIAT IS 128.3 FEET EAST OF THE POINT OF BEGINNING; THENCE WEST 128.3 FEET TO THE TRUE POINT OF BEGINNING. PARCEL NO. 6: THE WEST 77 FEET OF THAT PORTION OF LOT 18, BLOCK 11, RANCHO SAN BERNARDINO, 1N THE CITY OF SAN BERNARDINO. COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF FIRST STREET, 16 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 18, THENCE SOUTH 80 FEET; THENCE WEST 105 FEET: THENCE SOUTH 50 FEET; THENCE WEST 77 FEET; THENCE NORTH 130 FEET TO THE SOUTH L1NF. OF FIRST STREET; THENCE EAST 182 FEET TO THE POINT OF BEGINNING. City of San Bernardino ECONOMIC DEVELOPMENT AGENCY '9.9 M V _A A11 33 TO: MELANIE MILLER, SENIOR SECRETARY FROM: JOHN HOEGER, PROJECT MANAGER SUBJECT: INS BUILDING DOCUMENTS DATE: 05/03/99 CC: RACHEL CLARK, SANDRA MEDINA, GARY VAN OSDEL, AND RON WINKLER Melanie — I received your memo of April 28 and understand why you would like original documents for your records. There are two general principals at work in the current situation. The first is that the DDA you received (with unexecuted exhibits) is the original of the document the Mayor and Common Council approved. There is, for example, an Exhibit F that is the form of an anticipated Certificate of Completion. The Mayor and Common Council approved this form for use when and if such a certificate is issued. The actual certificate does not exist now and it will not exist until after the building is completed. Moreover, when it does come into existence, it may or may not be worded the same as the exhibit because the DDA allows changes and modifications. As another example, the Mayor and Common Council approved the form for the grant deed in Exhibit D but not the actual Grant Deed, itself. The real Grant Deed is different, if for no other reason than the fact that it does not say "Exhibit D" on its face. It is normal for other changes in a deed to be made as escrow proceeds. You have an original copy of the document the Mayor and Council approved although you do not have all of the documents necessary to complete the transaction. I think this is probably normal. The necessary documents include letters, checks, affidavits, instructions, and other contractual documents not ordinarily sent to your office. Second, most of the documents you list are essentially negotiable instruments which have been placed with a fiduciary third party to be held in escrow until such time as the Agency or developer have the right to possession. The Agency (and thus the City Clerk) does not have a right to hold Affaitati's Quitclaim Deed (Schedule 1) or his Personal Guarantee (Exhibit G) at this time just as Affaitati does not have a right to the Agency's Grant Deed (Exhibit D) or its Assignment of Lease (Exhibit C). These documents are held by a neutral third party until all of the preconditions for the close of escrow have been met and the documents will then be recorded and /or released. The general instructions regarding placement of documents into escrow are in Section 2.07 of the DDA. It specifies that these documents are to be placed with the escrow agent upon execution. The general requirements for close of escrow are in Sections 2.02 and 2.06. These two sections include specific instructions for the documents shown in form by Exhibits D, F, G, H, and I. We do not want to release the document that comes from Exhibit C until escrow is ready to close. The document from Schedule 1 will not exist until and unless the Default Assignment should someday become effective (see the wording of Section 1 of Exhibit I). • Many times, we execute documents in duplicate originals and provide everyone with an original copy. That is not appropriate for the documents above because they are negotiable instruments, something like stock certificates or personal checks. You would not make duplicate original copies of an individual stock certificate because that would be counterfeiting the original. You would not sign duplicate copies of your check to your mortgage company because someone else might cash one of them and that could debit your account twice for the same transaction. So it can be with deeds, assignments, guarantees and other instruments. For example, two or more deeds to the same property in different hands could confuse the chain of title. To avoid that, the original document is placed in an escrow and held until the conditions for closing are met. Then the original of each document is recorded or released to the appropriate party. In a similar way, documents granting powers to the other party are not released until everything is satisfied. Meanwhile I have certified to your office in my memo of April 8, 1999, that you have received copies of the documents we have submitted to escrow. Affaitati will submit others and we will all receive the originals to which we are entitled after escrow closes and recorded documents are returned. I hope that this has helped. Please discuss this with Rachael Clark and Huston Carlyle. I will be glad to work on it further with you if you continue to have questions or need additional information. 2 CITY OF SAN BERNARDINO INTEROFFICE MEMORANDUM CITY CLERK'S OFFICE RECORDS & INFORMATION MANAGEMENT (RIM) PROGRAM Date: April 28, 1999 To: John Hoeger, Project Manager From: Melanie Miller, Senior Secretary Re: INS Building CC: Rachel Clark, City Clerk; Sandra Medina, Administrative Operations Supervisor; Gary Van Osdel, Executive Director The City Clerk's Office is in receipt of the documents transmitted pursuant to your memorandum of April 8, 1999 regarding the INS Office Building Disposition and Development Agreement (DDA) on which action was taken by the Mayor and Common Council on November 23, 1998, Item #R3. As you know it is the policy of the City Clerk's Office to retain the originals for any documents adopted by the Mavor and Common Council. As this item had both a City Resolution adopted (Resolution 98 -326) and a Community Development Commission Resolution adopted (Resolution 5559) some of the documents you forwarded to us are not originals. I understand that in some cases you must retain originals, and we can certainly accept copies if they are certified copies. Following is a listing of the documents we have and an explanation as to whether we need certified copies to replace the copies we currently have. DOCUMENT NAME DDA Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Exhibit H Exhibit I Schedule 1 REQUIRE OK — nothing required. OK — nothing required. OK — nothing required. Need original signatures or certified copy. Need original signatures or certified copy. OK — nothing required. Need original signatures or certified copy. Need original signatures or certified copy. Need original signatures or certified copy. Need original signatures or certified copy. Need original signatures or certified copy. If you have any question on this matter please do not hesitate to contact me at ext. 3212. le:7c r Melanie Miller Senior Secretary 2 r City of San Bernardino ECONOMIC DEVELOPMENT AGENCY TO: LEE ANN ADAMS, FIRST AMERICAN TITLE CO RALPH AFFAITATI, AFFAITATI CONSTRUCTION ,,-RACHAEL CLARK, CITY CLERK BARBARA LINDSETH, DIRECTOR OF ADMINISTRATION MARK OSTOICH, GRESHAM SAVAGE NOLAN & TILDEN ALEXIS CRUMP, SABO & GREEN FROM: JOHN HOEGER, PROJECT MANAGER SUBJECT: INS BUILDING -DISTRIBUTION OF DOCUMENTS DATE: 04/08/99 CC: RON WINKLER, GARY VAN OSDEL Enclosed are the following fully executed docnunents, which have been signed and initialed by the respective parties: 1. Disposition and Development Agreement (DDA). 2. Assignment Agreement. 3. Grant Deed. 4. Guarantee. 5. Hold Harmless Agreement. 6. Default Assignment Agreement. I am distributing original documents and /or copies to each party in accordance with instructions in the March 22 letter from Mark Ostoich, as follows: A. Lee Ann Adams. You are receiving the Agency's wet signature copy of the DDA plus all of the originals of Items 2 through 6 for use and distribution through escrow. B. Ralph Affaitati. You are receiving a wet signature copy of the DDA and copies of the remaining executed documents. C. Raehael Clark You are receiving a wet signature copy of the DDA and copies of the remaining executed documents. D. Barbara Lindseth, Mark Ostoich, and Alexis Crump. You are receiving copies of all executed documents. Thank you for your participation and help. Please call me if you have questions or need information. My telephone number is 909 384 -5958. GF S'AN CHRONOLOGY OF Tur-j T= FIM MM13 Entered into Record at �� `� couticilk'niviievi'ms Mtg: re Aguw-- ciiv ClerkICOC Secy City of Sau Bernardino RALPH AFFAITATI CONSTRUCTION, INC. 393 West Athol Street, Suite 2 San Bernardino, CA 92401 (909) 889 -0131 (909) 381 -3881 (Fax) November 23, 1998 Honorable Judith Valles, Mayor Honorable Esther Estrada, Council Member Honorable Susan Lien, Council Member Honorable Frank Schnetz, Council Member Honorable Jerry Devlin, Council Member Honorable Betty Anderson, Council Member Honorable Norine Miller, Council Member Honorable Mayor and Common Council: Today I am presenting the terms of an agreement for the development of the INS building that was reached on October 8, among myself, Mayor Valles and Gary Van Osdel, EDA Director. At your October 5 council meeting, the INS building project was discussed in closed session. On October 6, I received a call from Mr. Van Osdel requesting a meeting. Our meeting took place the same day at 10:00 a.m. at his office. Mr. Van Osdel expressed to me the concerns of the Mayor and Common Council about the financial feasibility of the project and advised me that the EDA had contracted with a highly respected local company to confirm that the EDA's estimated construction cost was gravely underestimated. I concurred that the Agency's estimated construction cost was underestimated and also told Mr. Van Osdel that the construction cost estimate in my independent proposal to the General Services Administration was, in fact, in line with the estimate of the local company. Mr. Van Osdel informed me that in the October 5 closed session, he had been instructed by the Mayor and Common Council to contact me about my position as an independent bidder on the INS building and, particularly, whether I was in second position. If I had been able to confirm that I was in second position at that time, Mr. Van Osdel told me that the EDA would withdraw from the process. I could not give Mr. Van Osdel 100% assurance that I was in second position but I was able to give him strong assurances that I was, based on ongoing conversations with GSA, wherein I was told not to put any of my paper work away or release any options on my site. Although the EDA was the successful bidder, I was told that GSA felt that the EDA had been unresponsive. The same sentiments had been relayed to a Council Member. Mr. Van Osdel asked me, "what would you do if you were in my shoes ?" I answered that "I would have a heart-to -heart talk with GSA about the reasons you feel the EDA cannot perform to their commitment and if there was a way to determine with GSA whether another developer in San Bernardino is in second position ". I offered to arrange a phone call with GSA to obtain more information and he asked me to do so. Honorable Judith Valles, Mayor Honorable Members of the Common Council November 23, 1998 Page 2 On October 6, I called GSA and spoke with Rafael Narvaez (Realty Specialist with GSA in charge of the INS project). Rafael would not divulge any information about other offers, but reiterated that the EDA had not met any of the conditions of the 60 -day letter of intent which awarded the project to the EDA. I asked Rafael if he would agree to a conference call with Mr. Van Osdel, also involving the regional director, to further discuss whether the second bidder was a San Bernardino developer. I did not know the outcome of the conference call until Mr. Van Osdel phoned to inform me that the EDA had received a 24 -hour letter, requiring the EDA to either sign a binding lease or relinquish its position, by 3:00 p.m. of October 8. I asked Mr. Van Osdel to give me until the next morning to see what I could put together. We were both concerned about the politics of this high - profile project and the effects it could have on the City, the Mayor, Common Council and the EDA. Mr. Van Osdel, EDA counsel Tim Sabo and I met in Mr. Van Osdel's office on October 9 at 1:30 p.m. and I presented an offer based on what I knew about the project but also taking into consideration what I did not know about the EDA's site and any conditions peculiar to that site. My offer was a follows: 1. I would relinquish my independent position as a bidder for the INS project and commit a company I control to performance of the EDA proposal. 2. My company would develop, at its sole cost, a Class -A building and appurtenances, which would meet the requirements of GSA. 3. The EDA would convey the land to my company at no initial cost and would assist my company in acquiring an adjacent parcel, if necessary, to build the building GSA requires and to accommodate additional parking spaces, if required. 4. The EDA would reimburse my company for the cost to remediate any contamination on the land so that the land would be buildable. 5. My company would take over the EDA's position in the development process of the INS building. 6. The EDA would be reimbursed dollar -for- dollar for its cost upon permanent financing of the completed building. Mr. Van Osdel and Mr. Sabo seemed elated that I was providing an opportunity to remove the EDA from a difficult situation. By 2:30 p.m. on the same day, Mayor Valles, Terry Rubi, Mr. Van Osdel, Mr. Sabo and myself met at the Mayor's office and Mr. Van Osdel presented the solution to the INS building problem. Mr. Sabo supported the proposal from a legal standpoint and Mayor Valles said, "this is terrific, where do I sign ?" and she proceeded to sign the binding INS lease. The lease for the INS building was signed by the Mayor and faxed to GSA at 2:55 p.m. on October 9. Honorable Judith Valles, Mayor Honorable Members of the Common Council November 23, 1998 Page 3 Please keep in mind that, by becoming involved with the EDA in the INS project and in reliance on the mutual commitments of the EDA and myself, I relinquished my second position as an independent bidder of the INS building project. At that time, my main concern was to keep the INS building in San Bernardino. When we walked out of the Mayor's office, no other proposal or developer was involved. As far as I was concerned, the EDA and I had mutually committed ourselves to the project. Mr. Sabo made a copy of the complete INS building lease for my use in proceeding with all of the necessary steps to satisfy the 60 -day letter of intent, which included starting the architectural, engineering, mechanical and all other consultants needed for the development. I immediately started these consultants working on the project. On October 9, my attorney Mark Ostoich and Tim Sabo discussed the details of the agreement and Mark was advised that the principal terms of the agreement were being put into a document. I also called Rafael at GSA to inform him that the EDA would be entering into a DDA with me and that GSA should feel secure that the project would be moving in the right direction from now on. Rafael then asked, "Ralph, why did you do that ?" (he perceived that I would have a better economic position if the EDA failed to proceed). I responded with the same answer I gave the Mayor and Mr. Van Osdel - i.e., the City, the Mayor, the Common Council and the EDA have too much at stake with this high - profile project and cannot withdraw. I was thinking of the City of San Bernardino first. On October 12, I was told by EDA that an unsolicited proposal for the INS building project was presented in closed session at the EDA committee meeting on October 12. I was also told that, in that meeting, EDA staff was directed to stop any further discussions with me or anyone else, and to undertake a formal interview process to obtain additional proposals. On October 19, the EDA commission approved a formal interview process. Shortly after that, Mr. Van Osdel advised my attorney that a written proposal from me was required by 3:00 p.m. that afternoon. Before I agreed to submit a proposal, I wanted to talk with Mr. Van Osdel to ask him what this was all about. Mr. Van Osdel advised me to, "listen to my attorney and don't worry", because the proposal was no big deal. I appreciated his sincerity and instructed my attorney to submit in writing the same deal points that were agreed to at the October 9 meeting with the Mayor. My interview date was October 22 at 11:00 a.m. Prior to October 22, I contacted Mr. Van Osdel regarding what he wanted me to bring to the interview and specifically asked if he wanted me to bring a resume of past GSA projects in San Bernardino and referral contacts. He said it would be a good idea, but was not a "big deal ". The interview took 30 to 35 minutes. Our discussion focused on my experience and general knowledge of the INS project and the problems of the EDA site. Specifically, we discussed the location of utility vaults and utility easements and whether the site would support enough parking for the building and required expansion (although the required building is approximately 44,000 square feet, the GSA lease provides that GSA has the right to expand by an additional 20%). Although I was prepared to submit information concerning my involvement with other GSA buildings (see attached list - I manage the GSA portfolio of this firm), Mr. Van Osdel did not seem that interested in this information. Honorable Judith Valles, Mayor Honorable Members of the Common Council November 23, 1998 Page 4 Not receiving any word from the EDA regarding the results of the interview, on Tuesday, October 27, I called Mr. Van Osdel and left a message on his voice mail asking him what has happened at the interviews. I received a call that same afternoon from Ron Winkler and was told that I wasn't the successful developer and that the EDA was going forward with someone else. By Wednesday, October 28, the word on the street was that Vanir Development was the new developer for the project. This surprised me, because Vanir Development had made the same efforts to attempt to prevent me from becoming the successful developer of the Social Security office building at Sixth and Arrowhead. After learning this information, I requested a meeting with the Mayor and, on November 5, I met with Mayor Valles, Chief of Staff Terry Rubi, my attorney Mark Ostoich and my Councilman Frank Schnetz. Mayor Valles and Terry Rubi were as surprised as I was about the selection of Vanir Development. The Mayor said "Ralph, I would not have signed the lease without your commitment, you have been wronged, you have the right to be upset, and we need to give Mr. Van Osdel a call. We will get back to you as soon as possible." As of today, I have not received a phone call from the Mayor's office. I got involved with this situation to: • Get the City and the EDA out of a jam. • Give the Mayor, the Common Council and the EDA the credit for a first -class project. • Keep GSA satisfied with our City and provide a professional environment for GSA to do business in. • To make a fair return on my investment and risk. I am extremely disappointed about what has happened and the direction this project seems to be going. However, with the additional information I have developed about the EDA site over the past 30 days, I am hereby making a proposal along the same lines as the Vanir Development proposal, but with greater security for the City and the EDA. My new proposal is as follows: 1. My company, Affaitati LLC, will deposit $208,350 as a deposit against the purchase price of the land (the EDA cost in the land). On completion of development, the land will be appraised and Affaitati LLC will either increase the $208,350 deposit or decrease the $208,350 deposit, to match the appraised value, and the appraised value will be released to the EDA in cash at that time. 2. Affaitati LLC will develop he project at its sole cost (including an approximatel 52,000 P P J square foot building), except as provided below. Afaitat LLC will remediae 3. � on the land,[ the cost of the EDA d the EDA will indemnify Affaitati LLC for any liability related to the contaminatio Honorable Judith Valles, Mayor Hcnorable Members of the Common Council November 23, 1998 Page 5 4. Affaitati LLC will pay all design and engineering costs and all permit and development impact fees. 5. I will personally guaranty the obligations of Affaitati LLC. Based on EDA's staff's methodology in analyzing the Vanir Development proposal, under my proposal, the EDA will receive revenues in excess of the revenues presented in the staff report for the Vanir Development proposal: Land Purchase Deposit $208,350 Land Sale Proceeds TBD NPV Tax Increment Revenues $850,000 Utility Tax Revenues $201,600 Total Agency Revenues $1,259,950 My proposal is superior to the Vanir Development proposal and I urge you to direct EDA staff to negotiate a DDA with my company on the above - mentioned terms. I am including with this letter a letter from my bank, Business Bank of California, a letter from the Social Security Administration, commenting on my performance on the Social Security office at Sixth and Arrowhead, and a letter from my architect, Gary Miller. I am here this morning with my attorney and architect, who will be available to answer any questions you might have regarding my proposal and qualifications. Sincerel "faitati RA/ Enclosures BUSINESS BANK e c of CALIFORNIA November 20, 1998 Mayor Judith Valles City Council of San Bernardino 300 North "D" Street San Bernardino, CA 92401 Re: Ralph Affaitati Affaitati Construction Dear Mayor and City Council, It is our understanding that Mr. Affaitati has submitted to you a proposal for the construction of the new I.N.S. facility to be located at 655 West Rialto Avenue, San Bernardino, California. Please let this letter serve as our sincere expression of interest to provide the construction financing for this facility to Mr. Affaitati. This letter is not to be construed as a loan commitment. The financing is subject to the bank's completion of all underwriting procedures, at which time a formal commitment letter can be issued. The bank has previously worked with Mr. Affaitati on another governmental facility. The project was handled in a very timely and professional manner. We are privileged to have Mr. Affaitati, one of our communities key individuals and primary business establishments, as our client. The Bank is very interested in meeting the needs of the community and keeping business local. The Business Bank of California has the strength and ability to fund such a project for Mr. Affaitati, subject to a formal loan request and review of the project. Your consideration of Mr. Affaitati and his company for the construction of the I.N.S. facility is appreciated. Sincerely, Pegg e man �' Regional Vice President OFFICES Main Office, 505 W. Second St., San Bernardino, CA 92401 909 -885 -0036 • Corona, 321 E. Sixth St.. Corona, CA 91719 909-734-4110 Hi-hinnd. I'M F Highland Ave.. San Rernnrdinn. C > 92.1n-1 9t19 -RR 1 - 148 -1 • Redlandk. 171 N. Omni-�e St., Redland,. CA 9217; 909- 79'? -75;6 11/13/1998 11:36 9093835846 SSA SAN BDO DOC:959 PAGE 01 SOCXAL SECURffy ADMMSTR.ATION OFFICE OF THE DISTRICT MANAGER 605 N.Am—w ead venue Suite 101 San Bernardino, CA 92401 (909) 383 -5800 FAX (909) 383 -5816 November 13, 1998 Judith Valles Mayor, City of San Bernardino City Hall San Bernardino, CAS 92401 Dear Mayor Valles, I am, long overdue to share with the city my praise and appreciation for Ralph Affaitati for the building he provided us last year. We are blessed with what I truly believe to be the Premier Social Security office in the couietry. Numerous visitors from our central and regional offices have yet to challenge that claim! 'This project resulted from a very lengthy and at Mmes bitter controversy over the location for our office. As the manager here for over 20 years, in and out of downtown, I know firsthand the dilezmrnas and difficulties of space procurement in San Bernardino. The successful completion of our current building was a triumph for all concerned - -SSA, the General Services Administration, Congressman George Brown's office and, to a great extent, the City itself. The partnership that developed the anal plans for this space was a model I hope can be repeated. The key individual response -ble for the actual delivery of a first -rate federal project is Ralph Affaitati. The pride Ralph tapes in his home community sbines in the building at Sixth and ,arrowhead. He overcame the uncertainties aud, often, maddening demands of a major public construction enterprise and gave us a beautiful place for our customers and staff to do business. In the year and a half since we took occupancy, Ralph has managed the building in a conscientious and caring way. His attention to detail allows us to solve problems before they become serious and he is unfailingly responsive to our needs_ This building is a model for SSA in that it is the first national co- location of our traditionally separate field office and Hearings Office. This entailed complications that simply don't exist in the typical SSA space action. I know I speak for our colleagues in the Office of Hearings 11/13/1998 11:36 9093835846 SSA SAN BDO DOG:959 PAGE 022 and A.ppcals when I vouch for the satisfaction we all share in what Affaitati Construction, the architects, the sub - contractors and others who had a. hand in the building have accomplished for us. I expect there will be occasions when ,Ralph will have the opportunity to team with San Bernardino and I want you and others to know how grateful I am for all he has done to snake our physical plant a showpiece. If you or your staff have questions or wish more specifies about our experience, please don't hesitate to give me a call. Sincerely, James E, Hodgson District Manager cc: Ralph Affaitati Jorge Carlos, City Council STAFF REPORT Council Meeting Date: November 23, 1998 TO: Mayor and Common Council FROM: City Attorney's Office, City Clerk's Office DATE: November 18, 1998 AGENDA: November 23, 1998 On January 6, 1998, United States District Court Judge Lawrence K. Karlton issued a preliminary injunction that barred the Fair Political Practices Commission (FPPC) from enforcing the provisions of Proposition 208 until the California Supreme Court had an opportunity to review the measure and the matter was returned to Judge Karlton for final disposition. The FPPC filed a Notice of Appeal to the Ninth Circuit Court of Appeal on February 3, 1998, challenging all parts of Judge Karlton's order, including his findings on the unconstitutionality of the contribution and spending limits. Judge Karlton has since issued a stay of the part of his order requiring the FPPC to file an original petition in the California Supreme Court. In a 1998 Addendum to Campaign Manuals issued by the FPPC, the Commission has indicated that advice letters concerning Proposition 208 provisions are suspended while the preliminary injunction remains in effect. Given the uncertainty of the ultimate outcome of the appeal and final disposition of the subject case, and the confusion that surrounds the validity and application of local ordinances even though Judge Karlton did not directly rule on them, the FPPC has suggested several different options which local government agencies can exercise, including suspension of such ordinances until the subject case has been finally resolved. Given the nearness of the upcoming Special Election now set for February 2, 1999, the City Attorney's Office and the City Clerk's Office feels that suspension of the voluntary expenditure ceiling ordinance is a better option to follow at this time rather than attempting to enforce its provisions or outright repeal. The case has been fully briefed and is currently set for oral argument in the Ninth Circuit Court of Appeal on December 8, 1998 at 9:00 a.m. in Courtroom No. 1, in San Francisco. es F. Penman ty Attorney HTC:ea[Vo1Exp.srp] Rachel G. Clark City Clerk �11�23�9f I ik' 1 3 4 5 6 7 s 9 10 11 1? 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDINANCE NO. AN ORDINANCE OF THE CITY OF SAN BERNARDINO SUSPENDING SECTION 2.56.195 OF THE SAN BERNARDINO MUNICIPAL CODE RELATING TO ELECTION VOLUNTARY EXPENDITURE CEILING THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO ORDAIN AS FOLLOWS: SECTION 1. Section 2.56.195 of the San Bernardino Municipal Code relating to Election Voluntary Expenditure Ceiling is hereby suspended pending the outcome of the appeal and final disposition of the case entitled California Prolife Council Political Action Committee v. Scully, 98 -15308 (CIV -S -96 -1965 LKK). I HEREBY CERTIFY that the foregoing Ordinance was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the day of , 1998, by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT ESTRADA LIEN VACANT SCHNETZ DEVLIN ANDERSON MILLER CITY CLERK The foregoing Ordinance is hereby approved this day of , 1998. Approved as to form and legal content: JAMES F. PENMAN, City Attorney By: HTC:ea[Vo(Exp.Ordl 1 JUDITH VALLES, Mayor City of San Bernardino • November 5, 1996: Prop 208 passed — statewide campaign financing initiative that took effect 1/1/97 • Prop 208 established contribution limits for state and local candidates and included incentives to encourage candidates to voluntarily limit campaign spending • Five lawsuits challenging the constitutionality of 208 were filed in late 1996 • Lawsuits consolidated and trial began 10/15/97 • 1/6/98: Judge Karlton of the Federal District Court issued a preliminary injunction that barred Commission enforcement of the provisions of 208 until the California Supreme Court reviewed the measure and the matter was returned to Judge Karlton for final disposition • February 3, 1998: Notice of Appeal filed by the Commission challenging all parts of Judge Karlton's order. • CURRENTLY: The Commission will enforce the law and regulations that were in effect on 12/31/96, plus legislative changes since that time. • Advice letters concerning Prop 208 are suspended while the preliminary injunction remains in effect. • The injunction does not affect local campaign finance ordinances. • Local jurisdictions can exercise the following options: • Enforce the provisions of the ordinance; suspend enforcement pending the outcome of the appeal and final disposition of the case or take formal action to rescind the ordinance • Commission does not have authority to enforce or interpret local ordinances. • Case is scheduled for oral argument in December and is on appeal to the Ninth Circuit Court of Appeals. (From FPPC 1998 Addendum) *a II /13/1 � 14� COPY 1 RESOLUTION NO. 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MAKING 3 CERTAIN FINDINGS AND DETERMINATIONS, APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE 4 EXECUTION THEREOF AND ANY DOCUMENTS RELATED THERETO 5 WHEREAS, the Community Development Commission 6 ( "Commission ") is the governing board of the Redevelopment Agency 7 of the City of San Bernardino (the "Agency ") a body duly created 8 pursuant to the provisions of Sections 33000, at seq. of the Health 9 and Safety Code of the State of California; and 10 11 WHEREAS, the Agency currently owns certain property (the 12 "Property ") which is located within the Central City South 13 Redevelopment Project Area; and 14 15 WHEREAS, the Agency desires to convey the Property to a 16 developer in order for said developer to construct a commercial 17 office building ( "Building ") to house the Immigration and 18 Naturalization Service; and 19 20 WHEREAS, the Agency sought proposals from developers and 21 determined that the proposal of the Vanir Group of Companies 22 through its subsidiary INS Office, Inc. ( "Developer ") contained the 23 requisite items necessary to cause the construction and operation 24 of the Building; and 25 26 WHEREAS, the Agency deems it desirable to enter into a 27 Disposition and Development Agreement (the "Agreement ") with the 28 - 1 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Developer in the form as on file with the Secretary of the Agency and incorporated herein by this reference; and WHEREAS, the Agency has held a duly noticed public hearing in accordance with Sections 33431 and 33433 of the California Health and Safety Code and has caused the preparation of, and made available for public inspection, a report including a summary of the transaction; and WHEREAS, the development of the Property will help eliminate blighting conditions in the Central City South Redevelopment Project Area, will increase property values and will result in the creation of additional employment opportunities; and WHEREAS, the Agreement, and the development to be undertaken in connection therewith, is consistent with the Agency's redevelopment plan for the Central City South Redevelopment Project Area; and WHEREAS, based upon the evidence and testimony submitted to the Agency, it is reasonable and appropriate to approve the Il Agreement . NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION ACTING ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: /// - 2 - 1 Section 1. The foregoing Recitals are true and 2 correct and are incorporated herein by this reference. 3 4 Section 2. The Agency hereby adopts the findings and 5 determinations as set forth herein and finds that the Agreement is 6 within the redevelopment goals and objectives of the Agency. 7 8 Section 3. The Agency, having held a duly noticed 9 public hearing in accordance with Health and Safety Code Sections 10 33431 and 33433, finds and determines that the disposition of the 11 Property to the Developer, pursuant to the Agreement, will be of 12 benefit to the Agency and the City and will also promote 13 redevelopment within the Central City South Redevelopment Project 14 Area of the Agency. 15 i 16 Section 4. The Agency hereby approves the form of the 17 Agreement on file with the Secretary of the Agency and authorizes 18 the Executive Director and Secretary to execute the Agreement with 19 such changes as may be deemed appropriate by the Executive Director 20 and Agency Counsel. The Agency further authorizes the execution 21 and delivery by the Executive Director and Secretary of any and all 22 other documents, agreements, certificates, instruments of 23 conveyance, consents and notices which they may deem necessary or 24 advisable to carry out the transactions contemplated hereby. 25 26 27 28 3 - E 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MAKING CERTAIN FINDINGS AND DETERMINATIONS, APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE EXECUTION THEREOF AND ANY DOCUMENTS RELATED THERETO Section S. This Resolution shall take effect from and after its passage and adoption. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Development Commission of the City of San Bernardino at a meeting thereof, held on the day of , 1998, by the following vote, to wit: Commission Members: AYES NAYS ABSTAIN ABSENT ESTRADA LIEN DEVLIN ANDERSON MILLER Secretary The foregoing Resolution is hereby approved this day of , 1998. Judith Valles, Chairperson Community Development Commission of the City of San Bernardino Approve t for an egal content: J r By: `. Agency Counsel SBEO \0001 \3186 - 4 -