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HomeMy WebLinkAboutR22-Economic Development Agency ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FROM: Gary Van Osdel Executive Director SUBJECT: SALE OF SURPLUS WATER DEPARTMENT PROPERTY LOCATED AT NORTHWEST CORNER OF UNIVERSITY PARKWAY AND NORTHPARK BOULEVARD BY THE CITY TO THE REDEVELOPMENT AGENCY FOR SUBSEQUENT SALE TO THE J. R. WATSON & ASSOCIATES DEVELOPMENT CO. DATE: May 16, 2003 OR1GlNAL SvnoDsis of Previous Commission/Council/Committee Action(s): On May 8. 2003, Redevelopment Committee Members Anderson, Suarez and Estrada voted unanimously to recommend to the Community Development Commission and to the Mayor and Common Council that the sale of surplus Water Department property located at the northwest comer of University Parkway and Northpark Boulevard by the City to the Agency be approved. Further, the Redevelopment Committee voted unanimously to recommend to the Community Development Commission approval of a Disposition and Development Agreement between the Agency and J. R. Watson & Associates Development Co. relating to the property at the northwest comer of University Parkway and Northpark Boulevard. Recommended Motion!s): !Communitv Development Commission) MOTION A: A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING THE PURCHASE OF CERTAIN PROPERTY FROM THE CITY OF SAN BERNARDINO AND THE DISPOSITION OF SAID PROPERTY TO J. R. WATSON & ASSOCIATES DEVELOPMENT CO. AND APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND J. R. WATSON & ASSOCIATES DEVELOPMENT CO. !Mavor and Common Council) MOTION B: A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO RELATING TO PROPERTY LOCATED AT THE NORTHWEST CORNER OF UNIVERSITY PARKWAY AND NORTHPARK BOULEVARD IN THE CITY OF SAN BERNARDINO Contact Person(s): Gary Van Osdel Phone: (909) 663-1044 Project Area(s) None Ward(s); Fifth Supporting Data Attached: [{I Staff Report [{I Resolution(s) [{I Agreement(s)/Contract(s) 0 Map(s) 0 Letters FUNDING REQUIREMENTS r: $ None Source: C~ - ,/ ~.idget Authority: SIGNATURE: ,(~ k--v G. A / m___mmm________________________~~~L_~_S~:I:__~::C_~tl::_~lr_e:t:_r________m______m_______m__________________m_mm________________m_________________ Commission/Council Notes: N/A N/A ~,::l.> <-'0<-./ 'Lc~Y3--a() I 1?o":~2_~_____],.QQ3.=_l:?,Q________________________________________________________________________________________________________________________________________________________ P:\ClericaJ Services DcptlMargarct ParkenAgenda\CDC 2003\03.05-19 Walson.doc COMMISSION MEETING AGENDA Meeting Date: 06/02/2003 Agenda Item Number: ft 2. ~ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Sale of Surplus Water Department Property Located at Northwest Corner of Universitv Parkwav and Northpark Boulevard bv the City to the Redevelopment Al!encv for Subsequent Sale to the J. R. Watson & Associates Development Co. BACKGROUND: The City's Water Department is the owner of approximately 130 acres of land generally located on the west side of Northpark Boulevard, between University Parkway and the San Bernardino Flood Control Channel. Three months ago, in anticipation of the Board of Water Commissioners declaring all or a portion of the 130 acres as surplus, and desiring to have a role in the ultimate disposition and development of the land, staff representatives of Development Services, the Economic Development Agency and the Water Department initiated negotiations of a sale and development scenario with the principals of Watson & Associates, Inc. Watson & Associates, Inc, a Southern California development entity home based in Seal Beach, was first introduced to the site by Director of Development Services, James Funk. Founded in January of 1972 by James R. Watson, Watson & Associates Inc., specializes in high quality community sensitive development of mixed-use, residential, retail and office complexes. With over 35 major retail, office and residential projects completed, Watson & Associates has acquired a reputation for consistently developing projects that set new and higher standards for community aesthetics. The proposed Project entails the sale of approximately 99 acres of the surplus land (the "Property") by the City to the Redevelopment Agency (the "Agency") via a Purchase and Sale Agreement, the subsequent sale of the Property by the Agency to the J. R. Watson & Associates Development Co. ("Developer") pursuant to a Disposition and Development Agreement (the "DDA") and the development thereafter of the Property by the Developer. The appraisal of the Property was conducted by James Smothers and established a fair market value of $3,000,000 ($0.70 a square foot) for the Property. Thus, the Developer will pay $3 million to the Agency for the Property. In the event the Water Department determines that additional acres adjacent to the Property are surplus, the Developer may, at its sole option, purchase the additional acreage at the rate of $0.70 a square foot. The Developer shall pay 80% of the purchase price at close of escrow and the remaining 20% of the purchase price shall be paid two years from the date of escrow closure. The Agency will take back a Promissory Note from the Developer bearing a variable interest rate equal to 2% over the LlBOR. (London Inter Bank Offering Rate) Subsequent to the close of escrow, the Agency will forward the proceeds from the sale of the Property to the Water Department and will assign the Promissory Note to the Water Department as well. Pursuant to the DDA, the Developer will subdivide the Property and initiate a phased residential development of a minimum of 153 single-family residences. Featuring a minimum lot size of 10,800 square feet and homes with a minimum of 2,400 square feet of floor area, the Project is to be completed within five years of the close of escrow. The Project will include approximately 20 acres P:\Clcrical Services Dept\Margarel ParkeMgcnda\CDC 2003\03-05-19 Watson,doc COMMISSION MEETING AGENDA Meeting Date: 06/02/2003 Agenda Item Number: Economic Development Agency Staff Report J. R. Watson & Associates Development Co. Page 2 of parks, pedestrian and hiking trails and natural areas and the residential area will be separated from the perimeter roads through the use of a masonry/stucco or split face block wall and pilasters. The Project will consist of full landscaping treatment around the perimeter with unique plantings to enhance the neighborhood and to develop a sense of "place" for the Project. CURRENT ISSUE: Notice regarding the May 19, 2003, Public Hearing on the disposition and development of the Property was published in the Sun on May 5th and 12th. On May 27,2003, at a regularly scheduled meeting of the Board of Water Commissioners, the Board voted to declare the Property as surplus and to recommend to the Mayor and Common Council that the Property be sold at fair market value to the Agency under the terms of the attached Purchase and Sale Agreement. ENVIRONMENT AL IMPACT: On May 6, 2003, at a duly noticed Public Hearing, a Mitigated Negative Declaration and Mitigation Monitoring/Reporting Program for the Project were approved by the Planning Commission. In addition, at such Hearing, the Planning Commission approved Tentative Tract Map No. 16509 and Conditional Use Permit No. 03-06, based upon the Findings of Fact in the staff report, subject to the Conditions of Approval and Standard Requirements. On May 7,2003, Planning Staff filed the Notice of Determination. A separate Notice of Determination will be filed by Agency Staff with regard to the disposition of the Property to the Developer and the development of the Property by the Developer. FISCAL IMPACT: The Developer will pay market value for the Property. No public subsidies are required. RECOMMENDATION: That the Community Development Commission and Mayor and Common Council approve the attached Resolutions. ');(i~~ Gary V7Sdel, Executive irector P:\Clerical Services Dept\Margarct ParkeMgendalCDC 2003\03-05.19 Watson,doc COMMISSION MEETING AGENDA Meeting Date: 06/0212003 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FROM: Gary Van Osdel SUBJECT: SALE OF SURPLUS WATER DEPARTMENT Executive Director PROPERTY LOCATED AT NORTHWEST CORNER OF UNIVERSITY PARKWAY AND DATE: May 8, 2003 NORTHP ARK BOULEVARD BY THE CITY TO THE REDEVELOPMENT AGENCY FOR SUBSEQUENT SALE TO THE J. R. WATSON & ASSOCIATES DEVELOPMENT CO. .______._____n________._._________._____________________.__________________________________________________ Svnopsis of Previous Commission/Council/Committee Action(s): On May 8, 2003, Redevelopment Committee Members Anderson, Suarez and Estrada voted unanimously to recommend to the Community Development Commission and to the Mayor and Common Council that the sale of surplus Water Department property located at the northwest corner of University Parkway and Northpark Boulevard by the City to the Agency be approved. Further, the Redevelopment Committee voted unanimously to recommend to the Community Development Commission approval of a Disposition and Development Agreement between the Agency and J. R. Watson & Associates Development Co. relating to the property at the northwest corner of University Parkway and Northpark Boulevard. Recommended Motion(s): (Community Development Commission) MOTION A: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING THE PURCHASE OF CERTAIN PROPERTY FROM THE CITY OF SAN BERNARDINO AND THE DISPOSITION OF SAID PROPERTY TO J. R. WATSON & ASSOCIATES DEVELOPMENT CO. AND APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND J. R. WATSON & ASSOCIATES DEVELOPMENT CO. (Mavor and Common Council) MOTION B: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO RELATING TO PROPERTY LOCATED AT THE NORTHWEST CORNER OF UNIVERSITY PARKWAY AND NORTHPARK BOULEVARD IN THE CITY OF SAN BERNARDINO Contact Person(s): Gary Van Osdel Phone: (909) 663-1044 Fifth Project Area(s) None Ward(s): Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letters FUNDING REQUIREMENTS Amount: $ None 6/ SIGNATURE: { '" -----________________~L_~_~~:~:__~:~~:~::_ Commission/Council Notes: fM~ ::,-/,Q/03 # (>!" (.., d / / ./ Source: N/A N/A P:\Clerical Serviccs Dept\Margaret ParkeMgenda\COC 2003\03-05-]9 Watson.doc COMMISSION MEETING AGENDA Meeting Date: G /2./03 Agenda Item Number: f!, 2.-'2- ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Sale of Surplus Water Department Property Located at Northwest Corner of University Parkwav and Northpark Boulevard bv the City to the Redevelopment Al!:encv for Subsequent Sale to the J. R. Watson & Associates Development Co. BACKGROUND: The City's Water Department is the owner of approximately 130 acres of land generally located on the west side of Northpark Boulevard, between University Parkway and the San Bernardino Flood Control Channel. Three months ago, in anticipation of the Board of Water Commissioners declaring all or a portion of the 130 acres as surplus, and desiring to have a role in the ultimate disposition and development of the land, staff representatives of Development Services, the Economic Development Agency and the Water Department initiated negotiations of a sale and development scenario with the principals of Watson & Associates, Inc. Watson & Associates, Inc, a Southern California development entity home based in Seal Beach, was first introduced to the site by Director of Development Services, James Funk. Founded in January of 1972 by James R Watson, Watson & Associates Inc., specializes in high quality community sensitive development of mixed-use, residential, retail and office complexes. With over 35 major retail, office and residential projects completed, Watson & Associates has acquired a reputation for consistently developing projects that set new and higher standards for community aesthetics. The proposed Project entails the sale of approximately 99 acres of the surplus land (the "Property") by the City to the Redevelopment Agency (the "Agency") via a Purchase and Sale Agreement, the subsequent sale of the Property by the Agency to the J. R Watson & Associates Development Co. ("Developer") pursuant to a Disposition and Development Agreement (the "DDA") and the development thereafter of the Property by the Developer. The appraisal of the Property was conducted by James Smothers and established a fair market value of $3,000,000 ($0.70 a square foot) for the Property. Thus, the Developer will pay $3 million to the Agency for the Property. In the event the Water Department determines that additional acres adjacent to the Property are surplus, the Developer may, at its sole option, purchase the additional acreage at the rate of $0.70 a square foot. The Developer shall pay 80% of the purchase price at close of escrow and the remaining 20% of the purchase price shall be paid two years from the date of escrow closure. The Agency will take back a Promissory Note from the Developer bearing a variable interest rate equal to 2% over the LillOR. (London Inter Bank Offering Rate) Subsequent to the close of escrow, the Agency will forward the proceeds from the sale of the Property to the Water Department and will assign the Promissory Note to the Water Department as well. Pursuant to the DDA, the Developer will subdivide the Property and initiate a phased residential development ofa minimum of 153 single-family residences. Featuring a minimum lot size of 10,800 square feet and homes with a minimum of 2,400 square feet of floor area, the Project is to be completed within five years of the close of escrow. The Project will include approximately 20 acres P:\Clerical Services DeptlMargarel Parl:enAgenda\CDC 2003\03-05-19 Watson.doe COMMISSION MEETING AGENDA Meeting Date: 05/19/2003 Agenda Item Number: I<J 6 Economic Development Agency Staff Report 1. R. Watson & Associates Development Co. Page 2 of parks, pedestrian and hiking trails and natural areas and the residential area will be separated from the perimeter roads through the use of a masonry/stucco or split face block wall and pilasters. The Project will consist of full landscaping treatment around the perimeter with unique plantings to enhance the neighborhood and to develop a sense of "place" for the Project. CURRENT ISSUE: Notice regarding the May 19, 2003, Public Hearing on the disposition and development of the Property was published in the Sun on May 5th and 12th. On May 13,2003, at a regularly scheduled meeting of the Board of Water Commissioners, the Board was to consider a vote to declare the Property as surplus and to recommend to the Mayor and Common Council that the Property be sold at fair market value to the Agency under the terms of the attached Purchase and Sale Agreement. However, because of issues raised concerning the exact acreage involved in the proposed transaction, the matter will not be considered by the Board of Water Commissioners until the Board meeting of May 27, 2003. As a result of this delay, the Council and Commission will not be in a position to consider the proposed transaction at their meeting of May 19, 2003. ENVIRONMENTAL IMPACT: On May 6, 2003, at a duly noticed Public Hearing, a Mitigated Negative Declaration and Mitigation Monitoring/Reporting Program for the Project were approved by the Planning Commission. In addition, at such Hearing, the Planning Commission approved Tentative Tract Map No. 16509 and Conditional Use Permit No. 03-06, based upon the Findings of Fact in the staff report, subject to the Conditions of Approval and Standard Requirements. On May 7, 2003, Planning Staff filed the Notice of Determination. A separate Notice of Determination will be filed by Agency Staff with regard to the disposition of the Property to the Developer and the development of the Property by the Developer. FISCAL IMPACT: The Developer will pay market value for the Property. No public subsidies are required. RECOMMENDATION: Continue the Public Hearing to the Council/Commission Meeting of June 2, 2003. /7~ (/- . /IJ;. "/( Gary V)"i Osdel, Exec / P:\Clcrical Services DeptlMargaret ParkenAgenda\CDC 2003\03.05.]9 Watson.doc COMMISSION MEETING AGENDA Meeting Date: 05/19/2003 Agenda Item Number: ~ ~~~r RESOLUTION NO. 2 , .J A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO RELA TlNG TO PROPERTY LOCATED AT THE NORTHWEST CORNER OF UNIVERSITY PARKWAY AND NORTH PARK BOULEVARD IN THE CITY OF SAN BERNARDINO 4 5 6 7 8 9 WHEREAS, the City of San Bernardino, California (the "City") is a municipal corporation and charter city, duly organized and existing pursuant to the provisions of the constitution of the State of California; and 10 11 12 WHEREAS, the City is the current owner of certain real property located at the northwest corner of University Parkway and Northpark Boulevard in the City of San Bernardino and shown on the map attached hereto as Exhibit "A" (the "Map"); and WHEREAS, said property was purchased with Water Fund monies; and WHEREAS, the Board of Water Commissioners has determined that certain portions of said property are no longer necessary for use by the City's Municipal Water Department and has 13 14 15 16 17 18 19 20 recommended that they be sold as surplus Municipal Water Department property; and WHEREAS, the City desires to sell to the Redevelopment Agency ofthe City of San Bernardino (the "Agency") those portions of said real property shown on the Map as parcels 1, 2, 3, 5, 6, 7, 8, 10 21 and 12 (the "Property") pursuant to the provisions of the Charter of the City and the provisions oflhe Municipal Code, including without limitation Section 2,65.050; and WHEREAS, an MAl appraisal of the Property was conducted in April, 2002 by Smothers Appraisal (the "Appraiser"); and WHEREAS, according to the report dated April 11,2002 (the "Appraisal Report") prepared by the Appraiser, the fair market value of the Property is Three Million Dollars ($3,000,000); and 22 23 24 25 26 27 28 5B20037235.\ 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 WHEREAS, in May, 2003, the Appraiser updated the Appraisal Report, confinning and bringing forward to May, 2003, a fair market value for the Property of Three Million Dollars ($3,000,000); and WHEREAS, the Agency is entering into a Disposition and Development Agreement (the "DDA") pursuant to which the Agency will, simultaneously with its purchase of the Property from the City, sell the Property to J. R. Watson & Associates Development Co. (the "Developer") for a purchase price of Three Million Dollars ($3,000,000); and WHEREAS, the Agreement provides that all amounts received by the Agency from the Developer for payment of all or any portion of the purchase price of the Property under the DDA be paid, in turn, by the Agency to the City; and WHEREAS, the price the Developer is paying to acquire the Property is not less than the fair market value of the Property; and WHEREAS, the DDA provides for the development of the Property by the Developer as a residential neighborhood consisting of single family detached homes (the "Project"); and WHEREAS, in connection with the approval process of the tentative tract map submitted by the Developer, the Planning Commission of the City of San Bernardino (the "Planning Commission"), pursuant to the provisions of the California Environmental Quality Act ("CEQA") and the CEQA Guidelines developed thereunder (the "CEQA Guidelines"), conducted an initial study to asceliain whether the proposed Project may have a significant effect on the environment; and WHEREAS, the initial study identified potentially significant effects on the environment in connection with the proposed Project; and WHEREAS, the Planning Commission has imposed certain conditions on the Project to the Developer which would avoid or mitigate the potentially significant effects on the environment, and the Developer has agreed to implement such conditions; and WHEREAS, on May 6, 2003, following a duly noticed public hearing, the Planning Commission adopted a Mitigated Negative Declaration with respect to the Project in accordance with the provisions of CEQA and the CEQA Guidelines; and S820037235.1 2 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, the City has considered the initial study and the Mitigated Negative Declaration and has detemlined that the Planning Commission contemplated all environmental effects within the scope of its jurisdiction; and WHEREAS, City Staffhas prepared a Purchase and Sale Agreement (the "Agreement") attached hereto as Exhibit "B", pursuant to which the City will convey the Property to the Agency; and WHEREAS, it is appropriate for the Mayor and Common Council to take action with respect to the sale of the Property to the Agency. NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE MA YOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: Section 1. The above recitals are true and correct and incorporated herein by reference. Section 2. The Mayor and Common Council hereby accept the determination ofthe Board of Water Commissioners that the Property is no longer necessary for use by the City's Municipal Water Department and the recommendation of the Board of Water Commissioners that the Property be sold as surplus Municipal Water Department property. Section 3. The Mayor and Common Council hereby approve the sale of the Property to the Agency pursuant to the Agreement. Section 4. The Mayor and Common Council hereby direct that the proceeds of the sale of the Property received by the City from the Agency in accordance with the tenns of the Agreement be deposited in the Water Fund. Section 5. The Mayor and Common Council hereby find and determine that the sale of the Property pursuant to the Agreement creates no additional environmental effects, not contemplated by the initial study and Mitigated Negative Declaration, requiring further analysis or mitigation and hereby adopt the Mitigated Negative Declaration and direct the Development Services Department of the City to file a Notice of Determination on behalf of the City with respect thereto. Section 6. The Mayor and Common Council hereby approve the Agreement and authorize and direct the Mayor to execute the Agreement on behalf of the City together with such teclmical and conforming changes as may be recommended by the General Manager of the Municipal Water S8200n2351 3 Department and approved by the City Attorney. In the event that the Agreement may not be fully 2 executed by the parties for any reason within sixty (60) days following the date of adoption of this 3 Resolution, the authorization granted to the Mayor to execute the Agreement on behalf of the City shall 4 be of no further force and effect. 5 Section 7. Provided that the Agreement has been fully executed by the parties within the 6 period of time set forth in Section 6 of this Resolution, the General Manager of the Municipal Watcr 7 Department is hereby authorized and directed to take all actions set forth in the Agreement on behalfof 8 the City to close the escrow transaction described therein. 9 Section 8. The Mayor and Common Council hereby approve the sale of the Property to the 10 Agency in accordance with Section 2.65.050 of the Municipal Code and on the ternlS set forth in the II Agreement. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 582003:7235.1 4 1 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN PURCHASE AND SALE AGREEMENT 2 BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO RELATING TO PROPERTY LOCA TED 3 AT THE NORTHWEST CORNER OF UNIVERSITY PARKWAY AND NORTHPARK BOULEVARD IN THE CITY OF SAN BERNARDINO. 4 5 6 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 7 COUNCIL MEMBERS: AYES 8 ESTRADA 9 LONGVILLE 10 MCGINNIS 11 DERRY 12 SUAREZ 13 ANDERSON 14 MCCAMMACK 15 16 17 18 , 2003, by the following vote, to wit: NAYS ABSTAIN ABSENT CITY CLERK 19 20 21 22 The foregoing Resolution is hereby approved this day of ,2003. JUDITH V ALLES, Mayor City of San Bernardino Approved as to form and 23 legal content: 24 25 26 27 28 5 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss 2 CITY OF SAN BERNARDINO ) 3 I, City Clerk of the City of San Bernardino, DO HEREBY CERTIFY that the foregoing and attached copy of Mayor and Common Council of the City of San 4 Bernardino Resolution No. is a full, true and correct copy of that now on file in this office. 5 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of , 2003. 6 7 8 City Clerk of the City of San Bernardino 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SB2oon2351 6 EXHIBIT "A" 2 MAP 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SB200372351 7 l'IHT-~L-L~~6 U6:~q ~M ~HGLRNU (bl.1l::lldql~~l t-'_ Ul 1 f.CI> 13 ~~ )cj.7 7 UNIVERSITY PARK CONCEPT PLAN 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 SB2003:7235.1 EXHIBIT "B" PURCHASE AND SALE AGREEMENT 8 . . PURCHASE AND SALE AGREEMENT (Parcels Located at Northwest Corner of University Parkway and Northpark Boulevard) THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as of the day of , 2003, by and between the Redevelopment Agency of the City of San Bernardino ("Buyer"). and the City of San Bernardino ("Seller"). RECITALS (A) The Buyer is a public body corporate and politic organized and validly existing under the laws of the State of California (the "State"), and the Seller is a municipal corporation organized and validly existing under the Constitution of the State. (B) Seller owns certain property located in the City of San Bernardino, County of San Bernardino more particularly described in Exhibit "A" hereto (the "Property"). (C) Buyer intends to enter into a certain 2003 Disposition and Development Agreement, whereby Buyer will convey the Property to 1. R. Watson and Associates Development Co., a California corporation (the "Developer"). The Developer intends to develop the Property in phases as provided in the Disposition and Development Agreement The Developer will pay a purchase price for the Property of Three Million Dollars ($3,000,000.00). The Buyer and Seller wish to provide for a conveyance of the Property from the Seller to the Buyer in order that the Buyer may convey the Property to the Developer pursuant to the Disposition and Development Agreement. (D) The Seller and Buyer have duly approved the transactions contemplated by this Agreement by approval of their respective governing bodies and in order to set forth the terms and conditions of such purchase and sale, the Buyer and Seller desire to enter into this Agreement. NOW, THEREFORE, for and in consideration of the foregoing Recitals and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I PURCHASE AND SALE Section 1.01. Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell, transfer and convey to the Buyer, and the Buyer hereby agrees to purchase from Seller, all of Seller's right, title and interest in and to the Property, excluding water rights. SB2003, 13436.1 Section 1.02. Purchase Price.). The purchase price for the Property shall be Three Million Dollars ($3,000,000.00) (the "Purchase Price"). An MAl appraisal of the Property has been conducted by Smothers Appraisal (the "Appraiser"). According to the report prepared by the Appraiser, the fair market value of the Property is Three Million Dollars ($3,000,000.00). The Disposition and Development Agreement provides that the Developer shall pay 80 % of the Purchase Price at the close of escrow thereunder and that the remainder 20 % of the Purchase Price shall be financed by the Buyer hereunder, such financing to be evidenced by a promissory note (the "Promissory Note") and secured by a deed of trust creating a lien against all or some portion of the Property (the "Trust Deed"). All amounts received by the Buyer from the Developer under the Disposition and Development Agreement for payment of all or any portion of the purchase price thereunder shall, in turn, be paid by the Buyer to the Seller hereunder. The Seller hereunder shall be considered a third party beneficiary of the Buyer's rights under the Disposition and Development Agreement and under the Promissory Note and the Trust Deed. Section 1.03. Cash at Closing. Eighty percent (80%) of the Purchase Price shall be paid to Seller in cash at Closing (as defined in Section 3.01 hereof). The remainder of the Purchase Price shall be paid by the Buyer to the Seller upon receipt by the Buyer of periodic payments pursuant to the Promissory Note. Upon receipt of payments pursuant to the Promissory Note, the Buyer shall remit such amounts to the Seller in accordance with instructions received from time to time from the Seller. ARTICLE II TITLE INSURANCE Section 2.01. Seller's Obligation to Provide Title Insurance. Seller shall deliver to the Buyer, within ten (10) days after the execution and delivery of this Agreement by both parties (the "Effective Date"), a preliminary title report for an owner's title policy issued by Chicago Title Company, together with legible copies of all restrictive covenants, easements and other items listed as title exceptions therein (each a "Title Defect"). The title policy to be issued to the Buyer pursuant to this section shall ensure fee simple title to the Buyer in the amount of the Purchase Price, as adjusted pursuant hereto, subject only to the exceptions shown therein to which the Buyer has agreed in writing. The Buyer shall have five (5) days after its receipt of the preliminary title report within which to disapprove any Title Defects shown therein, such approval or disapproval to be within the Buyer's reasonable discretion. If the Buyer fails to disapprove any particular Title Defect by written notice delivered to and received by Seller within such time period, then the Buyer shall be deemed to have approved such title Defect. If the Buyer disapproves any such Title Defect by written notice delivered to and received by Seller within such time period, then the Buyer may terminate this Agreement unless Seller (without any obligation to do so) cures the Buyer's objection to such Title Defect. Title Defects which the Buyer approves or has been deemed to have approved pursuant to this Section shall have the option to either (a) extend the Closing by that period of time which is reasonably required by Seller to satisfy the title requirement or to cure the Title Defect, or (b) 582003:13..+36.1 terminate this Agreement by written notice to the Buyer In accordance with the notice . provisions of this Agreement. ARTICLE III CLOSING Section 3.01. Closing Through Escrow. Subject to the proVISIOns of this Agreement, the Buyer and Seller shall consummate and close the purchase and sale of the Property contemplated by this Agreement when all of the conditions of closing for the benefit of the parties hereto have been satisfied or waived, and when and if all conditions precedent to the close of escrow under the Disposition and Development Agreement have been satisfied, but in no event later than July 31, 2003 (the "Closing"). Subject to the provisions of this Agreement relating to the extension of the Closing, if the Closing does not occur as a result of the failure of a condition, then the party hereto for whose benefit the condition exists may terminate this Agreement, in which event the parties hereto shall have no further rights or obligations pursuant to this Agreement. The transfer and sale of the Property shall take place through an escrow (the "Escrow") to be administered by Chicago Title Company or such other escrow or title insurance company mutually agreed upon by the Buyer and the Seller (the "Escrow Agent") The Escrow shall be deemed open upon the receipt by the Escrow Agent of a fully executed copy of this Agreement. The Escrow Agent shall promptly confirm to the parties the escrow number and the title insurance order number assigned to the Escrow. The Buyer and the Seller each agree to execute the customary supplemental instructions in the form provided by the Escrow Agent to its clients in real property escrow transactions administered by it. Section 3.02. Seller's Obligations at Closing. At Closing, Seller shall deliver to the Escrow Agent the following documents (all duly executed and acknowledged by Seller, where required): a. Deed. A quitclaim deed in substantially the form attached to this Agreement as Exhibit "B", executed by Seller and conveying the Property to the Buyer, subject to no exceptions other than those agreed to by the Buyer. b. Title Policy. A commitment by the Title Company to issue an owner's title policy in CL T A standard form, naming the Buyer as the insured in the amount of the Purchase Price, insuring that the Buyer owns fee simple title to the Property, subject only to such exceptions as are agreed to by the Buyer Section 3.03. Buyer's Obligation at Closing. At Closing, the Buyer shall deliver to the Seller at least eighty percent (80%) of the Purchase Price in cash or by wire SB200),l)436.! transfer of readily available U.S. funds, together with documentary proof that the Note and the Trust Deed have been executed and delivered by the Developer. Section 3.04. Closing Costs. Seller shall pay all closing costs. IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of the date first above written. "BUYER" Redevelopment Agency of the City of San Bernardino By: Judith Valles Chair of the Community Development Commission "SELLER" City of San Bernardino By: Judith Valles, Mayor 5B2003: 13436. 1 '. EXHIBIT "A" Legal Description S82003,13436.1 EXHIBIT "B" Quitclaim Deed $82(103:13436.1 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 201 NORTH "E" STREET SUITE 301 SAN BERNARDINO, CALIFORNIA 92401 (Space Above tor Recorder's Use) OUlTCLAIM DEED SB2003:13436.1 QUITCLAIM DEED Documentary Transfer Tax -0- FOR A V ALlJABLE CONSIDERATION, receipt of which is hereby acknowledged, the City of San Bernardino, a municipal corporation, hereby REMISES, RELEASES and QlJITCLAIMS to Redevelopment Agency of the City of San Bernardino all that real property situated in the City of San Bernardino, County of San Bernardino, State of California, described as: SEE EXHIBIT "A" hereto Dated: ,2003 City of San Bernardino Judith Valles, Mayor (ST A TE OF CALIFORNIA) COlJNTY OF SAN BERNARDINO) WITNESS my hand and official seal. On Signature b e for e m e (here of the officer), appeared insert name and title personally (Seal) 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 III his/herltheir 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 S82()(J3: 134]() 1 EXHIBIT A Property Description 582003:13436.1 ACCEPTANCE By Resolution No. the Redevelopment Agency of the City of San Bernardino hereby accepts title to the property described in Exhibit A to this Quitclaim Deed. Dated: .2003 Redevelopment Agency of the City of San Bernardino Gary Van Osdel Executive Director SB2(j(j.3: I J..j;1() , I 2 3 4 5 6 7 8 9 10 C~[p>y RESOLUTION NO. A RESOLUTION OFTHE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, APPROVING THE PURCHASE OF CERTAIN PROPERTY FROM THE CITY OF SAN BERNARDINO AND THE DISPOSITION OF SAID PROPERTY TO J. R. WATSON & ASSOCIATES DEVELOPMENT CO. AND APPROVING THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND J. R. WATSON & ASSOCIATES DEVELOPMENT CO. WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") desires to acquire certain real property (the "Property") from the City of San Bernardino (the "City") pursuant 13 and 14 15 16 17 18 19 to Health and Safety Code Section 33396; and 12 11 WHEREAS, the City has determined that the Property is no longer necessary for the City's use; WHEREAS, the Property is located at the northwest comer of University Parkway and Northpark Boulevard in the City of San Bernardino and is more specifically described as parcels 1,2,3,5,6,7, 8, 10 and 12 on the map attached hereto as Exhibit "A"; and WHEREAS, an MAl appraisal of the Property was conducted in April, 2002 by Smothers Appraisal (the "Appraiser"); and WHEREAS, according to the report dated April II ,2002 (the "Appraisal Report"), prepared by 20 the Appraiser, the fair market value of the Property is Three Million Dollars ($3,000,000); and 2] 22 forward to May, 2003, a fair market value for the Property of Three Million Dollars ($3,000,000); and WHEREAS, in May, 2003, the Appraiser updated the Appraisal Report, confirming and bringing 23 WHEREAS, the Agency intends to enter into a Disposition and Development Agreement (the 24 "DDA") pursuant to which the Agency will, simultaneously with its purchase of the Property from the 25 City, sell the Property to J. R. Watson & Associates Development Co., a California corporation and its 26 27 28 SB2QOn255I 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 assigns (each, the "Developer") pursuant to Health and Safety Code Section 33430, for a purchase price of Three Million Dollars ($3,000,000); and WHEREAS, the DDA further provides for the development of the Property by the Developer as a residential neighborhood consisting of single family detached homes (the "Project"); and WHEREAS, as part of the approval process ofthe tentative tract map submitted by the Developer in connection with the Project, the Planning Commission of the City of San Bernardino (the "Planning Commission"), pursuant to the provisions of the California Environmental Quality Act ("CEQA") and the CEQA Guidelines developed thereunder (the "CEQA Guidelines"), conducted an initial study to ascertain whether the proposed Project may have a significant effect on the environment; and WHEREAS, the initial study identified potentially significant effects on the environment in connection with the proposed Project; and WHEREAS, the Planning Commission has imposed certain conditions on the Project which would avoid or mitigate the potentially significant effects on the environment, and the Developer has agreed to implement such conditions; and WHEREAS, on May 6, 2003, following a duly noticed public hearing, the Planning Commission adopted a Mitigated Negative Declaration with respect to the Project in accordance with the provisions ofCEQA and the CEQA Guidelines; and WHEREAS, the City has found and determined that the sale of the Property to the Agency creates no additional environmental effects, not contemplated by the initial study and Mitigated Negative Declaration, requiring further analysis or mitigation and has adopted the Mitigated Negative Declaration; and WHEREAS, it is appropriate for the Commission to take action with respect to the acquisition of the Property from the City and the disposition of the Property to the Developer and to approve the DDA as set forth in this Resolution. SB2003:725S.1 2 1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION ACTING 2 ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 3 DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: 4 Section 1. The above recitals are true and correct and incorporated herein by reference. 5 Section 2. The Commission is a responsible agency under CEQA with respect to the 6 disposition of the Property to the Developer and the development of the Property by the Developer 7 pursuant to the DDA. The Commission hereby finds that there are no additional environmental 8 effects not contemplated by the Mitigated Negative Declaration, requiring further analysis or 9 mitigation, resulting from the disposition of the Property to the Developer and the development of 10 the Property by the Developer pursuant to the DDA. The Commission hereby directs Agency Staff 11 to file a Notice of Determination on behalf of the Agency consistent with the findings herein. 12 Section 3. On June 2, 2003, the Commission commenced the conduct of a full and fair 13 public hearing relating to the purchase of the Property from the City and the disposition of the 14 Property to the Developer pursuant to the DDA. The minutes of the Agency Secretary for the June 15 2, 2003 meeting of the Commission shall include a record of all communication and testimony 16 submitted to the Commission by interested persons relating to the public hearing and the approval 17 of the DDA. 18 Section 4. A copy of the DDA in the form submitted at the public hearing is on file with the 19 Agency Secretary. 20 Section 5. The Commission hereby approves the purchase of the Property by the Agency 21 from the City pursuant to the Purchase and Sale Agreement attached hereto as Exhibit "B," and the 22 Chair is hereby authorized and directed to execute the Purchase and Sale Agreement on behalf of the 23 Agency together with such technical and conforming changes as may be recommended by the 24 Executive Director of the Agency and approved by Agency Counsel. 25 Section 6. The Commission hereby approves the DDA and the disposition of the Property 26 to the Developer on the terms set forth in the DDA. The Executive Director is hereby authorized and 27 directed to execute the DDA on behalf of the Agency together with such technical and conforming 28 3 I changes as may be recommended by the Executive Director and approved by Agency Counsel. In 2 the event that the DDA may not be fully executed by the parties for any reason within sixty (60) days 3 following the date of adoption of this Resolution, the authorization granted to the Executive Director 4 to execute the DDA on behalf of the Agency shall be of no further force and effect. 5 Section 7. Provided that the DDA has been fully executed by the parties within the period 6 of time set forth in Section 6 of this Resolution, the Executive Director of the Agency is hereby 7 authorized and directed to take all actions set forth in the DDA on behalf of the Agency to close the 8 escrow transaction described therein. Section 8. This Resolution shall become effective immediately upon its adoption. 9 10 III II III 12 III 13 III 14 III 15 III 16 III 17 III 18 III 19 III 20 III 21 III 22 II 23 III 24 III 25 III 26 III 27 III 28 4 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY 2 OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, APPROVING THE PURCHASE OF 3 CERTAIN PROPERTY FROM THE CITY OF SAN BERNARDINO AND THE DISPOSITION OF SAID PROPERTY TO J.R. WATSON & ASSOCIATES 4 DEVELOPMENT CO. AND APPROVING THAT CERTAIN DISPOSITION AND 5 DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND J.R. WATSON & ASSOCIATES 6 DEVELOPMENT CO. 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 8 Development Commission of the City of San Bernardino at a meeting thereof, 9 held on the _ day of ,2003, by the following vote to wit: 10 COMMISSION MEMBERS: AYES NAYS ABSTAIN ABSENT II ESTRADA 12 LONGVILLE 13 McGINNIS 14 DERRY 15 SUAREZ 16 ANDERSON 17 MCCAMMACK 18 19 20 Secretary The foregoing Resolution is hereby approved this _ day of ,2003. 21 22 JUDITH VALLES, Chairperson Community Development Commission of the City of San Bernardino 23 24 Approved as to form and legal content: 25 26 !3Y: 27 Agency Counsel 28 5 6 7 the 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2 3 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO ) I, Secretary of the Community Development Commission 4 of the City of San Bernardino, DO HEREBY CERTIFY that the foregoing and attached copy of Community Development Commission of the City of San Bernardino Resolution No. is a full, true and correct copy of that now on file in this office. 5 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Community Development Commission of the City of San Bernardino this day of ,2003. Secretary of the Community Development Commission of the City of San Bernardino 28 SB20037255.1 6 EXHIBIT "A" 2 MAP 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 5820037255.1 7 MHY-IL-L~~6 ~~;~q ~I" KH~~HN~ .OC>CO'<.'.......-..J'-'.. )<j.7 7 UNIVERSITY PARK CONCEPT PLAN EXHIBIT "8" 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 PURCHASE AND SALE AGREEMENT 28 SB20037255.1 8 PURCHASE AND SALE AGREEMENT (Parcels Located at Northwest Corner of University Parkway and Northpark Boulevard) THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as of the day of , 2003, by and between the Redevelopment Agency of the City of San Bernardino ("Buyer"), and the City of San Bernardino ("Seller"). RECITALS (A) The Buyer is a public body corporate and politic organized and validly existing under the laws of the State of California (the "State"), and the Seller is a municipal corporation organized and validly existing under the Constitution of the State. (B) Seller owns certain property located in the City of San Bernardino, County of San Bernardino more particularly described in Exhibit "A" hereto (the "Property"). (C) Buyer intends to enter into a certain 2003 Disposition and Development Agreement, whereby Buyer will convey the Property to J. R. Watson and Associates Development Co., a California corporation (the "Developer"). The Developer intends to develop the Property in phases as provided in the Disposition and Development Agreement. The Developer will pay a purchase price for the Property of Three Million Dollars ($3,000,000.00). The Buyer and Seller wish to provide for a conveyance of the Property from the Seller to the Buyer in order that the Buyer may convey the Property to the Developer pursuant to the Disposition and Development Agreement. (D) The Seller and Buyer have duly approved the transactions contemplated by this Agreement by approval of their respective governing bodies and in order to set forth the terms and conditions of such purchase and sale, the Buyer and Seller desire to enter into this Agreement. NOW, THEREFORE, for and in consideration of the foregoing Recitals and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I PURCHASE AND SALE Section 1.01. Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell, transfer and convey to the Buyer, and the Buyer hereby agrees to purchase from Seller, all of Seller's right, title and interest in and to the Property, excluding water rights. S82003,13436.1 Section ].02. Purchase Price. ). The purchase price for the Property shall be Three Million Dollars ($3,000,000.00) (the "Purchase Price"). An MA] appraisal of the Property has been conducted by Smothers Appraisal (the "Appraiser"). According to the report prepared by the Appraiser, the fair market value of the Property is Three Million Dollars ($3,000,000.00). The Disposition and Development Agreement provides that the Developer shall pay 80 % of the Purchase Price at the close of escrow thereunder and that the remainder 20 % of the Purchase Price shall be financed by the Buyer hereunder, such financing to be evidenced by a promissory note (the "Promissory Note") and secured by a deed of trust creating a lien against all or some portion of the Property (the "Trust Deed"). All amounts received by the Buyer from the Developer under the Disposition and Development Agreement for payment of all or any portion of the purchase price thereunder shall, in turn, be paid by the Buyer to the Seller hereunder. The Seller hereunder shall be considered a third party beneficiary of the Buyer's rights under the Disposition and Development Agreement and under the Promissory Note and the Trust Deed. Section 1.03. Cash at Closing. Eighty percent (80%) of the Purchase Price shall be paid to Seller in cash at Closing (as defined in Section 3.0] hereof). The remainder of the Purchase Price shall be paid by the Buyer to the Seller upon receipt by the Buyer of periodic payments pursuant to the Promissory Note. Upon receipt of payments pursuant to the Promissory Note, the Buyer shall remit such amounts to the Seller in accordance with instructions received from time to time from the Seller. ARTICLE II TITLE INSURANCE Section 2.01. Seller's Obligation to Provide Tit]e Insurance. Seller shall deliver to the Buyer, within ten (10) days after the execution and delivery of this Agreement by both parties (the "Effective Date"), a preliminary title report for an owner's title policy issued by Chicago Title Company, together with legible copies of all restrictive covenants, easements and other items listed as title exceptions therein (each a "Title Defect"). The title policy to be issued to the Buyer pursuant to this section shall ensure fee simple title to the Buyer in the amount of the Purchase Price, as adjusted pursuant hereto, subject only to the exceptions shown therein to which the Buyer has agreed in writing. The Buyer shall have five (5) days after its receipt of the preliminary title report within which to disapprove any Title Defects shown therein, such approval or disapproval to be within the Buyer's reasonable discretion. If the Buyer fails to disapprove any particular Title Defect by written notice delivered to and received by Seller within such time period, then the Buyer shall be deemed to have approved such title Defect. If the Buyer disapproves any such Title Defect by written notice delivered to and received by Seller within such time period, then the Buyer may terminate this Agreement unless Seller (without any obligation to do so) cures the Buyer's objection to such Title Defect. Title Defects which the Buyer approves or has been deemed to have approved pursuant to this Section shall have the option to either (a) extend the Closing by that period of time which is reasonably required by Seller to satisfy the title requirement or to cure the Title Defect, or (b) SB2oo3, 13436.1 terminate this Agreement by written notice to the Buyer III accordance with the notice provisions of this Agreement. ARTICLE III CLOSING Section 3.01. Closing Through Escrow. Subject to the proviSIOns of this Agreement, the Buyer and Seller shall consummate and close the purchase and sale of the Property contemplated by this Agreement when all of the conditions of closing for the benefit . of the parties hereto have been satisfied or waived, and when and if all conditions precedent to the close of escrow under the Disposition and Development Agreement have been satisfied, but in no event later than July 31, 2003 (the "Closing"). Subject to the provisions of this Agreement relating to the extension of the Closing, if the Closing does not occur as a result of the failure of a condition, then the party hereto for whose benefit the condition exists may terminate this Agreement, in which event the parties hereto shall have no further rights or obligations pursuant to this Agreement. The transfer and sale of the Property shall take place through an escrow (the "Escrow") to be administered by Chicago Title Company or such other escrow or title insurance company mutually agreed upon by the Buyer and the Seller (the "Escrow Agent"). The Escrow shall be deemed open upon the receipt by the Escrow Agent of a fully executed copy of this Agreement. The Escrow Agent shall promptly confirm to the parties the escrow number and the title insurance order number assigned to the Escrow. The Buyer and the Seller each agree to execute the customary supplemental instructions in the form provided by the Escrow Agent to its clients in real property escrow transactions administered by it. Section 3.02. Seller's Obli~ations at Closing. At Closing, Seller shall deliver to the Escrow Agent the following documents (all duly executed and acknowledged by Seller, where required): a. Deed. A quitclaim deed in substantially the form attached to this Agreement as Exhibit "B", executed by Seller and conveying the Property to the Buyer, subject to no exceptions other than those agreed to by the Buyer. b. Title Policv. A commitment by the Title Company to issue an owner's title policy in CLTA standard form, naming the Buyer as the insured in the amount of the Purchase Price, insuring that the Buyer owns fee simple title to the Property, subject only to such exceptions as are agreed to by the Buyer Section 3.03. Buyer's Obli~ation at Closing. At Closing, the Buyer shall deliver to the Seller at least eighty percent (80 %) of the Purchase Price in cash or by wire 582003,13436.1 , . transfer of readily available U.S. funds, together with documentary proof that the Note and the Trust Deed have been executed and delivered by the Developer. Section 3.04. Closing Costs. Seller shall pay all closing costs. IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of the date first above written. "BUYER" Redevelopment Agency of the City of San Bernardino By: Judith Valles Chair of the Community Development Commission "SELLER" City of San Bernardino By: Judith Valles, Mayor SB2003: 13436.1 EXHIBIT "A" Legal Description SB2003:13436.! EXHIBIT "B" Quitclaim Deed SB2OD3,13436.1 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 201 NORTH "E" STREET SUITE 301 SAN BERNARDINO, CALIFORNIA 92401 (Space Above for Recorder's Use) OUlTCLAIM DEED S82003: 13436.1 QUITCLAIM DEED Documentary Transfer Tax -0- FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the City of San Bernardino, a municipal corporation, hereby REMISES, RELEASES and QUITCLAIMS to Redevelopment Agency of the City of San Bernardino all that real property situated in the City of San Bernardino, County of San Bernardino, State of California, described as: SEE EXHIBIT "A" hereto Dated: ,2003 City of San Bernardino Judith Valles, Mayor (STATE OF CALIFORNIA) COUNTY OF SAN BERNARDINO) WITNESS my hand and official seal. On Signature before me __________ (here insert name and title of the officer), personally appeared --------------------------- (Seal) 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. SB200J:IJ4J6.1 EXHIBIT A Property Description 582003,13436.1 ACCEPTANCE By Resolution No. the Redevelopment Agency of the City of San Bernardino hereby accepts title to the property described in Exhibit A to this Quitclaim Deed. Dated: ,2003 Redevelopment Agency of the City of San Bernardino Gary Van Osdel Executive Director SB2003,13436.1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 201 North "En Street Suite 301 San Bernardino, California 92401 (Space Above Line for Use By Recorder) 2003 DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND J.R. WATSON & ASSOCIATES DEVELOPMENT CO. 882003:2151.1 Section 1.01. Section 1.02. Section 1.03. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 2.11. Section 2.12. Section 2.13. Section 2.14. Section 2.15. Section 2.16. Section 2.17. Section 2.18. Section 2.19. Section 2.20. Section 2.21. Section 2.22. Section 2.23. Section 2.24. Section 2.25. SB2Q03:2151.1 TABLE OF CONTENTS Page Purpose of Agreement........................................................................................1 ~~~........................................................................................................1 Parties to the Agreement....................................................................................2 ARTICLE II DISPOSITION OF THE PROPERTY .............................................5 Purchase and Sale of the Property; Purchase Price; Agency Financing ............5 Deposit............................................................................................................... 6 Opening and Closing of Escrow ........................................................................7 Escrow Instructions............................................................................................ 7 Conveyance of Title...........................................................................................8 Additional Closing Obligations of Agency........................................................8 Closing Obligations of Developer..................................................................... 9 Inspections and Review..................................................................................... 9 Due Diligence Investigation of the Property By the Developer ......................11 Due Diligence Certi ficate ............................................................................... .12 Books and Records ..........................................................................................12 Condition of the Property-Developer's Release ..............................................14 Review and Approval of Condition of Title by the Developer........................15 RESERVED .....................................................................................................15 Extension of Due Diligence Period..................................................................15 Developer's Conditions Precedent to Close Escrow .......................................15 Agency's Conditions Precedent to Close Escrow............................................ 16 Distribution of Documents to Developer After Closing Date by Escrow Holder..............................................................................................................1 7 Satisfaction of Conditions................................................................................1 7 RESERVED ...................................... ... ................................ ............................17 Prorations, Closing Costs, Possession .............................................................17 BREACH OF ARTICLE II BY THE AGENCY; PROVABLE OUT -OF-POCKET EXPENSES PAYABLE AS DAMAGES BY THE AGENCY TO THE DEVELOPER.......................................... ..19 RESERVED .....................................................................................................19 Representations and W arranties.......................................................................19 Damage, Destruction and Condemnation ........................................................22 Section 3.0l. Section 3.02. Section 3.03. Section 3.04. Section 3.05. Section 3.06. Section 3.07. Section 4.0l. Section 4.02. Section 4.03. Section 4.04. Section 5.oJ. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 6.0l. Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. 882003:2151.1 ARTICLE III DEVELOPMENT OF THE PROJECT ..........................................23 Development of the Project by Developer.......................................................23 RESERVED .....................................................................................................27 Taxes and Assessments................................................................................... .27 Change in Ownership Management and Control of the Developer n Assignment and Transfer................................................................................ .28 Security Financing; Right of Holders ..............................................................30 Right of the Agency to Satisfy Other Liens on the Property after Conveyance of Title........................................................................................ .33 Certificate of Completion.............................................................................. ..33 ARTICLE IV USE OF THE SITE..........................................................34 Uses................................................................................................................. .34 Maintenance of the Property........................................................................... .34 Obligation to Refrain from Discrimination......................................................35 Form of Nondiscrimination and Nonsegregation Clauses ...............................35 ARTICLE V DEFAULTS, REMEDIES AND TERMINATION .................................36 Defaults - General........................................................................................... .36 Legal Actions...................................................................................................3 7 Rights and Remedies are Cumulative ..............................................................37 Damages...........................................................................................................3 7 Specific Performance Prior to Close of Escrow ..............................................38 Agency Rights of Termination Following Close ofEscrow............................38 ARTICLE VI GENERAL PROVISIONS....................................................39 Notices, Demands and Communications Between the Parties ........................39 Conflict of Interest......................................................................................... ..40 Warranty Against Payment of Consideration for Agreement..........................40 Nonliability of Agency Officials and Employees ............................................40 Enforced Delay: Extension of Time of Performance.......................................40 Inspection of Books and Records ....................................................................41 Approvals........................................................................................................ .41 Real Estate Commissions............................................................................... ..41 11 Section 6.09. Section 6.10. Section 6.1l. Section 6.12. Indemnification............................................................................................... .41 Release of Developer from Liability................................................................43 Attorneys' Fees................................................................................................44 Effect............................................................................................................... .44 ARTICLE VII ENTIRE AGREEMENT; COUNTERPARTS; NO MERGER WITH GRANT DEED; WAIVERS AND AMENDMENTS .............................................44 Section 7.01. Section 7.02. Entire Agreement; Counterparts......................................................................44 No Merger; Waivers and Amendments ...........................................................44 ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION Section 8.01. Execution and Recordation ....................................................................................44 EXHIBIT "A" EXHIBIT "A-I" EXHIBIT "B" EXHIBIT "C" EXHIBIT "D" EXHIBIT "E" EXHIBIT "F" EXHIBIT "G" EXHIBIT "H" SB2003:2151.1 THE MAP AND THE PROPERTY REQUIRED BUILDING STANDARDS DESCRIPTION OF PROJECT AND SCOPE OF DEVELOPMENT - TENTATIVE TRACT MAP PROMISSORY NOTE DEED OF TRUST AGENCY GRANT DEED SCHEDULE OF PERFORMANCE CERTIFICATE OF COMPLETION '. III 2003 DISPOSITION AND DEVELOPMENT AGREEMENT (J.R. Watson & Associates Development Co. ) This 2003 Disposition and Development Agreement (the "Agreement") is entered into as of , _, 2003, by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body corporate and politic (the "Agency") and J.R. Watson & Associates Development Co., a California corporation (the "Developer"). The Agency and Developer hereby agree as follows: Section 1.01. Pumose of Agreement. In accordance with Section 33396 of the California Health and Safety Code, the purpose of this Agreement is to provide for the sale by the Agency to the Developer of certain unimproved lands located at the northwest comer of University Parkway and Northpark Boulevard in the City of San Bernardino and more specifically described as parcels 1,2,3,5,6,7,8, 10 and 12 (collectively and severally, the "Property") on the map attached hereto as Exhibit "A" (the "Map"). Section 1.02. The Proiect. Promptly following the conveyance of the Property by the Agency to the Developer, the Developer shall undertake the first phase of development of the Property as a residential neighborhood consisting of single family detached homes. (the "Residences") The community of Residences will be developed in accordance with and shall contain the features described in Exhibit "A-1 "("Required Building Standards") and will also include approximately twenty (20) acres devoted to a community park with playground, several miles of walking trails, green areas and landscaping in which Developer intends to invest at least $500,000 and of naturally left land (the "Parks and Trails") (the Residences and the Parks and Trails being hereinafter referred to as the "Project"). In the first phase of development of the Project, the Developer shall perform the following after receipt ofre1evant goverrunental approvals and permits: (a) mass grade the entire Project area (as appropriate) within sixty (60) days after closing and approval of a master grading plan; (b) install drainage facilities and utilities, as appropriate for the development plan in accordance with governmental requirements; (c) develop Residences in an orderly fashion based upon prevailing market conditions. Notwithstanding the foregoing, it is intended that 50-100 Residences will be developed initially with the balance of the Residences ( up to a total of 155-198, in the aggregate) to follow within five (5) years of the Closing Date. The Developer shall, as part of the Project, provide compacted fill for the completion of the ultimate right of way for the realignment of Campus Parkway at Northpark Boulevard. Developer shall also relocate existing water lines as reflected on the "Tentative Tract Map," as defined below and provide various mechanisms to maintain, as feasible, ground water recharge including drywell inlet structures and vertical recharge wells. I The Project is more particularly described in Exhibit "B" attached hereto (Description of Project and Scope of Development) (the "Scope of Development"). A tentative tract map with respect to the Property (the "Tentative Tract Map") has been submitted to the City of San Bernardino (the "City"). The Tentative Tract Map is attached hereto as Exhibit "C" in order to indicate the general nature of the Project. Approval of the tentative tract map may occur subsequent to the execution of this Agreement. Section 1.03. Parties to the Agreement. (a) The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California (Health and Safety Code Section 33020, et sea.). The principal office of the Agency is located at 201 North "E" Street, Suite 301, San Bernardino, California 92401. (b) The Developer is a California corporation. The principal office and mailing address of the Developer for purposes ofthis Agreement is: J.R. Watson & Associates Development Co. 101 Main Street, Suite A Seal Beach, California 90740 Attn: James R. Watson Telephone: (562) 430-0503 Fax: (562) 493-5860 (c) The City of San Bernardino is not a party to this Agreement. 2 882003:2151.1 Section 1.04. Restrictions Against Change in Ownership. Management and Control of Developer and Assignment of Agreement. The qualifications and identity of the Developer are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Developer. Prior to the issuance ofa Certificate of Completion as set forth in Section 3.07, no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement; provided, however that the parties hereto acknowledge and agree that prior to the commencement of construction of the Project, the Developer may assign some or all of its right, title and interest in this Agreement (or to relevant portions or phases of the Project) to an entity or entities which agree to build in accordance with the Required Building Standards attached hereto as Exhibit "A-I" and which is (a) at least twenty five percent (25%) owned directly or indirectly by the Developer or an affiliate of the Developer and the managing member or manager of which is the Developer or an affiliate of the Developer or (b) an entity not affiliated with J.R. Watson & Associates Development Co. (a "Builder", which builder together with an assignee permitted pursuant to 1.04(a), above, shall be individually referred to hereinafter as an "Approved Assignee") where Watson & Associates, rnc ("Watson") retains the following obligations and responsibilities: (i) Watson shall determine that the Builder is suitable for its portion of the Project (i..e. a custom home builder doing three very large homes in a cuI de sac will be evaluated differently than one or two Builders proposing different styles of housing for different neighborhoods within the Project);and (ii) Watson shall require that the Builder, in any purchase agreement, expressly assume the obligations set forth in the Required Building Standards and such Builder shall comply with same. Such purchase agreement shall further provide that Watson shall be entitled to approve (with such approval not being unreasonably withheld) prior to the submission thereof to any governmental entity (aa) the size, floor plans, elevations, color palettes, interior finishes, features and landscaping styles and (bb) the plotting of the houses (i.e the relationship of particular models and elevations to other nearby models and elevations, to ensure for, example, that identical homes are not located next to each other). The purpose of Watson's approval rights shall be to determine compliance with the Required Building Standards and ensure that Builder is performing in a manner consistent with Watson's standards for the entire Project. 3 SB2003:2151.1 The Approved Assignee shall expressly assume the obligations of the Developer under this Agreement with respect to the portion or Phase of the Project expressly assigned by Watson to Approved Assignee and agree to be subject to the conditions and restrictions to which the Developer is subject under this Agreement and, upon such assumption, the Approved Assignee shall become the Developer hereunder for all purposes; provided, however, that Watson shall remain obligated to perform all duties imposed on the Developer under this Agreement until such time as the Certificate of Completion is furnished to Developer by the Agency, as provided in Section 3.07 hereof. The Developer shall not, except as set forth above or in Section 3.04 hereof, assign all or any part of this Agreement or any rights hereunder prior to the issuance of the Certificate of Completion with respect to the Project without the prior written approval of the Executive Director of the Agency, which approval shall not be unreasonably withheld. The Developer shall promptly notify the Agency in writing of any and all changes whatsoever in the identity of the business entities and individuals either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such party, of which information the Developer or any of its officers have been notified or may otherwise have knowledge or information. This Agreement may be terminated by the Agency prior to the Close of the Escrow as set forth in Section 2.03 if there is any significant or material change, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the Agency prior to the time of such change or the Agency may seek other appropriate relief in the event that at any time following the Close of Escrow and prior to issuance of the Certificate of Completion such a change in the ownership, or control of the Developer occurs with respect to the Property; provided, however, that (i) the Agency shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following receipt of such written notice to commence and thereafter diligently and continuously proceed with the cure of the default of the Developer and submit evidence of the initiation of satisfactory completion of such cure to the Agency in a form and substance deemed satisfactory to the Agency, in its reasonable discretion. In the event that Watson has assigned its rights, duties, and/or obligations to a Builder, and such Builder is in breach of this Agreement, then Agency shall give Watson and Builder notice thereof. In the event Builder has failed to cure such breach after notice as provided or permitted elsewhere in this Agreement, then Watson shall have an additional period of time of three (3) months to cure such breach; provided, however that so long as Developer is diligently pursuing such cure, then, Developer shall have the right to an additional period of time not to exceed three (3) months. Agency shall accept cure by Watson, as Developer. 4 882003:2151.1 ARTICLE II DISPOSITION OF THE PROPERTY Section 2.01. Purchase and Sale of the Propertv: Purchase Price: Agencv FinancinlJ: . (a) Purchase and Sale. Subject to all of the terms, conditions and provisions of this Agreement, and in consideration of the promises and agreements of the Agency and the Developer herein set forth, the Agency hereby agrees to sell to the Developer merchantable lien free title to and the Developer hereby agrees to purchase all of the right, title and interest of the Agency in the Property. (b) Purchase Price. As the purchase price of the Property, the Developer shall pay to the Agency Three Million Dollars ($3,000,000). Developer shall have the right to enter upon and utilize those parcels shown on the Map which are not transferred to Developer for access, grading, utilities and any other use necessary for development of the Property. The entities owning parcels reflected on the Map that are not conveyed to Developer shall execute such further documentation as may be necessary to effectuate the intent of this paragraph. (c) Payment of Purchase Price. The Developer shall pay eighty percent (80%) of the Purchase Price in cash at the Close of Escrow. The Developer shall execute and deliver to the Agency at the Close of Escrow a promissory note substantially in the form attached hereto as Exhibit "0" in the amount of twenty percent (20%) of the Purchase Price (the "Promissory Note"). The maturity date of the Promissory Note shall be that date which is two (2) years from the date of the Close of Escrow. The Promissory Note shall bear interest on the unpaid principal amount thereof from the date of the Close of Escrow at a variable rate equal to two percent (2%) over the LIB OR (London Interbank Offering Rate) rate in effect from month to month. Interest shall be payable quarterly, on September 30, December 31, March 31 and June 30 of each year that the principal amount of the Promissory Note remains outstanding, commencing September 30,2003. A deed of trust covering one or more parcels totaling approximately twenty one (21) acres of the Property which is not contemplated to be developed with Residences in the first phase of construction (the "Deed of Trust"), substantially in the form attached hereto as Exhibit "E", shall secure the obligations of the Developer set forth in the Promissory Note. The Agency shall, at the request of the Developer, agree to subordinate the Deed of Trust to (i) a construction loan to the Developer in an amount which, when added to the Purchase Price, shall result in a loan to value ratio not to exceed ninety percent (90%) of the fair market value of the Property, as determined by the lender under such construction loan, the proceeds of which shall be used and applied by the Developer solely for the improvement and development of the Project and (ii) a permanent mortgage loan to provide for the release of the construction loan and the long term 5 882003:2151.1 financing for the capital costs associated with the development and financing of the Project. The subordination of the Deed of Trust to a construction loan and the subordination of the Deed of Trust to a permanent loan shall be evidenced by commercially reasonable subordination agreements by and among the applicable lender, the Developer and the Agency which contain the provisions required under Section 3.05 and the covenant of the Developer and the applicable lender that the applicable loan documentation shall not be amended or modified in any material respect without the approval of the Agency. The Deed of Trust shall contain provisions allowing for the release of the Property from the lien of the Deed of Trust in increments of four (4) acres or more at a release price equal to the value of the property released (computed at $0.70 per square foot times one hundred and ten percent 110%). Section 2.02. Deoosit. (a) Within five (5) days following the execution of this Agreement by both parties, the Developer shall deliver to the Escrow Holder (as hereinafter defined) Ten Thousand Dollars ($ 10,000). This sum upon its receipt by the Escrow Holder, is referred to in this Agreement as the "Deposit". Upon receipt of the Deposit together with a fully executed copy of this Agreement, the Escrow Holder shall cause the Escrow (as hereinafter defined) to be opened as provided in Section 2.03, and the Escrow Holder shall place the Deposit into an interest- bearing escrow account with the interest thereon to accrue to the benefit of the Developer. At the Close of Escrow (as hereinafter defined), the Deposit shall be applied as a credit to the Purchase Price of the Property. (b) The Deposit (less an amount equal to the customary and reasonable escrow cancellation charges of the Escrow Holder) shall be returned to the Developer in the event that: (i) the Agency or the Developer terminates this Agreement pursuant to Section 2.03(b); or (ii) the Developer does not deliver its Due Diligence Certificate (as hereinafter defined) to the Escrow Holder pursuant to Section 2.03(b) and this Agreement is terminated; or (iii) the Developer's conditions precedent to the Close of Escrow described in Section 2.16 are not satisfied (unless satisfaction has been waived by the Developer) and this Agreement is terminated; or (iv) the Property is materially damaged prior to the Close of Escrow, or an action of eminent domain is commenced by a governmental entity with respect to the Property prior to the Close of Escrow, 6 8B2003:2151 1 and the Developer elects to terminate this Agreement pursuant to Section 2.25. Section 2.03. Opening and Closing of Escrow . (a) The transfer and sale of the Property shall take place through an Escrow (the "Escrow") to be administered by Chicago Title Insurance Company or such other escrow or title insurance company mutually agreed upon by the Seller and the Agency (the "Escrow Holder"). The Escrow shall be deemed open ("Opening of Escrow") upon the receipt by the Escrow Holder of a fully executed copy of this Agreement and the Deposit. The Escrow Holder shall promptly confirm to the parties the escrow number and the title insurance order number assigned to the Escrow. (b) Subject to any extensions of time granted pursuant to Section 2.15 hereof, in the event that the Developer has not delivered its Due Diligence Certificate to the Agency and the Escrow Holder within ninety (90) days from the Opening of Escrow for any reason, then in such event this Agreement shall terminate upon written notice to the Escrow Holder from either the Agency or the Developer, whereupon the Deposit shall be returned by the Escrow Holder to the Developer (less an amount equal to the customary and reasonable escrow cancellation charges payable to the Escrow Holder) without further or separate instruction to the Escrow Holder, and the parties shall each be relieved and discharged from all further responsibility or liability under this Agreement. (c) Provided that the Developer has delivered the Due Diligence Approval Certificate within the period of time authorized in Section 2.10, then the Closing Date of the Escrow shall occur within twenty (20) days thereafter, unless the Close of Escrow is extended (a) unilaterally by Developer pursuant to Section 2.16 or (b) to a date that is more than twenty (20) days thereafter by mutual agreement of the Agency and the Developer. The words "Close of Escrow", "Closing Date" and "Closing" shall mean and refer to the date when the Escrow Holder is in receipt of the Escrow documents of the parties and is in a position to comply with the final written escrow closing instructions of the parties and cause the Agency Grant Deed for the Property to be recorded and the Title Policy (as defined below) to be delivered to the Developer. Section 2.04. Escrow Instructions. This Agreement also constitutes escrow instructions of the parties to the Escrow Holder. Additionally, the Developer and the Agency each agree to execute the customary supplemental escrow instructions of the Escrow Holder in the form provided by the Escrow Holder to its clients in real property escrow transactions administered by it. In the event of a conflict between the additional terms of such customary supplemental escrow instructions of the Escrow Holder and the provisions of this Agreement, this Agreement shall supersede and be controlling. Upon any termination of this Agreement or cancellation of the Escrow, the Developer shall be solely responsible for the payment of the escrow cancellation costs of the Escrow Holder, the Escrow Holder shall forthwith return all monies (as provided in this Agreement) and documents, less only the Escrow Holder's customary and reasonable escrow cancellation fees and expenses, as set forth herein. 7 SB2003:2151.1 Section 2.05. Convevance of Title . On or before 12:00 noon on the business day preceding the Closing Date, the Agency shall deliver to the Escrow Holder a grant deed in the form attached hereto as Exhibit "F" (the "Agency Grant Deed") duly executed and acknowledged by the Agency, which Agency Grant Deed shall convey all of its merchantable lien free right, title and interest of the Agency in the Property to the Developer. The Escrow Holder shall be instructed to record the Agency Grant Deed in the Official Records of San Bernardino County, California, if and when Escrow Holder holds the various instruments of the parties as set forth herein and can obtain for the Developer an ALTA owner's extended coverage policy of title insurance ("Title Policy") issued by Chicago Title Insurance Company or such other title insurance company mutually agreed upon by the parties ("Title Company") with liability in an amount equal to the Purchase Price, together with such endorsements to the policy as may be reasonably requested by the Developer, insuring that the Property with fee title to the Property vested in the Developer is free and clear of options, rights of first refusal or other purchase rights, leases or other possessory interests, lis pendens and monetary liens and/or encumbrances and subject only to: (I) non-delinquent real property taxes; (2) non-monetary title exceptions approved by the Developer pursuant to Section 2.13 below; (3) applicable provisions of the Tentative Tract Map; (4) the effect of any conditions imposed by the City as part of the development plan approvals for the Project accepted by Developer; (5) the provisions of the Agency Grant Deed; (6) the applicable provisions of this Agreement; and (7) such other title exceptions, if any, resulting from documents being recorded or delivered through Escrow. Section 2.06. Additional Closing Obligations of Agencv. On or before 12:00 noon on the business day preceding the Closing Date (unless indicated otherwise), the Agency shall deliver to the Escrow Holder (unless indicated to be delivered directly to the Developer) copies of the following documents and other items: (I) a certificate of non-foreign status executed by the Agency, in the customary form provided by the Escrow Holder, and a California Franchise Tax Board Form 590-RE executed by the Agency; (2) all soils, seismic, geologic, drainage, and environmental reports, and surveys, with respect to the Property, if any, which the Agency has in its possession and/or control to the extent that originals of such items have 8 SB2003:2151.1 not been delivered previously by the Agency to the Developer pursuant to Section 2.08 below; (3) two (2) duplicate original copies of the Closing Statement described in Section 2.21, duly executed by the Agency; (4) evidence of the existence, organization and authority of the Agency and of the authority of persons executing documents on behalf of the Agency reasonably satisfactory to the Escrow Holder and Title Company; and (5) any other documents, instruments, funds and records required to be delivered to the Developer under the terms of this Agreement which have not been previously delivered. Section 2.07. Closing Obligations of Developer . On or before 12:00 noon on the business day preceding the Closing Date, the Developer shall deliver to the Escrow Holder copies of the following documents and other items: (1) an acknowledgment and acceptance of the Agency Grant Deed, duly executed and acknowledged by the Developer. (2) two (2) duplicate original copies of the Closing Statement, duly executed by the Developer. (3) an original and duly executed Promissory Note and the Deed of Trust in recordable form. (4) evidence of the existence, organization and authority of the Developer and of the authority of persons executing documents on behalf of the Developer reasonably satisfactory to the Escrow Holder and the Title Company. (5) any other documents, instruments or funds required to be delivered by the Developer under the terms of this Agreement or as otherwise required by Escrow Holder or Title Company in order to close Escrow which have not previously been delivered. Section 2.08. Inspections and Review. (a) Due Diligence Items. Within five (5) days after the execution of this Agreement, the Agency shall deliver true, correct and complete copies or originals of the following documents and items (collectively, "Due Diligence Items") to the Developer: (I) copies of all soils, seismic, geologic, drainage, engineering, environmental and similar type reports and surveys (including, but not limited to, any 9 SB2003:2151.1 Property Environmental Site Assessments), surveys, relating to the Property if any, in the possession or control of the Agency. (2) notices of violations, including, but not limited to, zoning ordinances, development or building codes affecting the Property within the Agency's possession or control. (3) disclosure of any legal matters affecting the use or condition of the Property within the knowledge of the Agency. (b) Certain Definitions. For the purpose of this Agreement, the terms set forth below shall have the following meaning: (i) "environmental laws" means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") [42 USC Section 9601 et sea.]; the Resource Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901 et ~.]; the Clean Water Act, also known as the Federal Water Pollution Control Act ("FWPCA") [33 USC Section 1251 et eq.]; the Toxic Substances Control Act ('TSCA") [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act ("HMT A") [49 USC Section 1801 et sea.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et ~.] the Clean Air Act [42 USC Section 7401 et sea.]; the Safe Drinking Water Act [42 USC Section 300f et sea.]; the Solid Waste Disposal Act [42 USC Section 6901 et sea.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et ~.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et sea.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [H & S C Section 25288 et sea.]; the California Hazardous Substances Account Act [H & S C Section 25300 et sea.]; the California Safe Drinking Water and Toxic Enforcement Act [H & S C Section 24249.5 et sea.] the Porter-Cologne Water Quality Act [Water Code Section 13000 et sea.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law , statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, or the regulation 10 $82003:2151.1 or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use. (ii) "hazardous substances" includes without limitation: those substances included within the definitions of "hazardous substance," "hazardous waste," "hazardous material," "toxic substance," "solid waste," or "pollutant or contaminate" in CERCLA, RCRA, TSCA, HMT A, or under any other environrnentallaw; and those substances listed in the United States Department of Transportation (DOT)Table [49 CFR 172.101], or by the EP A, or any successor agency, as hazardous substances [40 CFR Part 302]; and other substances, materials, and wastes that are or become regulated or classified as hazardous or toxic under federal, state, or local laws or regulations; and any material, waste, or substance that is: (l) a petroleum or refined petroleum product, (2) asbestos, (3) polychlorinated biphenyl, (4) designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317, (5) a flammable explosive, or (6) a radioactive material. Section 2.09. Due Diligence Investigation of the Prooertv Bv the Developer. (a) Within ninety (90) days from and after the Opening of Escrow, and subject to the extensions of time set forth below in Section 2.15 the Developer shall have the right to examine, inspect and investigate the Property (the "Due Diligence Period") to determine whether the condition of the Property is acceptable to the Developer and to obtain such development project approvals from the City for the improvement of the Project as the Developer may require in its sole and absolute discretion. (b) During the Due Diligence Period, the Agency shall permit the Developer, its engineers, analysts, contractors and agents to conduct such physical inspections and testing of the Property as the Buyer deems prudent with respect to the physical condition of the Property, including the inspection or investigation of soil and subsurface soil geotechnical condition, II SB2003:2151.1 drainage, seismic and other geological and topographical matters, surveys the potential presence of any hazardous substances, if any. (c) Any such investigation work on the Property may be conducted by the Developer and/or its agents during any normal business hours upon twenty -four (24) hours prior notice to the Agency, which notice will include a description of any investigation work or tests to be conducted by the Developer on the Property. Upon the Agency's request, the Developer will provide the Agency with copies of any test results. (d) During the Due Diligence Period, the Developer shall also have the right to investigate all matters relating to the zoning, use and compliance with other applicable laws which relate to the use and development and improvement of the Property. The Developer may submit an application to the City and any other regulatory agency with jurisdiction for any and all necessary development project approvals for the Project. The Agency hereby consents to the submission of such development project approval applications by the Developer. (e) The Agency shall cooperate fully to assist the Developer in completing such inspections and investigations of the condition of the Property. The Agency shall have the right, but not the obligation, to accompany the Developer during such investigations and/or inspections. The Developer shall pay for all costs and expenses associated with the conduct of all such Due Diligence investigation including the cost of submitting any development project approval application as relates to the Project to any regulatory jurisdiction. Section 2.10. Due Diligence Certificate. Within ninety (90) days following the Opening of Escrow, the Developer shall complete its investigation of the Property (subject to any extensions of time as provided in Section 2.15 and deliver a due diligence certificate signed by the Developer (the "Due Diligence Certificate") to the Escrow Holder which either: (i) indicates that the Developer accepts the condition of the Property or; (ii) contains a description of the matters or exceptions relating to the condition of the Property which the Developer was not able to accept or resolve to its satisfaction during the Due Diligence Period. Section 2.11. Books and Records. As part of the Developer's due investigations during the Due Diligence Period, the Developer shall be afforded full opportunity by the Agency to examine all books and records which relate to the Property in the possession of the Agency and/or the Agency's agents or employees, including the reasonable right to make copies of such books and records. During the Due Diligence Period, the Agency will make sufficient staff available to assist the Developer with obtaining access to information relating to the Property which is in the possession or control of Agency. Section 2.12. Condition of the Prooertv-Develooer's Release. The Developer acknowledges and agrees that it shall be given a full opportunity under this Agreement to inspect and investigate every aspect of the Property during the Due Diligence Period. The Developer 12 SB2003:2151.1 shall accept the delivery of possession to the Property on the Close of Escrow in an "AS IS", "WHERE IS" and "SUBJECT TO ALL F AUL TS" condition. The Developer further agrees and represents to the Agency that by a date no later than the end of the Due Diligence Period, the Developer shall have conducted and completed (or waived the completion) of all of its independent investigation of the condition of the Property which the Developer may believe to be indicated. The Developer hereby acknowledges that it shall rely solely upon its own investigation of the Property and its own review of such information and documentation as it deems appropriate for the purpose of accepting the condition and possession of the Property. The Developer is not relying on any statement or representation by the Agency relating to the condition of the Property unless such statement or representation is specifically contained in this Agreement. Without limiting the foregoing, the Agency makes no representations or warranties as to whether the Property presently complies with environmental laws or whether the Property contains any hazardous substance, as these terms are defined in Section 2.08 (b) hereof. Furthermore, to the extent that the Agency has provided the Developer with information relating to the condition of the Property, including information and reports prepared by or on behalf of the City of San Bernardino, the Agency makes no representation or warranty with respect to the accuracy, completeness or methodology or content of such reports or information. Without limiting the above, except to the extent covered by an express representation or warranty of the Agency set forth in this Agreement, the Developer, on behalf of itself and its successors and assigns, waives and release the Agency and its successors and assigns from any and all costs or expenses whatsoever (including, without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, arising from or relating to the physical condition of the Property, the condition of the soils, the suitability of the soils for the improvement of the Project as proposed, or any law or regulation applicable thereto, including the presence or alleged presence or harmful or hazardous substances in, under or about the Property including, without limitation, any claims under or on account of (i) CERCLA and similar statutes and any regulations promulgated thereunder or (ii) any other environmental laws. The Developer expressly waives any rights or benefits available to it with respect to the foregoing release under any provision of applicable law which generally provides that a general release does not extend to claims which the creditor does not know of suspect to exist in his or her favor at the time the release is agreed to, which, if known to such creditor, would materially affect a settlement. By execution of this Agreement, the Developer acknowledges that it fully understands the foregoing, and with this understanding, nonetheless elects to and does assume all risk for claims known or unknown, described in this Section 2.12 without limiting the generality of the foregoing: The undersigned acknowledges that it has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOWN OR SUSPECT TO EXIST IN HIS 13 SB2003:2151.1 FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MA TERIALL Y AFFECTED HIS SETTLEMENT WITH THE DEBTOR." The undersigned, being aware of this code section, hereby expressly waives any rights it may have thereunder, as well as under any other statutes or common law principles of similar effect. Initials of Developer: The provisions of this Section 2.12 shall survive the Close of Escrow. Section 2.13. Review and Aooroval of Condition of Title bv the Developer. (a) Within fifteen (15) days following the Opening of Escrow, Agency shall cause to be delivered to the Developer a preliminary title report or title commitment for an AL T A extended coverage policy of title insurance issued by the Title Company describing the state of title of the Property, together with (i) copies of all exceptions specified therein and with all easements plotted and (ii) a survey prepared in compliance with AL T N ASCM standards and in a form acceptable to the Title Company for the deletion of the standard survey exception in the Title Policy relating to boundaries, without the addition of further exceptions unless the same are acceptable to the Developer in its sole and absolute discretion (the "Preliminary Title Report"). The Developer shall notify the Agency in writing of any objections the Developer may have to the title exceptions contained in the Preliminary Title Report ("Developer's Objection Notice") prior to the expiration ofthe Due Diligence Period. The Agency shall have a period of five (5) days after receipt of the Developer's Objection Notice in which to deliver written notice to the Developer ("Agency's Responsive Notice") of the Agency's election to either (i) agree to remove the objectionable items prior to the Close of Escrow, or (ii) decline to remove any such items; provided, however, that the Agency shall be required to remove all monetary liens and encumbrances created by or as a result of the Agency's activities. If the Agency notifies the Developer of its election to terminate Escrow rather than remove the objectionable items, the Developer shall have the right, by written notice delivered to the Agency within twenty (20) days after the Developer's receipt of the Agency's Responsive Notice, to agree to accept the Property subject to the objectionable items, in which event the Agency's election to terminate the Escrow shall be of no effect, and the Developer shall take title at the Close of Escrow subject to such objectionable items. (b) The Agency covenants not to further encumber and not to place any further liens or encumbrances on the Property, including, but not limited to, covenants, conditions, restrictions, easements, liens, options to purchase, options to lease, leases, tenancies, or other possessory interests without the prior written consent of the Developer. Upon the issuance of any amendment or supplement to the Preliminary Title Report which adds additional exceptions, the foregoing right of review and approval shall also apply to said amendment or supplement (provided that the period for the Developer to review such amendment or 14 882003:2151.1 supplement shall be the later of the expiration of the Due Diligence Period or ten (10) days from receipt of the amendment or supplement) and Escrow shall be deemed extended by the amount of time necessary to allow such review and approval in the time and manner set forth above. Section 2.14. RESERVED Section 2.15. Extension of Due Diligence Period. (a) In the event Agency fails to provide to the Developer the documents and other information required by Sections 2.08 and 2.11 by the date(s) set forth therein, the Due Diligence Period for such information shall be extended by one (1) day for each day of the delay by the Agency to permit the Developer to perform an adequate due diligence review not to exceed ninety (90) days. The Developer will use its best efforts to notify Agency of any documents the Agency has failed to deliver to the Developer within the time periods provided in Sections 2.08 and 2.11. (b) In the event that the Executive Director makes a finding that the Developer has undertaken substantial work to complete its investigation of the Property, the Executive Director shall upon the written request of the Developer, authorize an extension of the Due Diligence Period for up to four (4) additional periods of thirty (30) days each. Section 2.16. Developer's Conditions Precedent to Close Escrow. The Developer's obligation to complete the purchase of the Property and Close the Escrow shall be conditioned upon the fulfillment of the following conditions precedent, all of which shall be satisfied (or waived in writing pursuant to Section 2.19) prior to the Close of Escrow: (1) The Agency shall not have defaulted on any material term of this Agreement to be performed by the Agency hereunder, and each representation and warranty made by the Agency in this Agreement shall remain true and correct. For purposes of this subsection (1) only, a representation that is limited to the Agency's knowledge or notice shall be false if the factual matter that is subject to the representation is false, notwithstanding any lack of knowledge or notice to the Agency; (2) the Developer's approval of the Preliminary Title Report, within the time period specified in Sections 2.13; (3) the Developer's approval of the contents of all Due Diligence Items, and the other investigations of the Property made by the Developer and/or its designees pursuant to Sections 2.08 and 2.09 herein on or before the expiration of the Due Diligence Period, or such later date if the Due Diligence Period is extended pursuant to Section 2.15. The Developer shall be deemed to have disapproved such Due Diligence Items unless they are approved on or before 5:00 p.m. on the day of the Due Diligence 15 882003:2151.1 Period, or such later date if the Due Diligence Period is extended pursuant to Section 2.15 herein; (4) the Developer's approval of any notice of change in representation or warranty given by the Agency pursuant to Section 2.25(a) hereof; (5) the Title Company has committed to issue the Title Policy, in favor of the Developer in the form described in Section 2.05; (6) Developer has received an agreement from: (a) the County of San Bernardino respecting the quitclaim of certain easements; (b) California State University at San Bernardino respecting the use of property owned by the University at the NW comer of University and Northpark and the SW comer of future Campus Parkway and Northpark and (c) the City of San Bernardino respecting the construction of Campus Parkway and improvements to Northpark, acceptable to Developer in its sole discretion. In the event Developer is unable to obtain such agreements, or any of them, prior to the Closing Date set forth in Section 2.03,then Developer shall have the right to extend the time for the Close of Escrow for a reasonable period of time not to exceed four (4) additional months so long as Developer is acting diligently and in good faith, to obtain such agreements; and (7) Developer has received approval of its Tentative Tract Map respecting the Property and/or the rights required by Developer pursuant to Section 2.0 I (b). Section 2.17. Ag:encv's Conditions Precedent to Close Escrow. The Agency's obligation to convey the Property to the Developer shall be conditioned upon the fulfillment of the following conditions precedent, all of which shall be satisfied (or waived in writing pursuant to Section 2.19) prior to the Close of Escrow: (I) the Developer has accepted the condition of the Property and submitted its Due Diligence Approval Certification to the Escrow Holder within the time period set forth in Section 2.03 of this Agreement, as such time period may be extended pursuant to Section 2.15 hereof; (2) the Developer has accepted the condition of title of each of the Property on or before the date set forth in Section 2.13; (3) the Developer shall not be in default of any material term of this Agreement to be performed by the Developer hereunder and each representation and warranty of the Developer made in this Agreement shall remain true and correct; and 16 SB2003:2151.1 (4) the Developer shall be satisfied (or waive satisfaction) of each of the conditions precedent set forth in Section 2.16 and the Escrow is in a condition to close within sixty (60) following the expiration of the Due Diligence Period (as the Due Diligence Period or Close of Escrow may be extended pursuant to Section 2.15 or 2.16 respectively). Section 2.18. Distribution of Documents to Develooer After Closing Date bv Escrow Holder. The Escrow Holder shall deliver to the Developer within the (3) business days following the Closing Date a conformed copy of the Agency Grant Deed, as recorded and the policy of title insurance issued by the Title Company in favor of the Developer. Section 2.19. Satisfaction of Conditions. Where satisfaction of any of the foregoing conditions requires action by the Developer or by the Agency, each party shall use its diligent best efforts, in good faith, and at its own cost, to satisfy such condition. Where satisfaction of any of the foregoing conditions requires the approval of a party, such approval shall be in such party's sole and absolute discretion. Either party may waive any of the conditions set forth in the Agreement, but any such waiver shall be effective only if contained in a writing signed by the applicable party and delivered to the Escrow Holder. Section 2.20. RESERVED Section 2.21. Prorations. Closing Costs. Possession. (a) Real and personal property taxes for the Property shall be prorated by the parties to the Closing Date on the basis of a three hundred sixty-five (365) day year on the basis that the Agency is responsible for (i) all such taxes (if any) for the fiscal year of the applicable taxing authority occurring prior to the Current Tax Period (as defined below) and (ii) that portion of such taxes for the Current Tax Period to 11 :59 p.m. on the Closing Date, whether or not the same shall be payable prior to the Closing Date. The phrase "Current Tax Period" refers to the fiscal year of the applicable taxing authority in which the Closing occurs. All tax prorations shall be based upon the latest available tax statement. If the tax statements for the fiscal tax year during which Escrow closes do not become available until after the Closing Date, then the rates and assessed values of the previous year, with known changes, shall be used, and the parties shall re-prorate said taxes outside of Escrow following the Closing Date when such tax statements become available. The Agency shall be responsible for and shall payor reimburse the Developer upon demand for any real or personal property taxes payable following the Closing Date applicable to any period of time prior to the Closing Date as a result of any change in the tax assessment by reason ofreassessment, changes in use of the Property, changes in ownership, errors by the Assessor or otherwise. (b) The Developer shall be entitled to exclusive possession of the Property immediately upon the Close of Escrow. 17 SB2003:2151.1 (c) The Agency shall pay that portion of the cost of the premium for the Title Policy equal to the cost ofa CLTA owner's extended coverage policy of title insurance on the Property in the amount of the Purchase Price (a "CL TA policy of title insurance"), together with all title charges (including endorsements reasonably requested by the Developer to remove disapproved items shown on the Preliminary Title Report pursuant to Sections 2.13 and 2.14 above). The Agency shall pay one-half (Yz) of the customary and reasonable escrow fees which may be charged by the Escrow Holder in connection with the Close of Escrow. The Developer shall be responsible for paying the difference in cost between a CL TA policy of title insurance and the ALTA policy of title insurance that is to be delivered to the Developer at the Close of Escrow, plus the cost of recording the Agency Grant Deed, together with one-half(Yz) of the cost of the customary and reasonable escrow fees charged by Escrow Holder in connection with the Close of Escrow. Any other Escrow-related transaction expenses or escrow closing costs incurred by the Escrow Holder in connection with this transaction shall be apportioned and paid for by the parties to this Agreement in the manner customary in San Bernardino County, California. No later than three (3) business days prior to the Closing Date, the Escrow Holder shall prepare for approval by the Developer and the Agency a closing statement ("Closing Statement") on the Escrow Holder's standard form indicating, among other things, the Escrow Holder's estimate of all closing costs, pay-off amounts for the release and reconveyance of all liens secured by the Property and prorations made pursuant to this Agreement. The Developer and the Agency shall assist the Escrow Holder in determining the amount of all prorations. 18 882003:2151.1 Section 2.22. RESERVED Section 2.23 BREACH BY THE DEVELOPER OF ARTICLE II LIOUIDATED DAMAGES PAYABLE BY THE DEVELOPER TO THE AGENCY. IN THE EVENT THAT THE DEVELOPER COMMITS A MATERIAL BREACH OF ITS OBLIGATIONS UNDER THIS ARTICLE II PRIOR TO THE CLOSE OF ESCROW OR FAILS TO CLOSE ESCROW THE DAMAGES THAT THE AGENCY WILL INCUR BY REASON THEREOF ARE AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH. THE DEVELOPER AND THE AGENCY, IN A REASONABLE EFFFORT TO ASCERTAIN WHAT THE AGENCY'S DAMAGES WOULD BE IN THE EVENT OF SUCH A DEFAULT BY DEVELOPER HAVE AGREED THAT SUCH DMAMGES SHALL BE IN THE AMOUNT OF TEN THOUSAND DOLLARS ($10,000) AS LIQUIDATED DAMGES. SUCH SUM SHALL BE PAID TO THE AGENCY IN THE EVENT OF DEF AUL T BY THE DEVELOPER AS LIQUIDATED DAMGES, WHICH DAMAGES SHALL BE THE AGENCY'S SOLE AND EXCLUSIVE REMEDY AT LAW OR IN EQUITY IN THE EVENT OF AND FOR SUCH DEVFAULT BY THE DEVELOPER.WITHOUT LIMITING THE FOREGOING PROVISIONSOF THIS PARAGRAPHM THE AGENCY WAIVES ANY AND ALL RIGHTS WHICH TH E AGENCY WOULD HAVE HAD UNDER CIVIL CODE SECTION 3389 TO SPECIFICALLY ENFORCE THIS AGREEMENT. THE AGENCY AND THE DEVELOPER ACKNOWLEDGE AND AGREE THAT EACH OF THEM HAS READ AND UNDERSTANDS THE PROVISIONS OF THIS SECTION AND EACH AGREES TO BE BOUND BY ITS TERMS. Initials of Developer Initials of Agency Section 2.24. Reoresentations and Warranties. (a) Warranties and Representations bv the Agencv. The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Developer has been made and the acquisition by the Developer of the Property will have been made in material reliance by the Developer on such covenants, representations and warranties: (I) Warranties True. Each and every undertaking and obligation of the Agency under this Agreement shall be performed by the Agency timely when due; and that all representations and warranties ofthe Agency under this Agreement and its exhibits shall be true in all material respects at the Closing as though they were made at the time of Closing. (2) Due Organization. The Agency is a community redevelopment agency, duly formed and operating under the laws of California. The Agency has the legal power, right and authority to enter into this Agreement and to 19 882003:2151.1 882003:2151.1 execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (3) Requisite Action. The Agency has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (4) Enforceabilitv of Agreement. The persons executing any instruments for or on behalf of the Agency have been authorized to act on behalf of the Agency and that the Agreement is valid and enforceable against the Agency in accordance with its terms and each instrument to be executed by the Agency pursuant hereto or in connection therewith will, when executed, be valid and enforceable against the Agency in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by the Agency. (5) Title. Prior to the Closing, the Agency will be the owner of (and the Developer will acquire hereunder) the entire right, title and interest in the Property to effectively vest in the Developer good and marketable fee simple title to the Property, that the Developer will acquire the Property free and clear of all liens, encumbrances, claims, rights, demands, easements, leases or other possessory interests, agreements, covenants, conditions, and restrictions of any kind or character (including, without limiting the generality of the foregoing, liens or claims for taxes, mortgages, conditional sales contracts, or other title retention agreement, deeds of trust, security agreements and pledges and mechanics lien) except: (i)the matters described in Section 2.05, and (ii) the exceptions to title approved by the Buyer pursuant to Section 2.13. (6) No Litigation. There are no pending or, to the best of the Agency's knowledge, threatened claims, actions, allegations or lawsuits of any kind, whether for personal injury, property damage, property taxes or otherwise, that could materially and adversely affect the value or use of the Property or prohibit the sale thereof, nor to the best of the Agency's knowledge, is there any governmental investigation of any type or nature pending or threatened against or relating to the Property or the transactions contemplated hereby. (7) Ooeration and Condition Pending Closing. Between the date of this Agreement and the Close of Escrow, the Agency will continue to manage, 20 operate and maintain the Property in the same manner as existed prior to the execution of this Agreement. (8) Contracts. There are no contracts or agreements to which the Agency is a party relating to the operation, maintenance, development, improvement or ownership of either of the Property which will survive the Close of Escrow except as may be set forth in the Agency Grant Deed or in the Deed of Trust. (9) Development ofProiect. Although the Agency makes no representation or warranty that the Property is suitable for the development or operation of the Project, the Agency has no present knowledge of any condition of the Property which would prevent its development in accordance with the Scope of Development. (10) Special Studies Zone. The Property is not located within a designated earthquake fault zone pursuant to California Public Resources Code Section 2621.9 and a designated area that is particularly susceptible to ground shaking, liquefaction, landslides or other ground failure during an earthquake pursuant to California Public Resources Code Section 2694. (11) The Agencv's Knowledge. For purposes of this Section 2.24, the terms "to the best ofthe Agency's knowledge" or "to the Agency's knowledge" shall mean the actual knowledge of Gary Van Osdel. If the Agency becomes aware of any act or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by the Agency under this Agreement, whether as of the date given or any time thereafter through the Closing Date and whether or not such representation or warranty was based upon the Agency's knowledge and/or belief as of a certain date, the Agency will give immediate written notice of such changed fact or circumstance to the Developer, but such notice shall not release the Agency of its liabilities or obligations with respect thereto. All representations and warranties contained in this Section 2.24(a) are true and correct on the date hereof and on the Closing Date and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. (b) Warranties and Representations bv the Developer. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (I) The Developer is a duly organized and validly existing California corporation. The Developer has the legal right, power and authority to 21 enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. (2) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, goverrunental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Property. All representations and warranties contained in this Section 2.24(b) are true and correct on the date hereof and on the Closing Date and Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. Section 2.25. Damage. Destruction and Condemnation. Prior to the Agency's delivery of possession of the Property to Developer at the Close of Escrow, the risk ofloss or damage to the Property shall remain upon the Agency. If the Property suffers damages as a result of any casualty prior to the Close of Escrow which may materially diminish its value, then the Agency shall give written notice thereof to Developer promptly after the occurrence of the casualty. The Developer can elect to either: (i) accept the Property in its damaged condition or (ii) the Developer may terminate the Agreement and recover the Deposit as set forth in Section 2.02. The Developer shall confirm the exercise of its election under subparagraph (i) or (ii) of the preceding sentence within ninety (90) days of its receipt of notice from the Agency. In the event that, prior to the Close of Escrow, any goverrunental entity shall commence any actions of eminent domain or similar type proceedings to take any portion of the Property, the Agency shall give prompt written notice thereof to Developer, and Developer shall have the option either: (i) to elect not to acquire the Property, terminate the Agreement and recover the Deposit as set forth in Section 2.02; or (ii) the Developer may complete the 22 882003:2151.1 acquisition of the Property under this Agreement, in which case Developer shall be entitled to all the proceeds of such taking; provided however, that the Agency agrees that it shall not settle or compromise the proceedings before the Close of Escrow without the Developer's prior written consent, which consent will not be unreasonably withheld or delayed). The Developer shall confirm the exercise of its election under subparagraph (i) or (ii) of the preceding sentence within ninety (90) days of its receipt of notice from the Agency. ARTICLE III DEVELOPMENT OF THE PROJECT Section 3.01. Development of the Proiect bv Developer. (a) Scope of Development: Schedule of Performance. It is the intent of the parties that promptly following the Close of Escrow, the Developer shall commence the first phase of development of the Project on the Property. The Project consists of the elements set forth in the Scope of Development. The development of the Project shall occur within the time frame established therefor in the schedule of performance attached as Exhibit "G" (the "Schedule of Performance"). (b) The City's zoning ordinance and the City's building requirements will be applicable to the use and development of the Property. The Developer acknowledges that any change in the plans for development of the Property as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City requirements which are applicable to the Property or to the Developer, any successor in interest of the Developer or any successor in interest pertaining to the Property, except by modification or variance approved by the City consistent with this Agreement. (c) The Scope of Development is hereby approved by the Agency upon its execution of this Agreement. The Project shall be developed and completed in conformance with the approved Scope of Development and any and all other plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Agency. (d) The approval of the Scope of Development by the Agency hereunder shall not be binding upon the City Councilor the Planning Commission of the City with respect to any approvals of the Project required by such other bodies. If any revisions of the Scope of Development as approved by the Agency shall be required by another government official, agency, department or bureau having jurisdiction over the development of the Property, the Developer and the Agency shall cooperate in efforts to obtain waivers of such revisions, or to obtain approvals of any such revisions which have been made by the Developer and have thereafter been approved by the Agency. The Agency shall not unreasonably withhold approval of such revisions. 23 SB2003:2151.1 (e) Notwithstanding any provision to the contrary in this Agreement, the Developer agrees to accept and comply fully with any and all reasonable conditions of approval applicable to all permits and other governmental actions affecting the development of the Property and consistent with this Agreement. (f) The Developer shall cause landscaping plans in connection with development of the Property to be prepared by a licensed landscape architect. The Developer shall prepare and submit to the City for its approval, preliminary and landscaping plans for the Property which are consistent with City Code requirements. These plans shall be prepared, submitted and approved within the times respectively established therefor in the Schedule of Performance and shall be consistent with the Scope of Development. (g) The Developer shall prepare and submit development plans, construction drawings and related documents for the development of the Property consistent with the Scope of Development to the City. The development plans, construction drawings and related documents shall be in the form of drawings, plans and specifications. Drawings, plans and specifications are hereby defined as those which contain sufficient detail necessary to obtain a building permit from the City. (h) During the preparation of all drawings and plans in connection with the development of the Property, the Developer shall provide to the Agency regular progress reports to advise the Agency of the status of the preparation by the Developer, and the submission to and review by the City of construction plans and related documents. The Developer shall communicate and consult with the Agency as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer to the City are being processed in a timely fashion. (i) The Agency shall have the right of reasonable architectural review and approval of building exteriors and design of the structures to be constructed on the Property to determine if they are consistent with the Required Building Standards. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Property in order to ensure that they are consistent with this Agreement and with the Scope of Development. If the Agency shall determine that plans, drawings or related document are not consistent with this Agreement and with the Scope of Development, it shall notify the Developer in writing of such determination. The Developer, upon receipt of such notice from the Agency, shall promptly revise the applicable plans, drawings or related documents in a manner that addresses the inconsistency with the Scope of Development and shall resubmit such revised plans, drawings or related documents to the Agency no later than thirty (30) calendar days after its receipt of such notice from the Agency. (j) The Developer shall timely submit to the City for its review and approval any and all plans, drawings and related documents pertinent to the development of the Property, as required by the City. Any failure by the City to approve any of such plans or to issue necessary permits for the development of the Property within thirty (30) calendar days ofreceipt thereof shall constitute an enforced delay hereunder, and the Schedule of Performance shall be 24 SB2003:2151.1 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 reasonably revise and resubmit such plans in accordance with the City's requirements and in such form and substance so as to obtain the City's approval thereof. (k) The Agency shall in good faith use its best efforts to cause the City to approve in a timely fashion any and all plans, drawings and documents submitted by the Developer which are consistent with the Scope of Development and RequiredRequired Building Standards. (I) If the Developer desires to make any change in the plans, drawings and related documents after their review by the Agency for consistency with the Scope of Development, the Developer shall submit the proposed change in writing to the Agency for its review for consistency with the Scope of Development. The Agency shall notify the Developer in writing of any determination that the change is not consistent with the Scope of Development within thirty (30) calendar days after submission to the Agency. If the Developer desires to make any change in the plans, drawings and related documents after their approval by the City, the Developer shall submit the proposed change to the City for approval. The Agency shall use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 3.01(b) hereof. (m) The Developer shall have the right during the course of construction to make changes in construction of structures and "minor field changes" without seeking the approval of the Agency; provided, however, that such changes do not affect the type of use to be conducted within all or any portion of a structure. Said "minor field changes" shall be defined as those changes from the approved construction drawings, plans and specifications which have no substantial effect on the improvements and are made in order to expedite the work of construction in response to field conditions. Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City's Building Code requirements governing such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes." (n) The cost of constructing the Project, including all off-site public improvements shall be borne by the Developer. (0) The Developer shall at its expense cause to be prepared, and shall pay any and all fees pertaining to the review and approval of the development project approvals by the City, including the cost and preparation of all required construction, planning and other documents reasonably required by governmental bodies pertinent to the development of the Property hereunder including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications and design review documents. (p) The Developer shall pay for any and all costs, including but not limited to the costs of design, construction, relocation and securing of permits for utility improvements and 25 SB2003:21S1.1 connections, which may be required in developing the Property. The Developer shall obtain any and all necessary approvals prior to the commencement of applicable portions of said construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. (q) All construction and development obligations and responsibilities of the Developer as related to the Project shall be initiated and completed within the times specified in the Schedule of Performance, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Schedule of Performance shall be subject to revision from time to time as mutually agreed upon in writing by and between the Developer and the Agency. Any and all deadlines for performance by the parties shall be extended for any times attributable to delays which are not the fault of the performing party and are caused by the other party, other than periods for review and approval or reasonable disapprovals of plans, drawings and related documents, specifications or applications for permits as provided in this Agreement. (r) During the period of construction of the Project, the Developer shall submit to the Agency written progress reports when and as reasonably requested by the Agency but in no event more frequently than every four (4) weeks. The reports shall be in such form and detail as may reasonably be required by the Agency, and shall include a reasonable number of construction photographs taken since the last such report submitted by the Developer. In addition, the Developer will attend Agency meetings when requested to do so by Agency Staff. (s) Prior to the commencement of any construction, the Developer shall furnish, or shall cause to be furnished, to the Agency duplicate originals or appropriate certificates of public indemnity and liability insurance in the amount of One Million Dollars ($1,000,000.00) combined single limit, naming the Agency and the City and the elected officials, officers, employees, attorneys and agents of each of them as additional insureds. Said insurance shall cover comprehensive general liability including, but not limited to, contractual liability; acts of subcontractors; premises-operations; explosion, collapse and underground hazards, if applicable; broad form property damage, and personal injury including libel, slander and false arrest. In addition, the Developer shall provide to the Agency adequate proof of comprehensive automobile liability insurance covering owned, non-owned and hired vehicles, combined single limit in the amount of One Million Dollars ($1,000,000.00) each occurrence; and proof of workers' compensation insurance. Any and all insurance policies required hereunder shall be obtained from insurance companies admitted in the State of California and rated at least B+: XII in Best's Insurance Guide. All said insurance policies shall provide that they may not be canceled unless the Agency and the City receive written notice of cancellation at least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance obtained by the Developer hereunder shall be primary to any and all insurance which the Agency and/or City may otherwise carry, including self insurance, which for all purposes of this Agreement shall be separate and apart from the requirements of this Agreement. Any insurance policies governing the Property as obtained by the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance means those insurance policies approved by Agency Counsel consistent with the foregoing. Any and all insurance required hereunder shall be maintained and kept in force until the Agency has issued a Certificate of 26 Completion in substantially the form set forth in Exhibit "G" hereof (the "Certificate of Completion") in connection with the development of the Property. Developer waives subrogation and agrees that Developer and Agency are co-insured. Developer will use its best reasonable efforts to cause each insurance carrier obtained by it to waive any subrogation claim. (t) The Developer for itself and its successors and assigns agrees that in the construction of the Project, the Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin, or ancestry. Notwithstanding the foregoing, the Developer will use best efforts to offer employment opportunities to local residents and will seek to acquire goods and services from local vendors. (u) The Developer shall carry out its construction of the Project in conformity with all applicable laws, including all applicable state labor standards and requirements. (v) The Developer shall, at its own expense, secure or shall cause to be secured, any and all permits which may be required for such construction, development or work 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 applicable to the development of the Property. (w) Officers, employees, agents or representatives of the Agency shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours during the period of construction of the Project for the purpose of verifying compliance by the Developer within the terms of this Agreement. Such officers, employees, agents or representatives of the Agency shall be those persons who are so identified by the Executive Director. Any and all officers, employees, agents or representatives of the Agency who enter the Property pursuant hereto shall identify themselves at the job site office upon their entrance on to the Property and shall at all times be accompanied by a representative of the Developer while on the Property; provided, however, that the Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this right of access, other than injury, property damage or liability relating to the negligence of the Developer or its officers, agents or employees. (x) The Agency shall inspect relevant portions ofthe construction site prior to issuing any written statements reflecting adversely on the Developer's compliance with the terms and conditions of this Agreement pertaining to development of the Property. Section 3.02. RESERVED Section 3.03. Taxes and Assessments. The Developer shall pay prior to delinquency all real property taxes and assessments assessed and levied on or against the 27 882003:2151.1 Property subsequent to the Close of Escrow. 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. Section 3.04. Change in Ownershio Management and Control of the Develooer- - Assignment and Transfer. (a) As used in this Section 3.04, the term "Transfer" means: (I) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, by the Developer of more than a 49% interest (or series of such sales, assignments and the like which in the aggregate exceed a disposition of more than a 49% interest) with respect to its interest in this Agreement, the Property, or the Project, or any part thereof or any interest therein or of the improvements constructed thereon, or any contract or agreement to do any of the same; or (2) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer (or series of such sales, assignments and the like which in the aggregate exceeded a disposition of more than a 49% interest). (b) This Agreement is entered into solely for the purpose of the development of the Project on the Property by the Developer in accordance with the terms hereof. The Developer recognizes that the qualifications and identity of the Developer and the Developer's assurances that the Required Building Standards will be utilized in the construction of the Residences are of particular concern to the Agency, in view of: (I) the importance of the development of the Property to the general welfare of the community; and (2) the fact that a Transfer (except as provided in Section 1.04) is for all practical purposes a transfer or disposition of the responsibilities of the Developer, as applicable, with respect to the development of the Project on the Property. The Developer further recognizes and acknowledges that it is because of the qualifications and identity of the Developer that the Agency is entering into this Agreement with the Developer, and, as a consequence, Transfers are permitted only as provided in this Agreement. Developer shall be entitled to assign its rights and obligations under this Agreement to an Approved Assignee (as described in Section 1.04, above) subject to Watson's continued obligation to review and require compliance of any Approved Assignee with the Required Building Standards as described therein; provided, however, that Watson shall remain obligated 28 882003:2151.1 to perform all duties imposed upon Developer under this Agreement until such time as the Certificate of Completion is provided by the Agency to the Developer pursuant to Section 3.07. (c) The limitations on a Transfer as set forth in this Section 3.04 shall apply until such time as a Certificate of Completion is approved by the Agency and filed for recordation as provided in Section 3.07. Except as expressly permitted in this Agreement, the Developer represents and agrees that it has not made nor shall it create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the Agency until such time as a Certificate of Completion has been recorded. After the date of recordation of a Certificate of Completion, certain other provisions of this Agreement shall nonetheless be applicable to subsequent conveyances of interest in the Property, or portions thereof, as provided in Article IV of this Agreement. Any Transfer made in contravention of this Section 3.04 shall be voidable at the election of the Agency and shall then be deemed to be a default under this Agreement. (d) The following types of a Transfer shall be permitted and approved by the Agency and are referred to herein as a "Permitted Transfer"; (I) The Transfer by the Developer of all its right, title and interest in this Agreement to an entity at least twenty five percent (25%) of which is owned directly or indirectly by the Developer or an affiliate of the Developer and the managing member or manager of which is the Developer or an affiliate of the Developer; (2) Any Transfer by the Developer creating a "Security Financing Interest" in the Property which conforms to the provisions of Section 3.05; (3) Any Transfer directly resulting from the foreclosure of a Security Financing Interest created by the Developer in the Property or the granting of a deed in lieu of foreclosure of a Security Financing Interest; (4) Any Transfer of stock or equity of the Developer which does not change management or operational control of the Property or the Project; (5) Any Transfer of any interest in the Developer irrespective of the percentage of ownership to any affiliate of or other entity controlled by the Developer or in which the Developer directly or indirectly owns a controlling interest. (e) No Permitted Transfer of this Agreement or any interest in the Property or the Project, by the Developer (other than a Permitted Transfer created pursuant to a Security Financing Interest) shall be effective unless, at the time of the Permitted Transfer, the person or entity to which such Transfer is made shall expressly assume the obligations of the Developer under this Agreement and such person also agrees to be subject to the conditions and restrictions to which the Developer is subject under this Agreement. Such an assumption of obligation shall 29 SB2003:2151.1 be evidenced by a written instrument delivered to the Agency in a recordable form which is satisfactory to the Agency. (f) Provided the particular transaction satisfies the applicable provisions of Section 3.04(d), the Developer is not required to give the Agency advance notice of such a Permitted Transfer. The Agency may, in its reasonable discretion, approve in writing any other Transfer as requested by the Developer, provided such proposed transferee can demonstrate successful and satisfactory experience in the ownership, operation, and management of an operation similar to the Project. Any such transferee for itself and its successors and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Developer to the Agency under this Agreement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such other Transfer; and the approval or disapproval of the Agency shall be provided to the Developer, in writing within thirty (30) days of receipt by the Agency of the request therefor, and the Agency approval ofa transfer and shall not be unreasonably withheld or delayed. (g) Following the issuance ofa Certificate of Completion, the Developer shall be released by the Agency from any liability under this Agreement which may arise from a default of a successor in interest occurring after the date of such a Transfer; provided, however that the covenants of the Developer as set forth in Article IV of this Agreement shall run with the land for the term as provided in Article IV. Section 3.05. Securitv Financing: Right of Holders . (a) Notwithstanding any provision of Section 3.04 to the contrary, mortgages, deeds of trust, or any other form of lien required for any reasonable method of financing the construction and improvement of the Property ("Construction Financing") and one or more mortgages, deeds of trust, or other forms oflien required for any reasonable financing that takes out the construction financing (collectively, the "Permanent Financing") is permitted. The Developer shall notify the Agency in writing in advance of any mortgage, deed of trust, or other form of lien for Construction Financing or for Permanent Financing. The Developer shall not enter into any such conveyance for Permanent Financing without the prior written approval of the Agency, which approval the Agency shall grant if any such conveyance is given to a responsible financial or lending institution including, without limitation, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like and subject to agreement by such lender and the Agency on a form of subordination agreement (as provided in Section 2.01(c) hereof). (b) The Developer shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien that has been created with respect to the Property whether by voluntary act of the Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer to the Agency prior to suit being filed to foreclose such mechanic's lien. 30 SB2003:2151.1 (c) The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate construction and land development. (d) The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete the improvement of the Property or to guarantee such construction or completion. (e) Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in the completion of construction of the improvements, or any breach or default of any other obligations which, if not cured by the Developer, entitle the Agency to terminate this Agreement or exercise its right to re-enter the Property, the Agency shall at the same time deliver to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, to commence the cure or remedy of any such default and to diligently and continuously proceed with such cure or remedy, within one hundred twenty (120) calendar days after the receipt of the notice; and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such holder upon obtaining possession, such holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within one hundred twenty (120) calendar days after obtaining possession; provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within such one hundred twenty (120) calendar day period, such holder shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the improvements (beyond the extent necessary to conserve or protect the improvements or construction already made) or to operate the Project without first having expressly assumed the Developer's obligations by written agreement satisfactory to the Agency. The holder in that event must submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder that undertakes and completes construction of the improvements on the Property in accordance herewith shall be entitled, upon written request made to the Agency, to be issued the Certificate of Completion by the Agency. (f) In any case where, one hundred eighty (180) calendar days after default by the Developer the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Property or any portion thereof has not exercised the option to construct the applicable portions ofthe Project or to operate the Project following completion of construction, or has exercised the option but has not proceeded diligently and continuously with construction or operation of the Project, as the case may be, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between holder 31 882003:2151.1 and the Developer. If the ownership of the Property has vested in the holder, the Agency may at its option (but does not have an obligation to) seek a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: (1) The unpaid mortgage, deed of trust or other security interest debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between the holder and the Developer, at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application ofrentals and other income received during foreclosure proceedings.) (2) All expenses, if any, incurred by the holder with respect to foreclosure. (3) The net expenses, ifany (exclusive of general overhead), incurred by the holder as a direct result of the subsequent ownership or management of the Property or the Property, such as insurance premiums and real estate taxes. (4) The cost of any improvements made by such holder. (5) An amount equivalent to the interest that would have accrued on the aggregate on such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. (6) After expiration of the aforesaid one hundred eighty (180) calendar day period, the holder of any mortgage, deed of trust or other security affected by the option created by this Section, may demand, in writing, that the Agency act pursuant to the option granted hereby. If the Agency fails to exercise the right herein granted within sixty (60) calendar days from the date of such written demand, the Agency shall be conclusively deemed to have waived such right of purchase of the or the mortgage, deed of trust or other security interest. (g) In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Property (or any portion thereof), where the holder has not exercised its option to complete the development or to operate the Project, the Agency may cure the default but is under no obligation to do so prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien of the Agency as may arise under this Section 3.05(g) upon the Property (or any portion thereof) to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgages, deeds of trust or other security instruments executed by the Developer for the purpose of obtaining the funds to construct and improve the Property or for the purpose of obtaining the Permanent Financing as authorized herein. 32 882003:2151.1 Section 3.06. Right of the Agencv to Satisfv Other Liens on the Prooertv after Convevance of Title . After the conveyance of title to the Property by the Agency to the Developer and after the Developer has had a reasonable time to challenge, cure or satisfy any unauthorized liens or encumbrances on the Property, the Agency shall after one hundred twenty (120) calendar days prior written notice to the Developer have the right to satisfy any such liens or encumbrances; provided, however, that nothing in this Agreement shall require the Developer to payor make provisions for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Property, or any portion thereof, to forfeiture or sale. Section 3.07. Certificate of Como let ion . (a) Following the written request therefor by the Developer and the completion of construction of each phase of the Project, excluding any normal and minor building "punch-list" items to be completed by the Developer, the Agency shall furnish the Developer with a Certificate of Completion for the Property in the form set forth in Exhibit "G". (b) The Agency shall not unreasonably withhold the issuance of a Certificate of Completion. A Certificate of Completion shall be, and shall so state, that it is a conclusive determination of satisfactory completion of construction of the applicable phase of the Project. After the recordation of the Certificate of Completion, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by any covenants contained in the grant deed or other instrument of transfer which grant deed or other instrument of transfer shall include the provisions of Section 4.01 through 4.04, inclusive, of this Agreement. (c) Any Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder's Office of the County where the Property is located. (d) If the Agency refuses or fails to furnish a Certificate of Completion after written request from the Developer, the Agency shall, within fifteen (15) calendar days of the written request or within three (3) calendar days after the next regular meeting of the Agency, whichever date occurs later, provide to the Developer a written statement setting forth the reasons with respect to the Agency's refusal or failure to furnish a Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building "punch-list" items, the Agency may issue its Certificate of Completion upon the posting of a bond or irrevocable letter of credit, reasonably approved as to form and substance by the Agency Counsel and obtained by the Developer in an amount representing a fair value of the work not yet completed as reasonably determined by the Agency. If the Agency shall have failed to provide such written statement within the foregoing period, the Developer shall be deemed conclusively and without further action of the Agency to 33 882003:2151.1 have satisfied the requirements of this Agreement with respect to the Property as if a Certificate of Completion had been issued therefor. (e) A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements described herein, or any part thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion as referred to in Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants or conditions subsequent contained in the Agency Grant Deed attached hereto as Exhibit "F". ARTICLE IV USE OF THE SITE Section 4.01. Uses. (a) The Developer covenants and agrees for itself, its successors, and assigns that upon completion of development of the Project, there shall exist on the Property a residential neighborhood consisting of single family detached homes and approximately twenty (20) acres of community park with playground, walking trails, green areas, landscaping and naturally left land. The covenant of this Section 4.01(a) shall run with the land for the terms as set forth in the Agency Grant Deed. (b) The Developer further covenants and agrees for itself, its successors and assigns that the Property shall be improved and developed in accordance with the Scope of Development and the Required Building Standards. Developer covenants to develop the Property in conformity with all applicable laws. The covenants of this Section 4.01(b) shall also run with the land until the earlier date on which the Certificate of Completion is recorded or the fifth (5th) anniversary date of recordation of the Agency Grant Deed. (c) Excluding California State University at San Bernardino (any affiliated entity) and any Home Owners Association or other association set up to administer common areas, park or lands dedicated to public use, it is understood and agreed by the Developer that neither the Developer, nor its assigns or successors shall use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property or any portion thereof to any entity or party, or for any use of the Property, that is partially or wholly exempt from the payment of real property taxes pertinent to the Property, or any portion thereof, or which would cause the exemption of the payment of all or any portion of such real property taxes. The covenant of this Section 4.01(c) shall run with the land for the term as set forth in the Agency Grant Deed. Section 4.02. Maintenance of the Property. The Developer covenants and agrees for itself, its successors, and assigns to maintain the Property in a good condition free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping required to be planted in accordance with the Scope of Development. In the event the 34 882003:2151.1 Developer, or its successors or assigns, fails to perform the maintenance as required herein, the Agency shall have the right, but not the obligation, to enter the Property and undertake, such maintenance activities. In such event, the Developer shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities as set forth in the Agency Grant Deed. The covenant of this Section 4.02 shall run with the land for the term as set forth in the Agency Grant Deed. Section 4.03. Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property; nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the Property. The covenant of this Section 4.03 shall run with the land for the term as set forth in the Agency Grant Deed. Section 4.04. Form of Nondiscrimination and Nonsegregation Clauses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that the Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (I) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, 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 oftenants, lessees, subtenants, sublessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." (2) In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account ofrace, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, 35 SB2003:2151.1 use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sublessee, subtenants, or vendees in the premises herein leased." (3) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub lessees, subtenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. The covenant of this Section 4.04 shall run with the land in perpetuity. ARTICLE V DEF AUL TS. REMEDIES AND TERMINATION Section 5.01. Defaults - General. (a) In the event that a breach or default may occur prior to the Close of Escrow, the remedies of the parties shall be as set forth in Article II of this Agreement. (b) From and after the Close of Escrow and subject to the extensions 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 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. (c) The injured party shall give written notice of default to the party in default, specifying the default complained of by the nondefaulting party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (d) Any failure or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive 36 SB2003:2151.1 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 Central District of California. (b) The laws of the State of California shall govern the interpretation and enforcement of this Agreement. (c) In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or Chair of the Agency, or in such other manner as may be provided by law. (d) In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service on Charles Shumaker at the address set forth in Section 1.03(b) (or such other Agent for service of process and at such address as may be specified in written notice to the Agency), or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. Section 5.03. Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in Article II of this Agreement as relates to a default or breach occurring before the Close of Escrow, the rights and remedies of the parties as set forth in this Article V following the Close of Escrow are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Section 5.04. Damages: Soecific Performance. 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 after service of the notice of default and promptly complete the cure of such default within a reasonable time, not to exceed ninety (90) calendar days (or such shorter period as may otherwise be specified in this Agreement for default) after the service of written notice of such a default, then the non-defaulting party shall be entitled to maintain an action for damages or an action for specific performance in addition to such other remedies as it may have at law or in equity; provided, however, that in the event of a breach by the Developer of its obligations under Article II of this Agreement prior to the Close of Escrow, the Agency shall not be entitled 37 SB2003:2151.1 to bring an action against the Developer for specific performance and shall be entitled only to the liquidated damages set forth in Section 2.23 hereof. Section 5.05. RESERVED Section 5.06. Al):encv Rights of Termination Following Close of Escrow . (a) Unless otherwise permitted pursuant to the terms ofthis Agreement and subject to written notice of default which shall specify the Developer's default and the action required to commence cure of same and upon ninety (90) 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 Property other than the sale oflots on which Residences have been constructed to purchasers of such Residences in violation of the terms of this Agreement, and the Developer does not correct such violation within sixty (60) calendar days from the date of receipt of such notice. (b) Subject to written notice of default, which shall specify the Developer's default and the action required to commence cure of same and upon ninety (90) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer: (a) does not within the time limits set forth in this Agreement or as specifically provided in the Schedule of Performance, subject to extensions authorized by this Agreement due to force majeure or otherwise, submit development plans, construction drawings and related documents acceptable to the Planning Department and Building Division of the City for plan check purposes and in order to obtain building permits for the Project, together with applicable fees therefor, all prepared to the minimum acceptable standards as required by the Planning Department and Building Division of the City for commencement of formal review of such documents and as required by this Agreement, or (b) does not carry out its other responsibilities under this Agreement or in 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 sixty (60) calendar days after the date of receipt of written demand therefor from the Agency. (c) Subject to written notice of default which shall specify the Developer's default and the action required to commence cure of same and upon ninety (90) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if upon satisfaction of all conditions precedent and concurrent therefor under this Agreement, the Developer does not take title to the Property under tender of conveyance by the Agency, and such breach is not cured within sixty (60) calendar days after the date ofreceipt by the Developer of written demand therefor from the Agency. 38 SB2003:2151.1 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 designated in Section 1.04(a) and Section 1.04(b) hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate as provided in this Section. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail as heretofore provided. (b) In addition to the submission of notices, demands or communications to the parties as set forth above, copies of all notices shall also be delivered by facsimile as follows: to the Developer: J.R. Watson & Associates Development Co. 101 Main Street, Suite A Seal Beach, California 90740 Attn: James R. Watson Telephone: (562) 430-0503 Fax: (562) 493-5860 with copy to: Charles M. Shumaker Shumaker Steckbauer Weinhart & Sragow LLP 300 South Grand Avenue, Suite 1400 Los Angeles, California 90071 Telephone: (213) 229-2868 Fax: (213) 629-4520 the Agency: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, California 92401 Attn: Gary Van Osdel Telephone: (909) 663-1044 Fax: (909) 384-5135 39 SB2003:2151.1 with copy to: Lewis Brisbois Bisgaard & Smith LLP 650 E. Hospitality Lane, Suite 600 San Bernardino, California 92408 Attn: Tim Sabo, Esq. Fax: (909) 387-1138 Tel: (909) 387-1130 James f. Penman, Esq. City Attorney, City Hall 300 North "D" Street San Bernardino, California 92418 Fax: 909-384-52;'8 Tel: 909-384-5355 Section 6.02. Conflict of Interest . No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Agreement and the development of the 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 payor give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. Section 6.04. Nonliability of Agency Officials and Emplovees. 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, or considered to be a default, where delays or defaults are due to the force majeure including, without limitation, events of war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes or lack of transportation, weather-caused delays, inability to secure necessary labor, materials or tools, delays of any contractors, subcontractor or supplier, which are not attributable to the fault of the party claiming an extension of time to prepare or acts or failure to act of any public or governmental agency or entity. An extension of time for any such force majeure cause shall be for the period of the enforced delay and shall commence to run from the date of occurrence of the delay. The inability of the Developer to obtain a satisfactory commitment from a construction lender for the improvement of the Property or to satisfy any other condition ofthis Agreement relating to the redevelopment ofthe Property shall not be deemed to be a force majeure event or otherwise provide grounds for the assertion of the existence of a delay under this Section 6.05. The parties hereto expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of any of them which may have provided a basis for entering into this Agreement and which occur at any time after the execution of this Agreement, are not force majeure events and do not provide any party with 40 grounds for asserting the existence of a delay in the performance of any covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such party under this Agreement, but that such inconvenience or hardship is not a force majeure event and does not excuse the performance by such party of its obligations under this Agreement. Section 6.06. Insoection 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; provided, however, Agency shall not have the right to review the finnancal records of the Developer. 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. Aoorovals. (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, ifno time is given, within a reasonable time. (b) The Executive Director of the Agency is authorized to sign on his or her own authority amendments to this Agreement which are of routine or technical nature, including minor adjustments to the Schedule of Performance. Section 6.08. Real Estate Commissions. The Agency shall not be liable for any other real estate commissions, brokerage fees or finder fees which may arise from or related to this Agreement. Section 6.09. Indemnification. (a) Developer agrees to indemnify, defend, and hold harmless Agency, its board members, officers, directors, employees, agents and attorneys (individually and collectively, the "Agency Indemnities") from and against any and all third party suits, demands, claims, causes of action, losses, liabilities, penalties, charges, costs and expenses, including reasonable investigation costs, attorneys' fees and disbursements, consultants and expert witness fees (collectively, a "Third Party Claim") that may be imposed on, incurred by or asserted against Agency Indemnitees by reason of, on account of or in connection with: 41 SB2003:2151.1 (b) any negligence, willful misconduct or failure to act (when legally or contractually obligated to do so) by Developer, a Developer Affiliate or their respective agents, contractors or employees; or (c) any accident, injury, death or damage to any person or property occurring (1) on any portion of the Property owned by or leased to Developer or a Developer Affiliate, or (2) on Agency property on which Developer or a Developer Affiliate has entered pursuant to rights under this Agreement or under any separate license agreement, to the extent any such accident, injury, death or damage is directly caused by Developer, a Developer Affiliate or their respective agents, contractors or employees. (d) Agency agrees to indemnify, defend, and hold harmless Developer and Developer Affiliates (that own or lease a portion of the Property), their respective members, partners, officers, directors, employees, agents and attorneys (individually and collectively, the "Developer Indemnitees") from and against any Third Party Claim that may be imposed on, incurred by or asserted against the Developer Indemnitees by reason of, on account of or in connection with: (e) any negligence, willful misconduct or failure to act (when legally or contractually obligated to do so) by Agency or its agents, contractors or employees; or (I) any accident, injury, death or damage to any person or property occurring on any portion of the Property owned by Agency or leased to Agency (unless either the Agency owned or Agency leased property is leased to Developer or a Developer Affiliate), except to the extent such is directly caused by Developer, a Developer Affiliate or their agents, contractors or employees as described in subsection (a)(i)(B)(2) above. (g) As used herein, "Indemnitee" shall mean any Developer Indemnitee or Agency Indemnitee, as the case may be. Notwithstanding anything to the contrary contained in this Agreement, no indemnity obligations under this Agreement shall be owed by Agency to any Developer Indemnity relative to Third Party Claims resulting from the fraud, criminal behavior, willful misconduct, negligence, breach of duties, covenants or obligations hereunder or by other acts of any Developer Indemnitee except to the extent that negligence may be apportioned between Agency and Developer by a judge or jury after trial or binding arbitration. Notwithstanding anything to the contrary contained in this Agreement, no indemnity obligations under this Agreement shall be owed by Developer to any Agency Indemnitee relative to Third Party Claims resulting from the fraud, criminal behavior, willful misconduct, negligence, breach of duties, covenants or obligations hereunder or by other acts of any Agency Indemnitee except to the extent that negligence may be apportioned between Agency and Developer by a judge or jury after trial or binding arbitration. (h) The indemnity and defense obligations under this Agreement shall not be affected by the absence or unavailability of insurance covering the same or by failure or refusal by any insurance carrier to perform any obligation on its part under any such policy of insurance. 42 SB2003:21S1.1 (i) If an Indemnitee is entitled to defense or indemnification under this Agreement (each, an "Indemnification Claim") Developer or Agency, as the case may be ("Indemnitor") shall not be obligated to defend, indemnify or hold harmless Indemnitee unless and until Indemnitee provides written notice to Indemnitor promptly after such Indemnitee has actual knowledge of the facts or circumstances of the Third Party Claim on which such Indemnification Claim is based, describing in reasonable detail such facts and circumstances of the Third Party Claim with respect to such Indemnification Claim and a request for such indemnification (the "Indemnification Claim Notice"). Indemnitee shall not be entitled to indemnification or defense to the extent Indemnitee's failure to notify or delay notifying Indemnitor materially prejudices Indemnitor's ability to defend against any Third Party Claim on which such Indemnification Claim is based, or materially increases the amount of damages or losses incurred in respect of such indemnification obligation ofIndemnitor. (j) Indemnitor shall have the the obligation to assume the defense of an Indemnification Claim if Indemnitor's insurance carrier refuses to defend any such claim, and shall use good faith efforts consistent with prudent business judgment to defend such Indemnification Claim, provided that (a) the counsel for Indemnitor who shall conduct the defense of the Indemnification Claim shall be reasonably satisfactory to Indemnitee (unless required by Indemnitor's insurance company), (b) Indemnitee may participate (at Indemnitee's expense) in, but shall not control, the defense of such Indemnification Claim, and (c) without Indemnitee's prior written consent, which consent may be given or withheld in Indemnitor's sole and absolute discretion, Indemnitor shall not enter into any settlement or other agreement which requires any performance by Indemnitee, other than the payment of money which shall be paid by Indemnitor. Indemnitee shall cooperate as reasonably requested by Indemnitor in the defense of such Indemnification Claim and shall not take any action that prejudices the defense of such Indemnification Claim. Provided that Indemnitor is in compliance with the provisions of this subsection (vi), Indemnitee shall not enter into any settlement agreement with respect to any Indemnification Claim without Indemnitor's prior written consent, which consent may be given or withheld in Indemnitor's sole and absolute discretion. If Indemnitor does not assume or withdraws from the defense of such Indemnification Claim, Indemnitee shall have the right without waiving any of its Indemnification Claims hereunder, to control the defense of such Indemnification Claim and shall use good faith efforts consistent with prudent business judgment to defend such Indemnification Claim, and Indemnitor shall pay all reasonable defense costs of Indemnitee, in such instance, within thirty (30) days after receipt of any invoice therefor. (k) The indemnity obligations in this Agreement shall survive the termination of this Agreement but only to the extent based upon events or circumstances occurring between the Effective Date and the termination date. Section 6.10. Release of Develooer from Liabilitv. Notwithstanding any provision herein to the contrary, the Developer shall be relieved of any and all liability for the obligations of the Developer hereunder with regard to the Property and the Project, other than any covenants and obligations contained in the grant deed by which the Property is conveyed to the Developer, upon the issuance by the Agency of the Certificate of Completion. 43 SB2003:2151.1 Section 6.11. Attornevs' Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, seeks the resolution of disputes pursuant to Section 5.02 hereof, or is made a party to any action or proceeding brought by the Escrow Holder, then as between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit or resolution of disputes pursuant to Section 5.02 hereof, and not as damages, its reasonable attorneys' fees as fixed by the Court or other forum for resolution in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees. The costs, salary and expenses of the City Attorney and members of his office in enforcing this Agreement shall be considered as "attorneys' fees" for purposes of this Section. Section 6.12. Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. ARTICLE VII ENTIRE AGREEMENT: COUNTERPARTS: NO MERGER WITH GRANT DEED: WAIVERS AND AMENDMENTS Section 7.01. Entire Agreement: Counteroarts . (a) This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any portion of the Property and the development thereof. (b) This Agreement shall be executed in four (4) duplicate originals each of which is deemed to be an original. Section 7.02. No Merger: Waivers and Amendments. (a) 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. (b) All waivers of the provisions of this Agreement and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Developer. ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION Section 8.01. Execution and Recordation. (a) Following its execution by the Developer and prompt delivery thereafter to the Agency, this Agreement shall be subject to the review and approval by the governing 44 882003:2151.1 board of the Agency in its sole and absolute discretion within forty-five (45) calendar days after the date of signature by the Developer. In the event that the Agency has not approved, executed and delivered the Agreement to the Developer within the foregoing period, then no provision of this Agreement shall be of any force or effect for any purpose. The date of this Agreement shall be the date when the Agreement shall have been approved by the Agency. (b) The Developer and the Agency agree to permit recordation of this Agreement, or a notice of agreement in customary form, concurrently upon the Close of Escrow in the Office of the County Recorder for San Bernardino County. 45 SB2003:2151.1 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Judith Valles Chair of the Community Development Commission Date: By: Gary Van Osdel Executive Director DEVELOPER J.R. Watson & Associates Development Co. a California corporation By: Its [ALL SIGNATURES MUST BE NOTARIZED] 46 SB2003:2151.1 1 f.(P )'1.7 7 UNIVERSITY PARK CONCEPT PLAN --------\ EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY That portion of the following described property lying within Sections 7 and 8, Township I north, Range 4 west, San Bernardino Base and Meridian, and lying southerly and southeasterly of the southerly line of that parcel of land conveyed to the San Bernardino County Flood Control District in deed recorded June 7, 1974 in book 8447, page 1163 Official Records of said County. Beginning at Comer No. I, as established by George E. Sherer, May IS, 1921 said corner being identical with the northwest comer of the Wiggin's Tract as recorded in book of Maps No.3, page 74, records of San Bernardino County, California; thence north 363.0 feet to Corner No.2, as established by George E. Sherer, May IS, 1921, said corner being identical with the southeast corner of Section 7, Township I north, Range 4 west, San Bernardino Base and Meridian (unsurveyed); thence south 89 deg. 47' west along the south line of said Section 7, 1126.3 feet to Corner No.3, as established by George E. Sherer, May IS, 1921, said comer being the southeast corner of Tract shown on Map of the Irvington Land and Water Company's Subdivision of a part of the Muscupiabe Rancho recorded in book I Record of Surveys, page 32, Records of said County; thence north 37 deg. 30' west, 1252.68 feet to Corner No.4, as established by George E. Sherer, May IS, 1921; thence northerly 65 deg. 00" west, 884.27 feet to the north line of Parcel A as described in document recorded in book 6339, page 484, Official Records of said County; thence along said north line, north 63 deg. 07' east, 291.71 feet; thence leaving said northerly line, north 32 deg. 15'05" east, 388.53 feet; thence northeasterly 728.82 feet along a tangent curve, concave southeasterly, having a radius of 900 feet and a central angle of 46 deg. 23'53"; thence north 78 deg. 38'58" east, 188.02 feet; thence northeasterly 214.74 feet along a tangent curve, concave northwesterly, having a radius of 1100 feet and a central angle of II deg. II '67"; thence north 67 deg. 27'51" east, 1219.01 feet to the east line of the Parcel ofland described in document recorded in book 724 of Deeds, page 8, Official Records of said County; thence southerly along said east line, south 0 deg. 25' east, 129.77 feet to Corner No. 14, as established by George E. Sherer May IS, 1921, from which point the east 1/4 corner Section 7, Township I north, Range 4 west, San Bernardino Base and Meridian, bears east 129.47 feet; thence south 21 deg. 48' east, 3243.60 feet to Corner No. IS, as established by George E. Sherer, May IS, 1921 said corner being on the north line of said Wiggin's Tract; thence west along the north line of the Wiggin's Tract 1071.28 feet to the place of beginning. Excepting therefrom any portion lying within Campus Parkway traversing the property along the northerly portion of the above described parcel of land. Excepting therefrom any portion lying within North Park Circle Drive adjoining said property on the east. Excepting therefrom any portion of the following described parcels ofland: Parcel A Commencing at that certain point described as Corner Number 14 of G.E. Sherer Map, County Exh. "AI! SB2003:2151.1 Surveyor File No. 1780; thence south 45 deg. 20'02" west, 555.56 feet to the TRUE POINT OF BEGINNING; thence along the following courses and lengths; south 28 deg. 11 '32" west, 149.05 feet; south 02 deg. 32'40" east, 82.54 feet; south 14 deg. 48'38" east, 254.36 feet; north 76 deg. 40'06" east, 66.00 feet; north 23 deg. 37'55" east, 40.08 feet; north 45 deg. 25'25" east, 72.75 feet; north 24 deg. 55'16" east, 19.47 feet; north 32 deg. 41'12" east, 118.29 feet; north 05 deg. 07'37" east, 68.39 feet; north 13 deg. 50'12" west, 52.92 feet; north 24 deg. 28'21" west, 29.47 feet; north 38 deg. 18'03" west, 36.76 feet; north 51 deg. 19'05" west, 25.64 feet; north 58 deg. 14'06" west, 23.93; feet north 73 deg. 29'17" west, 125.76 feet to the TRUE POINT OF BEGINNlNG. Contains 2.00 acres more or less. Parcel B Commencing at that certain point described as Comer Number 14 of G.E. Sherer Map, County Surveyor File No. 1780; thence south 14 deg. 36'11" east, 1293.59 feet to the TRUE POINT OF BEGINNING; thence along the following courses and lengths; south 68 deg. 11'14" west, 35.07 feet; south 21 deg. 45'24" east, 13.28 feet; south 68 deg. 11'14" west, 14.70 feet; south 21 deg. 45'24" east, 85.06 feet; north 68 deg. 11'14" east, 60.49 feet; north 21 deg. 45'24" west, 53.77 feet; north 78 deg. 02'21" west, 12.90 feet; north 21 deg. 45'24" west, 37.40 feet; to the TRUE POINT OF BEGINNING. Containing 0.12 acres more or less. Parcel C Exh. "A" SB2003:2151.1 Commencing at that certain point described as Corner Number 14 of G.E. Sherer Map, County Surveyor File No. 1780; thence south 19 deg. 43'26" east, 2615.47 feet to the TRUE POINT OF BEGINNING; thence along the following courses and lengths; south 64 deg. 41'43" west, 15.45 feet; south 22 deg. 23'28" east, 67.92 feet; north 66 deg. 42'41" east, 55.25 feet; north 23 deg. 36'26" west, 40.63 feet; north 77 deg. 26'45" west, 47.51 feet to the TRUE POINT OF BEGINNING. Contains 0.07 acres more or less. Parcel D Commencing at that certain point described as Corner Number 14 of G.E. Sherer Map, County Surveyor File No. 1780; thence south 69 deg. 38'44" west, 1681.50 feet to the TRUE POINT OF BEGINNING; thence north 35 deg. 48'19" west, 130.48 feet to a point on a non-tangent curve, concave southerly, a radial to said point bears north 20 deg. 31'50" west; thence 142.48 feet along said curve, having a radius of900 feet and a central angle of9 deg. 04'14"; thence north 78 deg. 32'24" east, 188.02 feet; thence 30.66 feet along a tangent curve, concave northeasterly, having a radius of 1100 feet and a central angle of 1 deg. 35'50" to a point on a non-tangent curve, concave southeasterly, a radial to said point bears north 30 deg. 3'58" west; thence southwesterly 175.52 feet along said curve, having a radius of 2050 feet and a central angle of 5 deg. 54'21"; thence south 54 deg. 11'41" west, 158.01 feet to the TRUE POINT OF BEGINNING. Contains 0.51 acres more or less. This legal description was prepared by me or under my direction in conformance with the Land Surveyor's Act. David B. Ragland, L.S. 5173 Date License Expires June 30, 2005 Exh. "A" SB2003:2151.1 EXHIBIT "A-I" REQUIRED BUILDING STANDARDS STREETSCAPE o Mixture of one and two-story homes, with no two identical homes being contiguous o All 2 story homes will have at least 4 or 5 bedrooms o All homes will have at least 2 \12 baths o All one story homes will have at least 3 or 4 bedrooms o A minimum of one out of ten garages (except in a cul-de-sac) will not face the street o The mixture of one and two story homes will produce multiple floor plans and a variety of elevations o Homes will contain a minimum of 2, 400 square feet of floor area (excluding garage) o Perimeter walls on homes bordering main public thorough fares o Brick and stone accents on a minimum of 60% of selected elevations o Complete front yard landscaping including automatic sprinklers o Two 1 % "caliber trees (trees at least I % inches in diameter 6 inches from the base) per home site to be located in the Parkway on lots with 60' frontage or more o Varied front set-backs o All roofs will have vertical and horizontal articulation o Articulation and massing of structures will be balanced throughout the community o Careful attention will be paid to ensure that material changes will only occur at changes in plane o Reverse building plans will be employed o Underground utilities DISTINCTIVE EXTERIOR FEATURES o Fire-resistant concrete tile roofs in multiple styles and colors o Sectional roll-up garage doors consistent with architectural style of home o Garage interior will be finished with dry wall o Multiple panel front entry door with security viewer o Brass front door hardware o Gas stub outlet in backyard for barbecue o Eave-mounted power receptacle o Designer lighting at entry and garage D All garages will have a single story mass at front o Garage doors will appear to be set into the walls and will vary with architectural style INTERIOR DETAILING Exh. "A-I" 882003:2151.1 o Rounded drywall comers throughout o Ceramic tile (or better) entries o Plush carpeting throughout living areas, bedrooms, closets, hallways, and dressing areas o Family room with fireplace o Family room media niche o Minimum 9 foot ceilings in entry way and living room. o Decorator-selected light fixtures o Interior raised panel doors o Inside laundry rooms o Decorative framing baseboards where appropriate o Contemporary recessed lights in varying locations o Wiring for cable TV in family room and master bedroom o Wet Bar in 25% of homes o Interior fire sprinklers o Whisper light switches o Crown molding in family room and/or den o All homes will have intercoms o Pre wired for Security CONTEMPORARY KITCHEN FEATURES o Wood cabinetry with white laminate interiors o Smooth glide adjustable shelves and recessed panel doors o Under- cabinet lighting o Each kitchen will have a breakfast nook o Hand-set 6" tile countertops (or better) with 6" backsplash near cook top o Built-in appliances including: Self-cleaning double-oven Food waste processor Built-in microwave/hood combo Energy-saving multi-cycle Dishwasher o Large walk-in pantry LUXURIOUS MASTER SUITES o Volume ceiling in master bedroom o Cultured marble countertops or better o Lavish master bath with double sinks, separate shower and designer tub :J Spacious walk-in closet with shelving [] Private water closet o Coffee Bar and Microwave in 25% of homes SECONDARY BATHROOMS o Cultured marble countertops or better Exh. "A-I" SB2003:2151.1 CJ Designer bathroom fixtures CJ Dual sinks (upstairs) with shower areas CJ Private water closet ENERGY-SAVING FEATURES CJ Central heating and air conditioning CJ Energy-efficient thermostats CJ Dual-paned, vinyl framed windows with energy efficient Low E glass CJ Energy-saving weather stripping on all exterior doors CJ Time-controlled thermostat for each home CJ Pilot-less ignition on all gas appliances OFFERED IN SOME MODELS CJ Master Suite with fireplace and seating area CJ Balcony or viewing deck CJ Executive Retreat CJ Private Guest Suite Exh. "A-I" SB2003:2151.1 EXHIBIT "B" DESCRIPTION OF PROJECT AND SCOPE OF DEVELOPMENT The Project consists of a phased residential development with a minimum of 155 detached single family homes, each with a minimum lot size of 1 0,800 sq ft. The development will also include approximately 20 acres of parks, trails and natural areas. Initially the entire Project site will be graded and drainage systems (as appropriate to the development strategy) will be established. Thereafter, homes will be constructed in groups of 50 - 100 until the Project is completed. Exh. "B" - 1 EXHIBIT "C" TENTATIVE TRACT MAP Exh. "C"-1 882003:2151.1 EXHIBIT "D" PROMISSORY NOTE PROMISSORY NOTE SECURED BY DEED OF TRUST Dated: , 2003 $ NOTICE TO MAKER: THIS NOTE CONTAINS PROVISIONS THAT RESULT IN A BALLOON PAYMENT AT MATURITY FOR VALUE RECEIVED, the undersigned (collectively, "Maker"), hereby promise to pay to the order of Redevelopment Agency of the City of San Bernardino ("Lender"), at 201 North "E" Street, Suite 301, San Bernardino, California 9240 I or at such other place as the holder hereof from time to time may designate in writing, the principal sum of and Noll 00 Dollars ($ ), in lawful money ofthe United States of America, together with interest thereon at the per annum rate and payable as set forth below. Interest shall accrue on the outstanding principal balance under this Promissory Note Secured by Deed of Trust (this "Note") at a variable rate equal to two percent (2%) over the LIBOR (London Interbank Offering Rate) rate in effect from month to month. Interest only shall be payable quarterly in arrears on September 30, December 31, March 31 and June 30 of each year that the principal amount of the Promissory Note remains outstanding commencing If any payment is due for a period less than a full calendar month, then such payment shall be prorated for the actual number of days based upon a thirty (30) day calendar month. All outstanding principal and unpaid interest shall be due and payable on ("Maturity Date"). All payments on account of the indebtedness evidenced by this Note shall be paid without any setoff and shall be first applied to the payment of interest and other costs and charges due in connection with this Note, as Lender may determine in its sole discretion; and the balance shall be applied toward the reduction of the principal sum. Exh. "C" - 2 SB2003:21S1.1 Interest shall be computed on the balance remaining unpaid from time to time hereunder on the basis of a three hundred sixty (360) day year billed upon the exact number of days elapsed between each monthly payment. This Note and the loan evidenced hereby is secured by, among other things, that certain Senior Deed of Trust, Assignment of Rents, Security Agreement, Financing Statement and Fixture Filing dated as of the date hereof, by Maker, as trustor, in favor of Lender, as beneficiary (the "Deed of Trust"). Upon final payment of all amounts of principal, interest and other sums due hereunder, this Note shall be deemed paid in full, and Lender shall cause the "Property" (as defined in the Deed of Trust) to be reconveyed from the lien of the Deed of Trust. The principal balance of this Note may be prepaid, in whole or part , at any time. If any installment of principal or interest due shall become overdue for a period in excess of five (5) days, Maker shall pay to the holder hereof a "late charge" equal to four percent (4%) of the overdue payment or Five Dollars ($5.00), whichever is greater. If any payment of principal or interest is not made when due under this Note, or if any Event of Default has occurred and is continuing under this Note,or the Deed of Trust the entire principal balance and all outstanding interest then accrued, shall, at the option of Lender, become immediately due and payable without demand or notice, and whether or not Lender has exercised said option, interest shall accrue on the entire unpaid balance and outstanding accrued interest under this Note, at a rate equal to the maximum amount allowed by applicable law until fully paid. AND IT IS HEREBY EXPRESSLY AGREED by Maker that time is of the essence hereof, and that if any Event of Default occurs and is continuing: (a) The holder hereof may, at its sole option declare the entire unpaid balance of said principal sum, with interest accrued thereon and all other sums due from Maker hereunder under this Note and under the Deed of Trust, to be immediately due and payable; and (b) The holder hereof may, in addition, pursue each and every other right, remedy and power under this Note and the Deed of Trust and all other instruments related hereto and thereto and at law and in equity. The term "Event of DefauIt" shall mean the following: (a) due hereunder. The failure to pay, within five (5) days of the due date, any amount (b) The failure to perform any obligation other than the payment of amounts due hereunder, within thirty (30) days of the due date, provided, however, that such failure to perform shall not be a default hereunder if Maker commences to cure, Exh. "D" - 2 SB2Q03:21S1.1 correct or remedy such failure of performance within thirty (30) days of such failure and diligently and continuously prosecute such cure, correction or remedy to completion. (c) The occurrence of any Event of Default under the Deed of Trust or any other instrument evidencing or securing the loan evidenced hereby which Event of Default extends beyond any applicable grace or cure period. Maker waives presentment for payment, demand, notice of nonpayment, notice of dishonor, protest of any dishonor, notice of protest and protest of this Note and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note and agrees that the liability shall be joint, several and unconditional and without regard to the liability of any other party and shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by the holder hereof; and Maker consents to every extension of time, renewal, waiver or modification that may be granted by any holder hereof with respect to the payment or other provisions of this Note, and to the release of any collateral given to secure the payment hereof, or any part thereof, with or without substitution, and agree that additional makers or guarantors or endorsers may become parties hereto without notice to Maker. No holder hereof shall, by any act of omission or commission, be deemed to waive any of its rights, remedies or powers hereunder or otherwise unless such waiver is in writing and signed by the holder hereof, and then only to the extent specifically set forth herein. A waiver of one event of default shall not be construed as continuing or as a bar to or waiver of such right, remedy or power on a subsequent event of default. If this Note is placed in the hands of any attorney for collection by civil action or otherwise, or to enforce its collection or to protect any security for its payment, Maker shall pay all costs of collection and litigation together with reasonable attorneys' fees and costs if it is not the prevailing party in such action. It is expressly stipulated and agreed to be the intent of Maker and Lender at all times to comply with applicable state law and that this section shall control every other covenant and agreement in this Note. If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under this Note, or contracted for, charged, taken, reserved, or received with respect to the debt evidenced hereby, or if Lender's exercise of the option to accelerate the Maturity Date, or if any prepayment by Maker results in Maker having paid any interest in excess of that permitted by applicable law, then it is Lender's express intent that all excess amounts theretofore collected by Lender shall be credited on the principal balance of this Note and the provisions of this Note immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the debt evidenced hereby shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full of the debt so that the rate or amount of interest on account of the debt does not exceed the maximum lawful rate from time to time in effect and applicable to the debt for so long as the debt is outstanding. Exh. "D" - 3 SB2003:2151.1 The validity and interpretation of this Note shall be governed by the laws of California. Notices to be given hereunder shall be given in accordance with, and as provided under, the Deed of Trust. IN WITNESS WHEREOF, Maker does hereby execute this Note as of the date first written above. MAKER: Exh. "D" - 4 SB2003:2151.1 EXHIBIT "E" RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Ste. 301 San Bernardino, California 92401 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT ("Deed of Trust") is made as of _, 2003, by , a (hereinafter referred to as "Trustor"), whose address is c/o J.R. Watson & Associates Development Co., 101 Main Street, Suite A, Seal Beach, California 90740, to Chicago Title Insurance Company, whose address is (hereinafter referred to as "Trustee"), for the benefit of Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (herein called "Beneficiary"), whose address is 201 North "E" Street, Ste. 301, San Bernardino, California 9240t Trustor irrevocably grants, transfers and assigns to Trustee in trust, with power of sale, all that property, including all improvements thereon and all easements and rights of way used in connection therewith or as a means of access thereto, located in the City of San Bernardino, County of San Bernardino, State of California, and more particularly described in Exhibit "A" hereto and by this reference incorporated herein (the "Property"), together with the rents, issues and profits thereof, subject however to the right reserved by Trustor herein to collect and apply such rents, issues and profits prior to any default hereunder, for the purpose of securing performance in a timely manner of Trustor's obligation to pay to Beneficiary Dollars ($ ), as evidenced by that certain Promissory Note dated ,2003 (the "Promissory Note") executed by the Trustor and delivered to the Beneficiary in connection with a loan of Dollars ($ ) (the "Loan") made to the Trustor and the City by the Beneficiary pursuant to that certain Disposition and Development Agreement dated as of , 2003 (the "DDA") by and between the Trustor and the Beneficiary. To protect the security of this Deed of Trust, Trustor agrees: I. Trustor's Covenant of Payment. Trustor shall perform all of its obligations under the DDA, the Promissory Note and this Deed of Trust when due, without excuse or delay of any kind whatsoever, except as expressly provided herein or therein, and Trustor shall pay the Exh. "E"-I 882003:2151.1 Loan and all other debts and monies secured by this Deed of Trust when due, without set off or deduction of any kind. 2. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is the sole holder of fee simple absolute title to all of the Property and that said title is marketable and free from any lien or encumbrance, except as otherwise provided in this section, or approved in writing by Beneficiary, and the liens imposed by law for nondelinquent real property taxes and assessments. Trustor further covenants and agrees as follows: that Trustor will keep the Property free from all liens of any kind, including, without limitation, statutory and governmental; that no lien superior or junior to this Deed of Trust will be created or suffered to be created by Trustor during the life of this Deed of Trust without Beneficiary'S prior written consent; that Trustor has good right to make this Deed of Trust and the person or persons executing this Deed of Trust on behalf of Trustor has or have the authority to do so; and that Trustor will forever warrant and defend Beneficiary'S interest in the Property against every person, whomsoever, claiming any right or interest in the Property or any part thereof. 3. Trustor's Right to Contest Statutory Liens. As used herein the words "mechanic's lien" and "materialman's lien" mean and include a stop notice as this term is defined in California Civil Code Section 3179, et seq. The filing of a mechanic's or materialman's lien against the Property or a stop notice against the Trustor or the Beneficiary and/or funds held by or owed to the Trustor for the improvement of the Property shall not constitute a default hereunder, if and so long as (a) no defaults exist under the DDA, this Deed of Trust or the Promissory Note; (b) within fifteen (IS) days after filing of such lien, Trustor obtains and maintains in effect a bond issued by a California admitted surety acceptable to Beneficiary in an amount not less than the entire sum alleged to be owed to the lien claimant or such other amount as is required to obtain a court order to release said lien of record; (c) Trustor provides to Beneficiary and pays for an endorsement to Beneficiary's title insurance policy, in a form satisfactory to Beneficiary, which insures the priority of this Deed of Trust over the lien being contested; (d) Trustor immediately commences its contest of such lien and continuously pursues the same in good faith and with due diligence; (e) such bond or contest stays the foreclosure of the lien; and (t) Trustor pays in full any judgment rendered for the lien claimant within ten (10) days following entry of any such judgment. 4. RESERVED 5. Maintenance and Inspection of Improvements. Trustor shall maintain the buildings and other improvements now or hereafter located on the Property in a first class condition and state of repair. Trustor shall not commit or suffer any waste; shall promptly comply with all requirements of federal, state and municipal authorities and all other laws, ordinances, regulations, covenants, conditions and restrictions respecting the Property or the use thereof; and shall pay all fees or charges of any kind in connection therewith. 6. Construction and Repairs. Trustor shall complete or restore promptly and in a good and workmanlike manner any building or improvement that may be constructed, damaged or destroyed on the Property, and pay when due all costs incurred therefor. Exh. "E" - 2 SB2003:2151.1 7. RESERVED 8. Comoliance With Laws. Trustor shall comply with all statutes, laws, ordinances and regulations which now or hereafter pertain to the construction, repair, condition, use and occupancy of the Property, including, without limitation, all environmental, subdivision, zoning, building code, fire, occupational, health, safety, occupancy and other similar or dissimilar statutes, and shall not permit any tenant or other occupant to violate the same. If any statute or order of any court of competent jurisdiction requires any correction, alteration or retrofitting of any improvements on or related to the Property, Trustor shall promptly undertake the required repairs and restoration and complete the same with due diligence at its sole cost and expense. 9. Environmental Covenants. Reoresentations. Warranties and Indemnitv. (a) Trustor will not use any Hazardous Materials (as defined herein below) in the construction of any improvements on or about the Property. (b) RESERVED (c) Trustor agrees to submit from time to time, if requested by Beneficiary, a report, satisfactory to Beneficiary, certifying that the Property is not now being used nor has it ever been used for any Environmental Activities. Beneficiary reserves the right, in its reasonable discretion, to retain, at Trustor's expense, an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Property for Hazardous Materials. Trustor hereby grants to Beneficiary, its agents, employees, consultants and contractors the right to enter upon the Property to perform such tests as are reasonably necessary to conduct such a review and/or investigation. (d) Upon the discovery by Trustor of any event or situation which would render any of the representations or warranties contained in subparagraph 9(g) hereof inaccurate in any respect, ifmade at the time of such discovery, Trustor shall promptly notify Beneficiary of such event or situation and, within thirty (30) days after such discovery, submit to Beneficiary a preliminary written environmental plan setting forth a general description of such event or situation and the action that Trustor proposes to take with respect thereto. Within sixty (60) days after such discovery, Trustor shall submit to Beneficiary a final written environmental report, setting forth a detailed description of such event or situation and the action that Trustor proposes to take with respect thereto, including, without limitation, any proposed corrective work, the estimated cost and time of completion, the name of the contractor and a copy of the construction contract, if any, and such additional data, instruments, documents, agreements or other materials or information as Beneficiary may reasonably request. The plan shall be subject to Beneficiary's written approval, which approval may be granted or withheld in Beneficiary's sole but reasonable discretion. Beneficiary shall notify Trustor in writing of its approval or disapproval of the final plan within fifteen (15) days after receipt thereof by Beneficiary. If Beneficiary disapproves the plan, Beneficiary'S notice to Trustor of such disapproval shall include a brief explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written environmental plan Exh. "E" - 3 SB2003:2151.1 that remedies the defects identified by Beneficiary as reasons for Beneficiary's disapproval of the previous plan. If Trustor fails to submit a revised plan to Beneficiary within said thirty (30) day period, or if such revised plan is submitted to Beneficiary and Beneficiary disapproves said plan, such failure or disapproval shall, at Beneficiary's option and upon notice to Trustor, constitute an "Event of Default" hereunder. If Beneficiary does not notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the fifteen (15) day period described above, Trustor shall provide written notice to Beneficiary of Beneficiary's failure to respond, at which time Beneficiary shall have an additional forty-five (45) days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval of the final plan within said additional forty-five (45) day period. If Beneficiary fails to notify Trustor of its disapproval or approval of said plan within said forty-five (45) day period the plan shall be deemed approved. Once any such plan is approved in writing or deemed approved by Beneficiary, Trustor shall promptly commence all action necessary to implement such plan and to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and continuously pursue such action to completion in strict accordance with the terms of said plan. The rights of Beneficiary with respect to the approval or disapproval of the environmental plan set forth herein and the actions of Beneficiary pursuant to such rights are not intended to, and shall not, in and of themselves, confer on Beneficiary a right to manage, operate or control the Property on a continuing basis following the discovery of the event(s) or occurrence(s) described in this subparagraph 9( d). (e) Trustor agrees to submit from time to time, ifrequested by Beneficiary, a report, satisfactory to Beneficiary, specifying any activities involving, directly or indirectly, the use, generation, treatment, storage or disposal of any Hazardous Materials on the Property. Beneficiary reserves the right, in its sole and reasonable discretion, to retain, at Trustor's expense, an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Property. Trustor hereby grants to Beneficiary, its agent, employees, consultants and contractors the right to enter upon the Property and to perform such tests as Beneficiary deems are necessary to conduct such a review and/or investigation. Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to this Section 9, except for disclosure to (a) any consultant(s) hired by Beneficiary to review said report, (b) legal counsel, accountants and other professional advisors to Beneficiary, (c) regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as required by any federal, state, county, regional or local authority or law, rule, regulation or ordinance, (e) as required in connection with any legal proceeding, and (f) any financial institution in connection with a disposition or proposed disposition of all or part of Beneficiary's or any participant's interests hereunder. "Hazardous Materials" as used in this Deed of Trust shall mean any hazardous or toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives, chemicals known to cause cancer or reproductive toxicity, emissions or wastes and any other chemical, material or substance, the handling, storage, release, transportation, or disposal of which is or becomes prohibited, limited or regulated by any federal, state, county, regional or local authority or which, even if not so regulated, is or becomes known to pose a hazard to the health and safety of the occupants of the Property including, without limitation, (i) asbestos, (ii) petroleum and petroleum by-products, (iii) urea formaldehyde foam insulation, (iv) Exh. "E" - 4 882003:2151.1 polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 D.S.C. Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act, 33 D.S.C. Section 1251 et seq. the Clean Air Act, 42 D.S.C. Section 7401 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42 D.S.C. Section 6901 et seq.; (vi) all substances now or hereafter designated as "hazardous wastes" in Section 25117 of the California Health & Safety Code or as "hazardous substances" in Section 253 16 of the California Health & Safety Code; (vii) all substances now or hereafter designated by the Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986 as being known to cause cancer or reproductive toxicity, or (viii) all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" under any other federal, state or local laws or in any regulations adopted and publications promulgated pursuant to said laws. "Environmental Laws" as used herein shall mean all laws, rules, regulations and ordinances relating to Hazardous Materials, including, but not limited to, those relating to soil and groundwater conditions and those statutes referred to in the definition of Hazardous Materials set forth hereinabove. "Environmental Activities" as used herein shall mean the use, generation, transportation, treatment, storage or disposal of any Hazardous Materials at any time located on or present on, under or about the Property. (f) Trustor hereby agrees, at its sole cost and expense, to indemnify, protect, hold harmless and defend (with counsel of Beneficiary's choice), Beneficiary, its successors and assignees, and the officials, officers, agents, attorneys and employees of each of them (individually, each an "Indemnitee", and collectively, the "Indemnitees") from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without limitation, reasonable attorneys' and experts' reasonable fees, disbursements and costs) of any kind or of any nature whatsoever (collectively, "Claims") which may at any time be imposed upon, incurred or suffered by, or asserted or awarded against, any Indemnitee directly or indirectly relating to or arising from any of the following "Environmental Matters," but excluding any Claims arising solely from the gross negligence or willful misconduct of Beneficiary: (i) Any past, present or future presence of any Hazardous Materials on, in, under or affecting all or any portion of the Property or on, in, under or affecting all or any portion of any property adjacent or proximate to the Property, if such Hazardous Materials originated or allegedly originated on or from the Property; (ii) Any past, present or future storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under or from the Property or any portion thereof, Exh. "E" - 5 SB2003:2151.1 (iii) The failure of Trustor to comply with any and all laws, rules, regulations, judgments, orders, permits, licenses, agreements, covenants, restrictions, requirements or the like now or hereafter relating to or governing in any way the environmental condition of the Property or the presence of Hazardous Materials on, in, under or affecting all or any portion of the Property including, without limitation, all Environmental Laws; (iv) The failure of Trustor to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants, and the like relative to any of the Environmental Matters described herein in connection with the Property or the ownership, use, operation or enjoyment thereof, (v) The extraction, removal, containment, transportation or disposal of any and all Hazardous Materials from any portion of the Property or any other property adjacent or proximate to the Property, if such Hazardous Materials originated or allegedly originated on or from the Property; (vi) Any past, present or future presence, permIttmg, operation, closure, abandonment or removal from the Property of any storage tank that at any time contains or contained any Hazardous Materials and is or was located on, in or under the Property or any portion thereof; (vii) The implementation and enforcement of any monitoring, notification or other precautionary measures that may at any time become necessary to protect against the release or discharge of Hazardous Materials on, in, under or affecting the Property or into the air, any body of water, any other public domain or any property adj acent or proximate to the Property; (viii) Any failure of any Hazardous Materials generated or moved from the Property to be removed, contained, transported or disposed of in compliance with all applicable Environmental Laws; or (ix) Any breach by Trustor of any of its covenants, representations or warranties regarding Environmental Matters contained in this Deed of Trust. The indemnity contained herein shall terminate and be of no further force and effect, ifno Claim is pending, upon the repayment of the Loan in accordance with its terms. (g) Trustor hereby represents and warrants as follows to the best of its knowledge: (i) The Property is not and has not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, or transportation of any Hazardous Materials; (ii) The Property is in compliance with all Environmental Laws; Exh. "E" - 6 582003:2151.1 (iii) Trustor has not received any written notice of claims or actions (collectively, "Hazardous Materials Claims") pending or threatened against Trustor or any previous owner or user of the Property (and relating to Trustor's and/or such previous owner's or user's ownership of the Property), by any governmental entity or agency or any other person or entity and relating to Hazardous Materials or pursuant to Environmental Laws; and (iv) Trustor has not received any written notice (i) pursuant to which the Property has been designated as "border zone property" under the provisions of California Health and Safety Code Sections 25220 et seq., or any regulation adopted in accordance therewith, (ii) of a hearing at which the Property will be considered for designation as "border zone property," or (iii) of an occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be designated as "border zone property." The foregoing shall constitute environmental provIsIOns for purposes of California Code of Civil Procedure Section 736. 10. Insurance. 10.1. Casualtv Insurance. Trustor shall at all times keep the Property insured for the benefit of Trustee and Beneficiary as follows, despite governmental requirements that may detrimentally affect Trustor's ability to obtain or may materially increase the cost of such msurance coverage: 10.1.1. Against damage or loss by fire and such other hazards (including lightning, windstorm, hail, explosion, riot, acts of striking employees, civil commotion, vandalism, malicious mischief, aircraft, vehicle, and smoke) as are covered by the broadest form of extended coverage endorsement available from time to time, in an amount not less than the full insurable value (as defined in section 10.9) of the Property, with a deductible amount not to exceed an amount reasonably satisfactory to Beneficiary; 10.1.2. Rent or business interruption or use and occupancy insurance on such basis and in such amounts and with such deductibles as are satisfactory to Beneficiary; 10.1.3. Against damage or loss by flood, if the Property is located in an area identified by the Secretary of Housing and Urban Development or any successor or other appropriate authority (governmental or private) as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended, modified, supplemented, or replaced from time to time, on such basis and in such amounts as Beneficiary may require; 10.1.4. Against damage or loss from (a) sprinkler system leakage and (b) boilers, boiler tanks, heating and air conditioning equipment, pressure vessels, auxiliary piping, and similar apparatus, on such basis and in such amounts as Beneficiary may require; Exh. "E" - 7 882003:2151.1 10.1.5. During any alteration, construction, or replacement of improvements on the Property, or any substantial portion thereof, a Builder's All Risk policy with extended coverage with course of construction and completed value endorsements, for an amount at least equal to the full insurable value of the improvements on the Property, and workers' compensation, in statutory amounts, with provision for replacement with the coverage described in Section 4.1, without gaps or lapsed coverage, for any completed portion of improvements on the Property; and 10.1.6. RESERVED 10.2. Liabilitv Insurance. Trustor shall procure and maintain workers' compensation insurance for Trustor's employees and comprehensive general liability insurance covering Trustor, Trustee, and Beneficiary against claims for bodily injury or death or for damage occurring in, on, about, or resulting from the Property, or any street, drive, sidewalk, curb, or passageway adjacent to it, in standard form and with such insurance company or companies and in an amount of at least $2,000,000 combined single limit, or such greater amount as Beneficiary may require, which insurance shall include completed operations, product liability, and blanket contractual liability coverage that insures contractual liability under the indemnifications set forth in this Deed of Trust (but such coverage or its amount shall in no way limit such indemnification). 10.3. Other Insurance. Trustor shall procure and maintain such other insurance or such additional amounts of insurance, covering Trustor and the Property, as (a) may be required by the terms of any construction contract for any improvements on the Property or by any governmental authority, other than Beneficiary or (b) may be reasonably required by Beneficiary from time to time. 10.4. Form of Policies. All insurance required under this Section 10 shall be fully paid for and nonassessable. The policies shall contain such provisions, endorsements, and expiration dates as Beneficiary from time to time reasonably requests and shall be in such form and amounts, and be issued by such insurance companies doing business in the State of California, as Beneficiary shall approve in Beneficiary's reasonable discretion. Unless otherwise expressly approved in writing by Beneficiary, each insurer shall have a Best Rating of Class A, Category VIII, or better. All policies shall (a) contain a waiver of subrogation endorsement; (b) provide that the policy will not lapse or be canceled, amended, or materially altered (including by reduction in the scope or limits of coverage) without at least 30 days' prior written notice to Beneficiary; (c) with the exception of the comprehensive general liability policy, contain a mortgagee's endorsement (438 BFU Endorsement or equivalent), and name Beneficiary and Trustee as insureds; and (d) include such deductibles as Beneficiary may approve. If a policy required under this paragraph contains a co-insurance or overage clause, the policy shall include a stipulated value or agreed amount endorsement acceptable to Beneficiary. 10.5. Duolicate Originals or Certificates. Duplicate original policies evidencing the insurance required under this Section 10 and any additional insurance that may be purchased on the Property by or on behalf of Trustor shall be deposited with and held by Beneficiary and, in addition, Trustor shall deliver to Beneficiary (a) receipts evidencing payment of all premiums Exh. "E" - 8 882003:2151.1 on the policies and (b) duplicate original renewal policies or a binder with evidence satisfactory to Beneficiary of payment of all premiums at least 30 days before the policy expires. In lieu of the duplicate original policies to be delivered to Beneficiary under this Section 4.5, Trustor may deliver an underlier of any blanket policy, and Trustor may also deliver original certificates from the issuing insurance company, evidencing that such policies are in full force and effect and containing information that, in Beneficiary's reasonable judgment, is sufficient to allow Beneficiary to ascertain whether such policies comply with the requirements of this Section 10. 10.6. RESERVED 10.7. No Separate Insurance. Trustor shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 10, unless endorsed in favor of Trustee and Beneficiary, as required by this Section 10 and otherwise approved by Beneficiary in all respects. 10.8. Transfer of Title. In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the Trustor's obligation to repay the Loan, all right, title, and interest of Trustor in and to all insurance policies required under this Section 10 or otherwise then in force with respect to the Property and all proceeds payable under, and unearned premiums on, such policies shall immediately vest in the purchaser or other transferee of the Property. 10.9. Replacement Cost. For purposes of this Section 10, the term "full insurable value" means the actual cost ofreplacing the Property in question, without allowing for depreciation, as calculated from time to time (but not more often than once every calendar year) by the insurance company or companies holding such insurance or, at Beneficiary's request, by appraisal made by an appraiser, engineer, architect, or contractor proposed by Trustor and approved by said insurance company or companies and Beneficiary. Trustor shall pay the reasonable cost of such appraisal. 10.10. Approval Not Warrantv. No approval by Beneficiary of any insurer may be construed to be a representation, certification, or warranty of its solvency and no approval by Beneficiary as to the amount, type, or form of any insurance may be construed to be a representation, certification, or warranty of its sufficiency. 10.11. Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary original policies or certificates evidencing such insurance at least 30 days before the existing policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is canceled, whether or not Beneficiary has the policy in its possession, and no reinstatement or replacement policy is received before termination of insurance, Beneficiary, without notice to or demand on Trustor, may (but is not obligated to) obtain such insurance insuring only Beneficiary and Trustee with such company as Beneficiary may deem satisfactory, and pay the premium for such policies, and the amount of any premium so paid shall be charged to and promptly paid by Trustor. Trustor acknowledges that, if Beneficiary obtains insurance, it is for the sole benefit of Beneficiary and Trustee, and Trustor shall not rely on any insurance obtained by Beneficiary to protect Trustor in any way. Exh. "E" - 9 SB2003:2151.1 10.12. Dutv To Restore After Casualtv. If any act or occurrence of any kind or nature (including any casualty for which insurance was not obtained or obtainable) results in damage to or loss or destruction of the Property, Trustor shall immediately give notice of such loss or damage to Beneficiary and, if Beneficiary so instructs, shall promptly, at Trustor's sole cost and expense, regardless of whether any insurance proceeds will be sufficient for the purpose, commence and continue diligently to completion to restore, repaid, replace, and rebuild the Property as nearly as possible to its value, condition, and character immediately before the damage, loss or destruction. II. Assil,':nment of Insurance and Condemnation Proceeds. Should the Property or any part or appurtenance thereof or right or interest therein be taken or damaged by reason of any public or private improvement, condemnation proceeding (including change of grade), fire, earthquake or other casualty, or in any other manner, Beneficiary or Trustee may, at its option, commence, appear in and prosecute, in its own name, any action or proceeding, or make any reasonable compromise or settlement in connection with such taking or damage, and obtain all compensation, awards or other relief therefor. All compensation, awards, damages, rights of action and proceeds, including the policies and the proceeds of any policies of insurance affecting the Property, are hereby assigned to Beneficiary, but no such assignments shall be effective to invalidate or impair any insurance policy. Trustor further assigns to Beneficiary any return premiums or other repayments upon any insurance at any time provided for the benefit of the Beneficiary and all refunds or rebates made of taxes or assessments on the Property, and Beneficiary may at any time collect said return premiums, repayments, refunds and rebates in the event of any default by Trustor under the DDA, this Deed of Trust or the Promissory Note. No insurance proceeds or condemnation awards at any time assigned to or held by Beneficiary shall be deemed to be held in trust and Beneficiary may commingle such proceeds with its general assets and shall not be liable for the payment of any interest thereon. Trustor also agrees to execute such further assignments of any such policies, compensation, award, damages, rebates, return of premiums, repayments, rights of action and proceeds as Beneficiary or Trustee may reqUlre. 12. Use ofInsurance Proceeds. After any damage by casualty to the Property, whether or not required to be insured against under the policies to be provided by Trustor, Trustor shall give prompt written notice thereof to Beneficiary generally describing the nature and cause of such casualty and the extent of the damage to or destruction of the Property. Trustor shall have the obligation to promptly repair the damage, regardless of whether and to the extent the casualty was covered by an insurance policy. For these purposes, Beneficiary shall make available to Trustor proceeds of any insurance policy covering the casualty and maintained by Trustor under and subject to each of the following terms and conditions: (a) Insurance proceeds which are directly attributable to the damage (herein the "Proceeds") shall be released to Trustor upon and subject to satisfaction of each of the following conditions: (i) There exists no default under the DDA, this Deed of Trust or the Promissory Note at any time prior to or during the course ofreconstruction; Exh. "E" - 10 882003:2151.1 SB2Q03:2151.1 (ii) Receipt by Beneficiary of satisfactory written evidence that any proposed restorations by Trustor will comply with all statutes, ordinances, regulations, rules, rulings, restrictive covenants, reciprocal easements, leases and contracts; that all proposed plans and specifications are approved by all required governmental agencies; and that Trustor has obtained all necessary building and other permits and approvals for such reconstruction; (iii) Receipt by Beneficiary of proof reasonably satisfactory to Beneficiary that there exists and will continue to exist, until the Property is reasonably expected to be restored and fully occupied, a source of funds sufficient to pay the Loan as and when due. Such computation shall include Beneficiary's estimate of the amount necessary to pay all of Trustor's operating expenses and pay all of the sums due on the Loan over the projected period of reconstruction, and Beneficiary may require Trustor to establish and fund a holdback account up to the amount of the difference between the anticipated debt service and operating expenses of Trustor. In the event of any default under the DDA, this Deed of Trust, the Promissory Note or any reconstruction requirements, Beneficiary may, at its option, apply any portion or all of such amounts against accrued interest and the outstanding amounts due under the Loan; (iv) Receipt by Beneficiary from Trustor of sufficient cash funds to cover one hundred percent (100%) of any difference between the estimated costs of completion, as certified by an architect or engineer approved by Beneficiary in writing, and the Proceeds, the amount of such difference shall be paid in cash to Beneficiary with said amount and any interest earned thereon shall be released to Beneficiary, as necessary, following the exhaustion of available insurance proceeds, or at such earlier time deemed appropriate by Beneficiary. In the event of any default under the DDA, this Deed of Trust, the Promissory Note or any reconstruction requirements, Beneficiary may, at its option, apply any portion or all of such amounts and interest against the accrued interest and principal sums outstanding under the Loan; (v) Receipt by Beneficiary of a certificate executed by Trustor describing the work to be performed in connection with such restoration and a certificate by an independent architect or engineer selected or approved by Beneficiary in writing stating that the work described in the Trustor's certificate is adequate to restore the Property to substantially the same size, design, quality and condition as existed prior to the damage. The architect's or engineer's certificate shall include its estimate of all costs and expenses which will be required to complete such restorations; and (vi) Such additional conditions as may reasonably be imposed by Beneficiary to provide assurance that the Proceeds will be used to restore the Property to substantially the same condition, to the extent possible, as existed prior to the damage or taking, including, without limitation, Beneficiary'S prior Exh. "E" - II written approval of all permits, plans, specifications and construction contracts for such restoration. (b) Beneficiary shall disburse the Proceeds in increments corresponding to the percentage of completion costs then incurred for labor performed and materials furnished (which may, at Beneficiary's discretion, be subject to reasonable holdbacks required by Beneficiary, not exceeding ten percent (10%) of the total estimated cost of completion and which will be released upon lien-free completion of the restorations in accordance with the requirements of this Deed of Trust and the expiration of the periods within which any mechanic's or materialman's lien may be filed). Disbursements shall be conditioned upon Beneficiary's written confirmation that all of its requirements therefor have been satisfied, including its receipt of periodic inspection and completion percentage certificates executed by the project architect approved by Beneficiary in writing, payment acknowledgments and unconditional lien releases, and such other conditions to periodic disbursements as are customarily imposed by Beneficiary in connection with its construction loans, no defaults or misrepresentations of Trustor and Trustor's obtaining all title insurance endorsements, payment and performance bonds, and builder's risk policies required by Beneficiary. Trustor shall, during the progress of the work, also submit to the Beneficiary, at periodic intervals not less frequently than monthly, a certificate satisfactory to Beneficiary furnished by an architect or engineer approved by Beneficiary in writing showing the cost of labor and materials incorporated into the work during the period specified in the certificate, which period shall not include any part of the period covered by any other such certi ficate; and (c) After completion of the restoration and subject to the conditions herein stated, and, if Trustor is not then in default under the DDA, this Deed of Trust or the Promissory Note, Beneficiary shall pay to Trustor (or such other persons or entities that may have an interest therein) the undisbursed Proceeds and Trustor's deposit for any estimated restoration expense held by Beneficiary upon delivery to Beneficiary of (i) a certificate executed by Trustor showing that the work has been completed and that all bills for labor performed and materials furnished in connection therewith have been paid, (ii) unconditional lien releases and other appropriate written acknowledgments of payment in full executed by all contractors and subcontractors performing labor on or furnishing materials to the Property; (iii) a certificate executed by an architect or engineer approved by Beneficiary confirming that the Property has been restored to substantially the same size, design, quality and condition as existed immediately prior to the damage and in accordance with all applicable federal, state, local and other governmental laws and regulations; and (iv) a certificate of occupancy and other permits issued by the appropriate governmental authorities authorizing the occupancy of the Property for its intended purposes and use. If (i) any of the conditions in subparagraph l2(b), above, are not fulfilled within sixty (60) days after the date of the casualty, or if the reconstruction cannot be completed within such 60 day period, within such additional time as may be reasonably necessary to complete the reconstruction, not to exceed one hundred eighty (180) days, and provided such additional time does not result in a breach by the Trustor under the DDA, this Deed of Trust or the Promissory Note; or (ii) if Trustor fails to exercise diligence in promptly commencing or continuously prosecuting the work; or (iii) if Trustor is otherwise in default under the DDA, this Deed of Trust, the Promissory Note or any reconstruction requirements set forth therein or herein, Exh. "E" - 12 SB2003 2151.1 Beneficiary may, at its option, apply the Proceeds and any deposits made by Trustor hereunder to the indebtedness secured hereby, or to complete the necessary repairs and use the Proceeds for the payment thereof. If the Proceeds are so applied to the indebtedness and, together with any other payments due to Beneficiary under the Loan and all other debts of Trustor to Beneficiary are discharged, Beneficiary shall not have the right to require the Property to be repaired under the terms of this Deed of Trust, but Beneficiary's rights under any other lien that it holds against the Property and which is not also required to be released shall not be thereby impaired or affected. Trustor shall not commence any repairs or reconstruction of any casualty until Beneficiary consents in writing thereto, which consent may be withheld by Beneficiary in its reasonable discretion, until all of the conditions contained in this paragraph are satisfied. All work of repairing or restoring damage shall be done in a good and workmanlike manner with materials of good quality and in conformity with all applicable laws, ordinances, rules and regulations. Nothing herein contained shall be construed as authorizing the Trustor to subject the Property to any mechanic'S, materialman's or other lien for the payment of bills for material furnished or labor performed in connection with any work contemplated by this paragraph. In any event in which the Beneficiary is not otherwise obligated to permit the insurance proceeds to be applied to the restoration of the Property as hereinabove described and, at the option of Beneficiary, the proceeds of a loss under any policy, whether or not endorsed payable to Beneficiary, may be applied in payment of the principal, interest or any other sums secured by this Deed of Trust, whether or not then due, or to the restoration or replacement of any building on the Property, without in any way affecting the enforceability or priority of the lien of this Deed of Trust or the obligation of the Trustor or any other person for payment of the indebtedness hereby secured or the reconstruction of the damaged improvements, whether such Trustor be the then owner of said building or improvements or not. 13. Use of Condemnation Awards. Should the Property or any portion thereof or any improvements thereon be taken or damaged by reason of any public improvement or condemnation proceeding, or by any other form of eminent domain, Trustor agrees that Beneficiary shall be entitled to all compensation, awards and other payments or relief therefor and may, at its option, commence, appear in or prosecute in its own name any action or proceeding or make any reasonable compromise or settlement in connection with such taking or damage, and Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in connection therewith. All such compensation, awards, damages, rights of actions and proceeds may be applied by Beneficiary toward the repair of any damage to the improvements on any portion of the Property not subject to the taking as and subject to the same conditions herein provided with respect to the disposition of insurance proceeds; provided, however, that if the taking results in a loss of the Property to an extent which, in the reasonable opinion of Beneficiary, renders or will render the Property not economically viable or which substantially impairs Beneficiary'S security or lessens to any extent the value, marketability or intended use of the Property, Beneficiary may apply the condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order as Beneficiary may determine. Trustor agrees to execute such further assignments of condemnation proceeds as Beneficiary or Trustee may from time to time require. If so applied, any proceeds in excess of the unpaid principal and accrued Exh. "E" - 13 582003:2151 1 interest due under the Loan plus all other sums due to Beneficiary from Trustor shall be paid to Trustor or Trustor's assignee. 14. ProDertv Taxes and Assessments. Trustor shall pay in full on or before the due date thereof all rents, taxes, assessments and encumbrances, with interest, that may now or hereafter be levied, assessed or claimed upon the Trustor's ownership or use of the Property that is the subject of this Deed of Trust or any part thereof, and upon request, provide the Beneficiary with copies of official receipts for payment therefor, and shall pay all taxes imposed upon, and reasonable costs, fees and expenses of, this Deed of Trust. 15. Assessment Districts. Trustor agrees not to consent to inclusion of the Land in any local improvement or special assessment district or to the imposition of any special or local improvement assessment against the Property, without Beneficiary's prior written consent. 16. Mortgage Taxes. In the event of the passage after the date of this Deed of Trust of any federal, state or municipal law, ordinance or regulation relating to the taxation of mortgages, deeds of trust or debts secured thereby so as to tax or assess any interest of Beneficiary or any payments secured hereby, Trustor shall bear and pay the full amount of such taxes. 17. SDecial Assessment and Insurance Reserves. Trustor shall, at the request of the Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and insurance premiums estimated by the Beneficiary next to become due, in addition to any other periodic payment or performances owed by Trustor under the DDA, the Promissory Note or this Deed of Trust, so that thirty (30) days before the due date thereof, or of the first installment thereof, Beneficiary will have on hand an amount sufficient to pay the next maturing assessments and insurance premiums. The amount of the additional payment to be made on account of assessments and insurance premiums shall be adjusted annually or more frequently as Beneficiary deems necessary and any deficit shall be immediately paid by Trustor upon request and any surplus shall be credited on the mortgage account. Subsequent payments on account of assessments and insurance premiums shall be made in accordance with the next estimate by the Beneficiary of annual requirements. To the extent permitted by applicable law, all monies paid to Beneficiary on account of assessments or insurance premiums may be commingled and invested with Beneficiary'S own funds and, unless and to the extent required by law, shall not bear interest for Trustor. Beneficiary shall not exercise the rights granted in this paragraph so long as all of the following conditions are met: (a) There is no other continuing default under the DDA, this Deed of Trust or the Promissory Note; and (b) Trustor pays all assessments and Insurance premIUms prior to delinquency. Upon Trustor's failure to comply with either of the conditions (a) and (b), above, Beneficiary may, at its option, then or thereafter exercised, require Trustor to pay the additional sums described in this paragraph. Exh. "E" - 14 SB2Q03:2151.1 18. Trustor's Right to Contest Taxes. Trustor shall have the right to contest any real property tax or special assessment so long as (a) no defaults exist under the DDA, this Deed of Trust or the Promissory Note; (b) Trustor makes any payment or deposit or posts any bond as and when required as a condition to pursuing such contest; (c) Trustor commences such contest prior to such tax or assessment becoming delinquent and continuously pursues the same in good faith and with due diligence; (d) such contest or any bond furnished by Trustor stays the foreclosure of any lien securing the payment of any such tax or assessment; and (e) Trustor pays any tax or assessment within ten (10) days following the date ofresolution of such contest. 19. ReDort of Real Estate Transaction. Trustor has made or provided for making, or will make or provide for making, on a timely basis, any reports or returns required by state or local law relating to the Property, or the development of the Property, notwithstanding the fact that the primary reporting responsibility may fall on the Beneficiary, or other party. Trustor's obligations under this paragraph will be deemed to be satisfied, if proper and timely reports and returns required under this paragraph are filed by a title company involved in each real estate transaction relating to the Property, but nothing contained herein shall be construed to require such returns or reports to be filed by Beneficiary. 20. RESERVED 21. Assignment of Leases. Trustor hereby unconditionally and absolutely assigns, transfers and sets over unto Beneficiary, all leases, subleases, rental agreements, occupancy agreements, licenses, concessions, entry fees and other agreements that grant a possessory interest in all or any part of the Property, together with all rents, issues, deposits and profits of the Property, together with the immediate and continuing right to collect and receive the same, for the purpose and upon the terms and conditions hereinafter set forth. Trustor further unconditionally and absolutely assigns, transfers and sets over unto Beneficiary all of its right, title and interest in and to any plans, drawings, specifications, permits, engineering reports and land planning maps, which it now has or may hereafter acquire regarding any improvements now on or to be constructed upon the Property. Beneficiary confers upon Trustor a license to collect and retain the rents, issues, deposits and profits of the Property, as they become due and payable, subject, however, to the right of Beneficiary upon a default hereunder to revoke said license, at any time, in its sole discretion and without notice to Trustor. Beneficiary may revoke said license and collect and retain the rents, issues, deposits and profits of the Property assigned herein to Beneficiary upon the occurrence of an Event of Default hereunder or under any of the obligations secured hereby, and without taking possession of all or any part of the Property, and without prejudice to or limitation upon any of its additional rights and remedies granted pursuant hereto or pursuant to the DDA or the Promissory Note, and Beneficiary shall, in its sole and absolute discretion, have the right to apply such income for the payment of all expenses or credit the net amount of income that it receives from the Property, to the indebtedness in the manner, order and amounts as Beneficiary shall determine. In the event the Beneficiary exercises or is entitled to exercise any of its rights or remedies under this Deed of Trust as a result of the default of the Trustor under the DDA, and if any lessee, sublessee or assignee under any lease assigned under this paragraph files or has filed against it any petition in bankruptcy or for reorganization or undertakes or is subj ect to similar action, Beneficiary shall have, and is hereby assigned by Trustor, all of the rights that would otherwise inure to the benefit of Trustor in such proceedings, Exh. "E" -15 882003:2151.1 including, without limitation, the right to seek "adequate protection" of its interests, to compel assumption or rejection of any such lease and to seek such claims and awards as may be sought or granted in connection with the rejection of any such lease. Unless otherwise agreed to by Beneficiary in writing, Beneficiary's exercise of any of the rights provided in this paragraph shall preclude Trustor from the pursuit and benefit thereof, without any further action or proceeding of any nature. The foregoing assignment shall not impose upon Beneficiary any duty to produce rents from the Property, and such assignment shall not cause Beneficiary to be a "mortgagee in possession" for any purpose. The rights granted in this paragraph shall be in addition to and not in derogation of any similar or related rights granted to Beneficiary in any separate assignment of leases and rents. 22. Imoairment of Securitv. Trustor shall not, without first obtaining Beneficiary'S written consent, assign any of the rents or profits of the Property or change the general nature or use of the Property or initiate or acquiesce in any zoning reclassification, or do, or suffer to be done, any act or thing that would impair the security of Beneficiary's lien upon the Property or the rents thereof. Trustor shall not, without the written consent of Beneficiary, which consent shall not be unreasonably withheld, delayed or conditioned, (i) initiate or support any zoning reclassification of the Property, seek any variance under existing zoning ordinances applicable to the Property or use or permit the use of the Property in a manner that would result in such use becoming a non-conforming use under applicable zoning ordinances; (ii) impose or consent to any restrictive covenant or encumbrance upon the Property, execute or file any subdivision or parcel map affecting the Property or consent to the annexation of the Property to any municipality; or (iii) permit or suffer the Property to be used by the public or any person in such manner as might make possible a claim of any implied dedication or easement. 23. Defense of Suits. Trustor shall appear in and defend any suit, action or proceeding that might affect the value, priority or enforceability of this Deed of Trust or the Property itself or the rights or powers of Beneficiary or Trustee, including any suits relating to damage to property or death or personal injuries, whether or not Trustor is ultimately found liable for any negligence or other wrongful conduct or inaction. Trustor, following mutual negotiations with Beneficiary, has waived and does hereby waive any immunity to such liability to Beneficiary under any industrial insurance or similar statute, to the extent such immunity would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or defend any such action or proceeding or be made a party to any such action or proceeding by reason of this Deed of Trust, or elect to prosecute such action as appears necessary to preserve the value, priority or enforceability of this Deed of Trust or the Property itself, Trustor will at all times indemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss, damage, expense or cost, including cost of evidence of title expert witness fees and attorneys' fees, arising out of or incurred in connection with any such suit, action or proceeding, and any appeal or petition for review thereof, and the sum of such expenditures shall be secured by this Deed of Trust with interest at the rate of 10% per annum and shall be due and payable on demand. Trustor shall pay costs of suit, cost of evidence of title expert witness fees and reasonable attorneys' fees in any proceeding or suit brought by Beneficiary to foreclose this Deed of Trust and in any appeal therefrom or petition for review thereof. Exh. "E" - 16 SB2003:2151.1 24. Assignments and Transfers. Trustor acknowledges that Beneficiary relied upon Trustor's financial statements and status as a public agency in making the Loan, and Trustor covenants not to transfer any of the interest in the Property or to permit the transfer of any interest in Trustor without first receiving Beneficiary's express written consent in each instance (which consent shall not be unreasonably withheld). A breach of this covenant shall constitute a default under the DDA and this Deed of Trust. All sums then due to Beneficiary by Trustor hereunder or under the Loan may, at Beneficiary's option, be declared immediately due and payable if any of Trustor's interests in the Property, or any part thereof, are sold or transferred, voluntarily or involuntarily, without Beneficiary's written consent. 25. RESERVED 26. Further Encumbrances. Trustor shall have the right, without the consent of Beneficiary, to further encumber the Property. Without limitation on the foregoing, Beneficiary shall, at the request of Trustor, subordinate this Deed of Trust to (a) a construction loan to Trustor in an amount which, when added to the amount secured hereby, shall result in a loan to value ratio not to exceed ninety percent (90%) of the fair market value of the Property, as determined by the lender under such construction loan (the proceeds of which shall be used and applied by Trustor solely for the improvement and development of the Property, and/or (b) a permanent mortgage loan to provide for the release of the construction loan and the long term financing of the capital costs associated with the development and financing of the Property. 27. Release of Parcels. In the event that Trustor desires to effectuate the release of one or more parcels comprising the Property (each, a "Release Parcel"), Beneficiary shall cause the release of such Release Parcel(s), provided the following conditions (the "Release Conditions") are satisfied: (a) No Event of Default shall have occurred and be continuing under the DDA, the Note or this Deed of Trust, nor shall have there occurred any event which would, with the giving of notice or passage of time, or both, constitute an Event of Default under any of the foregoing; (b) Receipt by Beneficiary of evidence satisfactory to Beneficiary that (i) Trustor has initiated the process to cause the remaining Property to be a separate tax parcel, or separate tax parcels, and not be subject to any lien for taxes due or not yet attributable to the Release Parcel and (ii) the Release Parcel has been separately subdivided and, after giving effect to the subdivision and conveyance of the Release Parcel, the remaining Property will (i) comply with all zoning ordinances, including without limitation those related to parking, lot size and density, or a variance with respect thereto shall have been obtained, (ii) comply with all applicable subdivision ordinances and regulations, and (iii) have appurtenant easements for utilities currently crossing, located on or to be located on the Release Parcel, which easements shall be subj ect to Lender's prior approval not to be unreasonably withheld or delayed; Exh. "E" - 17 SB2Q03:2151.1 (c) receipt by Lender of an endorsement to Lender's loan policy of title insurance insuring the lien of this Deed of Trust insuring each of the items set forth in clause (b) above to the extent title insurance is available therefor; (d) payment to Beneficiary by Trustor of Beneficiary's reasonable fees and expenses incurred in evaluating and documenting the release, including, without limitation, reasonable attorneys' fees and filing fees plus the value of the Release Parcel (computed at $0.70 per square foot multiplied by 110); (e) Trustor shall deliver or take, as the case may be, any other items or actions reasonably requested by Beneficiary in connection with the release of the Release Parcel(s); and (f) any Release Parcel shall be four (4) acres or more. 28. Event of Default. An "Event of Default" shall be deemed to have occurred in any of the following circumstances: (a) Failure of Trustor to satisfy any performance or payment obligation required under this Deed of Trust, the DDA or the Promissory Note when due; (b) Failure of Trustor to properly perform its obligations under this Deed of Trust, the DDA or the Promissory Note by a date specified herein or therein or in a written notice to Trustor, if applicable, (which date specified shall not be less than ten (10) days nor greater than thirty (30) days from the date of such notice, and shall be determined by Beneficiary in its sole discretion); provided, however, that: (i) if such default set forth in the notice cannot be cured by the date specified, (ii) Trustor commences to cure the default prior to the date specified in the notice, and (iii) Trustor diligently proceeds to cure the default thereafter; then the date specified in the notice shall be extended by any period reasonably necessary to complete the cure, but in no event for more than ninety (90) days after the date originally specified in the notice; (c) RESERVED (d) Trustor becomes insolvent or generally is not paying its debts as they become due, as defined in the United States Bankruptcy Reform Act, as amended from time to time (which Act, as amended, is herein called the "Bankruptcy Code"), or shall file a voluntary petition in bankruptcy seeking to effect a reorganization plan or other arrangement with creditors or any other relief under the Bankruptcy Code or under any other state or federal law relating to bankruptcy or other relief for debtors, whether now or hereafter in effect, or shall consent to or suffer the entry of any order for relief in any involuntary case under the Bankruptcy Code, or shall be the defendant or subject of any involuntary petition filed under the Bankruptcy Code that is not dismissed within ninety (90) days of the filing thereof, or shall make an assignment for the benefit of creditors; Exh. "E" - 18 882003:2151.1 (e) Any court (or similar tribunal) having jurisdiction over Trustor or any of the Property or other property of Trustor shall enter a decree or order appointing a receiver, trustee, guardian, conservator, assignee in bankruptcy or insolvency of Trustor, of any of the Property, of any other real property of Trustor, of any other significant asset of Trustor, or shall enter a decree or order for relief in any involuntary case under the Bankruptcy Code; (f) The entry of any final judgment or arbitration award against Trustor that is not paid or stayed pending appeal, or the sequestration or attachment of, or any levy or execution upon (i) any of the Property, (ii) any other collateral provided by Trustor or any other person under this Deed of Trust or as security for performance or payment of the Loan, or (iii) any significant portion of the other assets of Trustor, which is not released, expunged or dismissed prior to the earlier of (10) days after such sequestration, attachment or execution or five (5) days before the sale of any such assets; (g) Trustor shall dissolve, liquidate or wind up its affairs or shall bring any legal action or take any other action contemplating such dissolution, liquidation or winding up; (h) The determination by Beneficiary that any representation, warranty or statement contained in this Deed of Trust or the DDA or in any other writing delivered to Beneficiary in connection with the Loan or the Promissory Note was incomplete, untrue or misleading in any material respect as of the date made; (i) The enactment of any law that deducts from the value of the Property for the purpose of taxation of any lien thereon or imposing upon Beneficiary the payment of the whole or any part of the taxes, assessments, charges or liens herein required to be paid by Trustor or changing in any way the laws relating to the taxation of deeds of trust or debts secured by deeds of trust or Beneficiary's interest in the Property or the manner of collection of taxes so as to affect this Deed of Trust or the DDA or the Promissory Note or the holder thereof or imposing a tax, other than a Federal or state income tax, on or payable by Trustee or Beneficiary by reason of their ownership of this Deed of Trust, the DDA or the Promissory Note and, in such event, Trustor, after demand by Beneficiary, does not pay such taxes or assessments or reimburse Beneficiary therefor or, in the opinion of counsel for Beneficiary, it might be unlawful to require Trustor to make such payment or the making of such payment might result in the imposition of interest costs beyond the maximum amount permitted by applicable law; (j) The occurrence of a default by Trustor under any of the contracts and agreements assigned to Beneficiary under this Deed of Trust, where such default is not cured within the applicable cure period, if any, or the failure of Trustor to diligently enforce its rights and remedies under such contracts and agreements upon the default of any other party thereto; and (k) RESERVED Exh. "E" - 19 882003:2151.1 29. Rights and Remedies on Default. Upon the occurrence of any Default or Event of Default under this Deed of Trust and at any time thereafter, Trustee or Beneficiary may exercise anyone or more of the following rights and remedies: (a) DDA. Beneficiary may exercise any right or remedy provided for in the DDA or the Promissory Note; (b) Acceleration. Beneficiary may declare the Loan and all other performances or sums secured by this Deed of Trust immediately due and payable; (c) Foreclosure Rights. Beneficiary may declare all performances or sums secured hereby immediately due and payable either by commencing an action to foreclose this Deed of Trust as a mortgage, or by the delivery to Trustee of a written declaration of default and demand for sale and of written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record in case of foreclosure by exercise of the power of sale herein. Should Beneficiary elect to foreclose by exercise of the power of sale herein, Beneficiary shall also deposit with Trustee this Deed of Trust, the documents evidencing the Loan and any receipts and evidence of expenditures made and secured hereby as Trustee may require, and notice of sale having been given as then required by law and after lapse of such time as may then be required by law after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder upon any terms and conditions specified by Beneficiary and permitted by applicable law. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to any purchaser its deed or deeds conveying the Property, or any portion thereof, so sold, but without any covenant or warranty, express or implied. The recitals in such deed or deeds of any matters or facts, shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase all or any portion of the Property, as applicable, at sale. (d) Right to Rescind. Beneficiary, from time to time before Trustee's sale, may rescind any such notice of breach or default and of election to cause the Property to be sold by executing and delivering to Trustee a written notice of such rescission, which notice, when recorded, shall also constitute a cancellation of any prior declaration of default and demand for sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any breach or default then existing or subsequently occurring, or impair the right of Beneficiary to execute and deliver to Trustee, as above provided, other declarations of default and demand for sale, and notices of breach or default, and of election to cause the Property to be sold to satisfy the obligations hereof, nor otherwise affect any provision, agreement, covenant or condition of the DDA and/or of this Deed of Trust or any of the rights, obligations or remedies of the parties hereunder. Exh. "E" - 20 8B2003:2151.1 (e) UCC Remedies. Beneficiary shall have all the rights and remedies of a secured party under the California Uniform Commercial Code, including, without limitation, Section 9501(4) thereof. Upon request, Trustor shall assemble and make such collateral available to Beneficiary at a place to be designated by Beneficiary that is reasonably convenient to both parties. Upon repossession, Beneficiary may propose to retain the collateral in partial satisfaction of the Loan or sell the collateral at public or private sale in accordance with the Uniform Commercial Code as adopted in the state where the Property is situated or any other applicable statute. Such sale may be held as a part of, distinctive from or without a trustee S sale or foreclosure of the real property secured by this Deed of Trust. If any notification of disposition of all or any portion of the collateral is required by law, such notification shall be deemed reasonably and properly given, if mailed at least ten (10) days prior to such disposition. If Beneficiary disposes of all or any part of the collateral after default, the proceeds of disposition shall be applied in the following order: (i) to the reasonable expenses of retaking, holding, preparing for sale, selling the collateral, and the like; (ii) to the reasonable attorneys' fees and legal expenses incurred by Beneficiary; and (iii) to the satisfaction of the indebtedness secured by this Deed of Trust. (f) Remedial Advances. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, without obligation so to do and without demand upon Trustor and without releasing Trustor from any obligation hereof, may (i) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; (ii) commence, appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest or compromise any encumbrance, charge, lien, tax or assessment, or the premium for any policy of insurance required herein; and in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ counsel and pay such counsel's fees. Beneficiary shall be subrogated to the rights and lien interests of any person who is paid by Beneficiary pursuant to the terms of this paragraph. Trustor shall repay immediately on written notice to Trustor all sums expended or advanced hereunder by or on behalf of Beneficiary, with interest from the date of such advance or expenditure at the rate of 10% per annum, and the repayment thereof shall be secured hereby. (g) Summary Possession. Beneficiary may, at its option, either in person or by agent, employee or court-appointed receiver, enter upon and take possession of the Property and continue any work of improvement, repair or renovation thereof at Trustor's expense and lease the same or any part thereof, making such alterations as it Exh. "E" - 21 SB2003:2151.1 finds necessary, and may terminate in any lawful manner any lease(s) of the Property, exercising with respect thereto any right or option available to the Trustor. The entering upon and taking possession of the Property, the collection of rents, issues and profits, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage to the Property, and the application or release thereof shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (h) Collection of Rents. Beneficiary may require any tenant or other user of the Property to make payments of rent or use fees directly to Beneficiary, regardless of whether Beneficiary has taken possession of the Property. If any rents are collected by Beneficiary, then Trustor hereby irrevocably designates Beneficiary as Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Beneficiary in response to Beneficiary's demand shall satisfy the obligation for which the payments are made, whether or not any proper grounds for the demand existed. Beneficiary may exercise its rights under this paragraph either in person, by agent or through a receiver. (i) Beneficiary'S Enforcement of Leases. Beneficiary is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to collect the rents assigned in this Deed of Trust, including the right, in person or by agent, employee or court-appointed receiver, to enter upon the Property, or any part thereof, and take possession thereof forthwith to the extent necessary to effect the cure of any default on the part of Trustor as lessor in any leases or upon Trustor's default under the DDA. Trustor hereby grants to Beneficiary full power and authority to exercise all rights, privileges and powers herein granted at any and all times hereafter, without notice to Trustor, including the right to operate and manage the Property, make and amend leases and perform any other acts reasonably necessary to protect the value, priority or enforceability of any security for the obligations of the Trustor under the DDA and use and apply all of the rents and other income herein assigned to the payment of the costs of exercising such remedies, of managing and operating the Property, and of any indebtedness or liability of Trustor to Beneficiary, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring any improvements on the Property or of making the same rentable, attorneys' fees incurred in connection with the enforcement of this Deed of Trust, and any principal and interest payments due from Trustor to Beneficiary under the DDA, the Promissory Note and this Deed of Trust, all in such order as Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Trustor in any leases. It is further understood that this Deed of Trust shall not operate to place responsibility for the control, care, management or repair of the Property, or parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable for the carrying out of any of the terms and conditions of any leases, or for any waste of the Property by the Exh. "E" - 22 882003:2151.1 lessee under any leases or by any other party, or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, invitee, licensee, employee or stranger, except as may result from the gross negligence or willful misconduct of Beneficiary after taking possession of the Property hereunder. (j) Beneficlarv's Enforcement of Contracts. Beneficiary shall have the right to enforce Trustor's rights under all architect, engineering, construction and related contracts and to bring an action for the breach thereof in the name of Beneficiary or, at Beneficiary's option, in the name of Trustor, in the event any architect, engineer, contractor or other party breaches their respective contract or contracts, regardless of whether Beneficiary acquires or retains any interest in the Property. Trustor hereby irrevocably appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing, which power shall be durable and coupled with an interest. Beneficiary does not assume and shall not be obligated to perform any of Trustor's obligations under said contracts nor shall Beneficiary be required to enforce such contracts or bring action for the breach thereof, provided; however, any performance of the respective contracts specifically required by the Beneficiary in writing, following any default by Trustor under the DDA or the contracts, and which is properly and timely undertaken by the contractor, engineer or architect, shall be paid for by the Beneficiary in accordance with the terms and conditions of the contracts. Such payments shall be deemed additions to the amounts owed by Trustor to the Beneficiary under the DDA and Promissory Note and secured by this Deed of Trust and shall bear interest at the rate of 10% per annum from the date of advance to and including the date of full payment, and shall be secured by any deed of trust, collateral assignment of leases and rents, security agreement and other documents granted to secure the Loan. (k) Annointment of Receiver. Beneficiary has the right to have a receiver appointed to take possession of any or all of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, to collect the income from the Property and apply the proceeds, over and above the cost of the receivership, against the Loan. The receiver may serve without bond, if permitted by law. Beneficiary's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the indebtedness secured hereby by a substantial amount. Employment by Beneficiary shall not disqualify a person from serving as a receiver. Upon taking possession of all or any part of the Property, the receiver or Beneficiary may: (i) use, operate, manage, control and conduct business on the Property and make expenditures for all maintenance and improvements as in its judgment are necessary and proper; (ii) collect the income from the Property and apply such sums to the expenses of use, operation and management; and (iii) at Beneficiary's option, complete any construction in progress on the Property, and in that connection pay bills, borrow funds, employ contractors and make any changes in plans or specifications as Beneficiary deems reasonably necessary or appropriate. If the revenues produced by the Property are insufficient to pay expenses, the receiver may borrow, from Beneficiary or otherwise, as Beneficiary may deem reasonably necessary for the purposes stated in this paragraph. The amounts borrowed or advanced shall be payable on demand and bear Exh. "E" - 23 882003:2151.1 interest from the date of expenditure until repaid at the rate of 10% per annum. Such sums shall become a part of the debt secured by this Deed of Trust. (I) Specific Enforcement. Beneficiary may specifically enforce any covenant in this Deed of Trust or the Trustor's compliance with its warranties herein and may restrain and enjoin the breach or prospective breach of any such covenant or the noncompliance with any condition and Trustor waives any requirement of the posting of any bond in connection therewith. (m) General Creditors Remedies. Beneficiary shall have such other rights and remedies as are available under any statute or at law or in equity, generally, and the delineation of certain remedies in this Deed of Trust shall not be deemed in limitation thereof 30. Application of Sale Proceeds. After deducting all costs and expenses of Trustee and of this Deed of Trust, including cost of evidence of title and reasonable attorneys' fees in connection with sale, as above set forth, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the rate of 10% per annum; all other sums then secured hereby; and the remainder, if any, to the Beneficiary and any other person or persons legally entitled thereto. 31. Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy provided herein or under the DDA or the Promissory Note, or otherwise by law provided or permitted, or provided in any guaranty given in connection with the Loan, but each shall be cumulative and shall be in addition to every other remedy. Every power or remedy given by this instrument to Trustee or Beneficiary or to which either of them may be otherwise entitled, may be exercised concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies. 32. No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the future or a preclusion of any right or remedy with respect to the same or any other occurrence. 33. Marshaling. In case of a sale under this Deed of Trust, the Property, real, personal and mixed, may be sold in one or more parcels. Neither Trustee nor Beneficiary shall be required to marshal Trustor's assets. 34. SUBMISSION TO JURISDICTION. (A) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED Exh. "E" - 24 SB2003:2151.1 OF TRUST, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN SAN BERNARDINO COUNTY, CALIFORNIA, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN BERNARDINO COUNTY, CALIFORNIA (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW). (B) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS DEED OF TRUST OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY OR TRUSTOR, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. 35. Trustor's Indemnification. Trustor agrees to indemnify and hold harmless Trustee and Beneficiary from and against any and all losses, liabilities, penalties, claims, charges, costs and expenses (including attorneys' fees and disbursements) (the "Losses") that may be imposed on, incurred or paid by or asserted against Trustee and/or Beneficiary by reason or on account of, or in connection with: (a) any default by Trustor hereunder or under the DDA; (b) Trustee's and/or Beneficiary's good faith and commercially reasonable exercise of any of their rights and remedies or the performance of any of their duties hereunder or under any other documents to which Trustor is a party; (c) the construction, reconstruction or alteration of the Property; (d) any negligence, willful misconduct or failure to act of Trustor, or any negligence, willful misconduct or failure to act of any lessee of the Property, or any of their respective agents, contractors, subcontractors, servants, employees, licensees or invitees; or ( e) any accident, injury, death or damage to any person or property occurring in, on or about the Property or any street, drive, sidewalk, curb or passageway adjacent thereto, except for the willful misconduct or gross negligence of the indemnified person. Any amount payable to Trustee, Beneficiary or counsel for Beneficiary under this paragraph shall be due and payable within ten (10) days after demand therefor and receipt by Trustor of a statement from Trustee, Beneficiary and/or counsel for Beneficiary setting forth in reasonable detail the amount claimed and the basis therefor, and such amounts shall bear interest at the rate of 10% per annum from and after the date such amounts are paid by Beneficiary, Trustee or counsel for Beneficiary, until paid in full by Trustor. Trustor's obligations under this paragraph shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation on its part under any such policy of insurance. If any Exh. "En - 25 claim, action or proceeding is made or brought against Trustor and/or Beneficiary that is subject to the indemnity set forth in this paragraph, Trustor shall resist or defend against the same, if necessary, in the name of Trustee and/or Beneficiary, with attorneys for Trustor's insurance carrier (if the same is covered by insurance) or otherwise by attorneys approved by Beneficiary. Notwithstanding the foregoing, Trustee and Beneficiary, in their reasonable discretion, may engage their own attorneys to resist or defend, or assist therein, and Trustor shall pay, or, on demand, shall reimburse Trustee and Beneficiary for the payment of the reasonable fees and disbursements of said attorneys. The indemnity provided for herein shall survive Trustor's payment of the Loan secured by this Deed of Trust and foreclosure, whether by judicial foreclosure, power of sale pursuant to this Deed of Trust or by deed in lieu of foreclosure. 36. Attornevs' Fees; Costs. Trustor agrees to reimburse Beneficiary for all costs, expenses expert witness and consulting fees and reasonable attorneys' fees that Beneficiary incurs in connection with the realization or enforcement of any obligation or remedy contained in this Deed of Trust, the DDA or the Promissory Note, with or without litigation, including without limitation any costs, expenses and fees incurred: (a) on appeal; (b) in any arbitration or mediation; (c) in any action contesting or seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in which Beneficiary prevails; (d) in any bankruptcy, probate, receivership or other proceeding involving Trustor; and (e) in connection with all negotiations, documentation, and other actions relating to any work-out, compromise, settlement or satisfaction of the debt secured hereby or settlement of any covenants and obligations secured by this Deed of Trust or set forth in the DDA or the Promissory Note. All such costs, expenses and fees shall be due and payable upon demand, shall bear interest from the date incurred through the date of collection at the rate of 10% per annum, and shall be secured by this Deed of Trust. The costs, salary and expenses of the City attorney and members of his office in enforcing this Deed of Trust, the DDA or the Promissory Note on behalf of Agency shall be considered as "attorneys fees" for purpose of this section. 37. Acceptance bv Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record, as provided by law. 38. Successor Trustee. Trustee may resign by an instrument in writing addressed to Beneficiary, or Trustee may be removed at any time with or without cause by an instrument in writing executed by Beneficiary and duly recorded. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute or successor trustee to act instead of Trustee herein named or any substitute or successor trustee, then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor trustee, or a substitute trustee, without other formality than appointment and designation in writing executed and acknowledged by Beneficiary and the recordation of such writing in the office where this Deed of Trust is recorded, and the authority hereby conferred shall extend to the appointment of other successor and substitute trustees successively. Such appointment and designation by Beneficiary shall be full evidence of the right and authority to make the same and of all facts therein recited. If such appointment is executed on behalf of Beneficiary by an officer of Beneficiary, such appointments shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Trustee or any officer of Beneficiary. Upon the making of such appointment and designation, all of the estate and title of Trustee in the Property shall vest in the named successor or substitute trustee and it shall thereupon succeed to and shall hold, possess and execute all the rights, pcMerS, privileges, imnmities and duties here:in conferred upon Trustee; but, Exh. 'E' - 26 nevertheless, upon the written request of Beneficiary or of the successor substitute trustee, the Trustee shall execute and deliver an instrument transferring to such successor or substitute trustee all of the estate and title in the Property of the trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and shall duly assign, transfer and deliver any of the properties and moneys held by the Trustee hereunder to said successor or substitute trustee. All references herein to Trustee shall be deemed to refer to any trustee (including any successor or substitute, appointed and designated, as herein provided) from time to time acting hereunder. Trustor hereby ratifies and confirms any and all acts that Trustee herein named or its successor or successors, substitute or substitutes, in this Deed of Trust, shall do lawfully by virtue hereof. 39. Reconvevance. Upon written request of Beneficiary, stating that all performances and sums secured hereby have been satisfied and paid, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in any reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 40. No Releases. The Property shall not be released from the lien of this Deed of Trust and no person shall be released from liability under the DDA or any other obligation secured hereby, except in the manner herein specified. Without affecting the liability of any other person for the payment and performance of any obligation herein mentioned (including Trustor should it convey said Property) and without affecting the lien or priority hereof upon any Property not released, Beneficiary may, without notice, release any person so liable, extend the maturity or modify the terms of any such obligation, grant other indulgences, make future or other advances to Trustor or anyone or more parties comprising Trustor, assign or in any manner transfer this Deed of Trust, release or reconvey or cause to be released or reconveyed at any time all or part of the said Property described herein, take or release any other security or make compositions or other arrangements with debtors. Beneficiary may also accept additional security, either concurrently herewith or thereafter, and sell same or otherwise realize thereon, either before, concurrently with, or after sale hereunder. 41. Beneficiary's Consents. At any time, upon written request of Trustor, Trustor's payment of Beneficiary's fees and presentation of this Deed of Trust (in case of full reconveyance, for cancellation and retention), without affecting the liability of any person for the payment of the indebtedness, Beneficiary may: (a) consent to the making of any map or plat of said Property; (b) join in granting any easement or creating any restriction thereon, (c) join in any other agreement affecting this Deed of Trust or the lien or charge thereof, and (d) reconvey, without warranty, all or any part of the Property. 42. RESERVED 43. Further Assurances. Trustor, from time to time, within fifteen (15) days after request by Beneficiary, shall execute, acknowledge and deliver to Beneficiary, such chattel mortgages, security agreements or other similar security instruments, in form and substance reasonably satisfactory to Beneficiary, covering all property of any kind whatsoever owned by Exh. "E" - 27 882003: 2151.1 Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is essential to the operation of the Property covered by this Deed of Trust. Trustor shall further, from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement or other document as Beneficiary may reasonably request in order to perfect, preserve, continue, extend or maintain the security interest under, and the priority of, this Deed of Trust and the priority of each such chattel mortgage or other security instrument. Trustor further agrees to pay to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in connection with the preparation, execution, recording, filing and refiling of any such instrument or document, including the charges for examining title and the attorneys' fees for rendering an opinion as to priority of this Deed of Trust and of such chattel mortgage or other security instrument as a valid and subsisting lien. However, neither a request so made by Beneficiary, nor the failure of Beneficiary to make such request shall be construed as a release of such Property, or any part thereof, from the conveyance of title under this Deed of Trust, it being understood and agreed that this covenant and any such chattel mortgage, security agreement or other similar security instrument delivered to Beneficiary are cumulative and given as additional security. 44. Time of Performance. Time is of the essence hereof in connection with all obligations of the Trustor herein and under the DDA and Promissory Note. 45. Notices. The undersigned Trustor requests that a copy of any Notice of Default or Notice of Sale hereunder be mailed to it at its address as hereinbefore set forth. Any notices to be given to Trustor by Beneficiary hereunder shall be sufficient, if personally delivered or mailed, postage prepaid, to the address of the Trustor stated hereinabove, or to such other address that Trustor has requested in writing to Beneficiary. Any time period provided in the giving of any notice hereunder shall commence upon the date such notice is delivered or deposited with the United States Postal Service for delivery by regular first-class postage pre- paid mail, as officially recorded on the certified mail receipt. 46. Beneficiary's Right to Inspect. Beneficiary and its agents and representatives may enter upon the Property at all reasonable times to attend to Beneficiary's interest and to inspect the Property. 47. RESERVED 48. Assignment bv Beneficiarv: Participation. Beneficiary may assign this Deed of Trust in whole or in part to any person and may grant participations in any of its rights under this Deed of Trust, without notice and without affecting Trustor's liability under this Deed of Trust. In connection with any proposed assignment, participation or similar arrangement, Beneficiary may make available to any person all credit and financial data furnished or to be furnished to Beneficiary by Trustor. Trustor agrees to provide to the person designated by Beneficiary any information as such person may reasonably require to form a decision regarding the proposed assignment, participation or other arrangement. Trustor may not assign this Deed of Trust to any person at any time, except in connection with a transaction approved in writing by Beneficiary, under the terms of this Deed of Trust. 49. RESERVED Exh. "E" - 28 882003:2151.1 50. Legal Relationships. The relationship between Beneficiary and Trustor is similar to that of lender and borrower, and no partnership, joint venture, or other similar relationship shall be inferred from this Deed of Trust. Trustor shall not have the right or authority to make representations, to act, or to incur debts or liabilities on behalf of Beneficiary. Trustor is not executing this Deed of Trust as an agent or nominee for an undisclosed principal, and no third party beneficiaries are or shall be created by the execution of this Deed of Trust, other than by the assignment by Beneficiary of this Deed of Trust. 51. RESERVED 52. Modification. This Deed of Trust may be amended, modified, changed or varied only by a written agreement signed by all of the parties hereto. No requirement of this Deed of Trust may be waived, at any time, except in a writing signed by Beneficiary and any such waiver shall be effective only as to its terms and on a single occasion. Neither, Beneficiary's delay or omission in exercising any right, power or remedy under this Deed of Trust upon default of Trustor nor Beneficiary'S failure to insist upon strict performance of any of the covenants or agreements contained in this Deed of Trust shall be construed as a waiver of any such right, power, remedy, covenant or agreement or as an acquiescence in Trustor's breach or default. 53. Successors. Subject to the prohibitions against Trustor'S assignments herein, this Deed of Trust shall inure to the benefit of and bind all of the parties, their successors, estates, heirs, personal representatives and assigns. 54. Partiallnvaliditv. If a court of competent jurisdiction finally determines that any provision of this Deed of Trust is invalid or unenforceable, the court S determination shall not affect the validity or enforceability of the remaining provisions of this Deed of Trust. In such event, this Deed of Trust shall be construed as if it did not contain the particular provision that was determined to be invalid or unenforceable. No such determination shall affect any provision of this Deed of Trust to the extent that it is otherwise enforceable under the laws of any other applicable jurisdiction. 55. Mutual Negotiation. Beneficiary and Trustor confirm that they have mutually negotiated this Deed of Trust and that none of the terms or provisions of this Deed of Trust shall be construed against either party. 56. Paragraph Headings. The paragraph headings are for convenience only and in no way define, limit, extend, or describe the scope or intent of this Deed of Trust or any of its provisions. 57. Applicable Law. This Deed of Trust and the rights of the parties hereunder shall be governed by, construed and enforced in accordance with the laws of the State of California. 58. Entire Agreement. This Deed of Trust, including any exhibits or addenda, contains the entire agreement of the parties with respect to the subject matter hereof Exh. "E" - 29 SB2003:2151.1 59. Countemarts. This Deed of Trust may be executed in two or more counterparts, all of which together shall constitute one and the same instrument and lien. The signature pages of exact copies of this Deed of Trust may be attached to one copy to form one complete document. Additional copies of this Deed of Trust may be executed in counterparts and recorded in two or more counties, all of which shall constitute one and the same instrument and lien. 60. Fixture Filing and Recording. This Deed of Trust constitutes a financing statement filed as a fixture filing under California Commercial Code Section 9502( c), as amended or recodified from time to time. This Deed of Trust is to be recorded in the real estate records of Los Angeles County, California, and covers goods that are, or are to become, fixtures. 61. Survival of Reoresentations and Warranties. All of Trustor's representations and warranties contained in this Deed of Trust shall be true and correct at all times during the term of the Loan secured hereby, until performance of all obligations set forth in the DDA and in the Promissory Note or, alternatively, full repayment of the Loan and release and reconveyance of this Deed of Trust. IN WITNESS WHEREOF, Trustor hereby duly executes this Deed of Trust as of the day and year first above written. TRUSTOR a By: Its By: Its [NOTARY JURATS ATTACHED] EXHIBIT "A" LEGAL DESCRIPTION Exh. "E" - 30 SB2003:2151.1 Exh. "E" - 31 SB2003:2151.1 EXHIBIT "F" AGENCY GRANT DEED [TO COME] [to include reservation of water rights with no rights to surface entry] Exh. "F" - 1 882003:2151.1 EXHIBIT "G" SCHEDULE OF PERFORMANCE (Days shall be calendar days, and all dates herein are subject to change due to force majeure in accordance with Section 7.05 of the Agreement) Agency approval of DO A April _, 2003 Developer shall perform the following after receipt of the relevant govermnental approvals and permits: (a) Commence mass grading the entire Property area (as appropriate) within sixty (60) days after Close of Escrow and approval of master grading plan. (b) Install drainage facilities and utilities, as appropriate, for the development plan. (c) Develop Residences in an orderly fashion based on prevailing market conditions. It is intended that 50-100 Residences will be developed initially with the balance to be completed within five (5) years after the Closing Date. (d) Mass grading will commence within 60 days after the approval of a master grading plan. Exh. "G" - I SB2Q03:2151.1 EXHIBIT "H" FORM OF CERTIFICATE OF COMPLETION We, , the Executive Director and the Assistant Secretary of the Redevelopment Agency of the City of San Bernardino (the "Agency") hereby certify as follows: By its Resolution No. _, adopted and approved resolved as follows: , 200_, the Agency has Section 1. The improvements required to be constructed in accordance with that certain Disposition and Development Agreement (the "Agreement") dated , by and between the Agency and Jr. Watson & Associates Development Co., a California corporation or its Approved Assignee as defined in the Agreement (the "Developer") on that certain real property more fully described in Exhibit "A" attached hereto and incorporated herein by this reference (the "Property"), 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 buildings and their use and occupancy on the Property, 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 containing 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 201 North "E" Street, Suite 301, San Bernardino, California, during regular business hours. DATED AND ISSUED this _ day of ,200_. Executive Director ATTEST: Assistant Secretary Exh. "H" - 1 882003:2151.1 CITY OF SAN BERNARDINO Interoffice Memorandum CITY CLERK'S OFFICE Records and Information Management (RIM) Program DATE: June 6, 2003 TO: Margaret Parker, Secretary FROM: Michelle Taylor, Senior Secretary RE: Resolution CDC/2003-20 At the Mayor and Common Council meeting of June 2, 2003, the City of San Bernardino adopted Resolution CDC/2003-20 - Resolution... approving that certain disposition and development agreement by and between the Redevelopment Agency and JR. Watson & Associates Development Co. Please obtain all signatures and return the original agreement to the City Clerk's Office. If you have any questions, please do not hesitate to contact me at ex!. 3206. Thank you. Michelle Taylor Senior Secretary I hereby acknowledge receipt of this memorandum. Signed: 711/}:://.!/,,';M4.R.M-J / / 6/';2(' /er?; , / Please sign and return Date: t . CITY OF SAN BERNARDINO Interoffice Memorandum CITY CLERK'S OFFICE Records and Information Management (RIM) Program DATE: June 6, 2003 TO: Margaret Parker, Secretary FROM: Michelle Taylor, Senior Secretary RE: Resolution 2003-120 At the Mayor and Common Council meeting of June 2, 2003, the City of San Bernardino adopted Resolution 2003-120 - Resolution approving that certain purchase and sale agreement by and between the City of San Bernardino and the Redevelopment Agency relating to property located at the northwest corner of University Parkway and Northpark Boulevard. Please obtain all signatures and return the original agreement to the City Clerk's Office. If you have any questions, please do not hesitate to contact me at ext. 3206. Thank you. Michelle Taylor Senior Secretary I hereby acknowledge receipt of this memorandum. Signed: /J /h'j}1U/ ;f}dl'4. / ~':k & ';;c (13 I I Please sign and return Date: ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO INTER-OFFICE MEMORANDUM SUBJECT: Michelle Taylor, Senior Secretary, Clerk's Office ~) _1,1 I Margaret Parker, Secretary Executed Agreement TO: FROM: DATE: July 7,2003 Enclosed is the fully executed Agreement pertaining to the following resolutions: CDC/2003-20,2003-120 2003 Disposition and Development Agreement by and between Redevelopment Agency of the City of San Bernardino and J.R. Watson & Associates Development Co. Thank you, Margaret Encl: Original Agreement cc: Barbara Lindseth (with Original Agreement) Musibau Arogundade (with Copy of Agreement) Barbara Sharp (with Copy of Agreement) ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO INTER-OFFICE MEMORANDUM FROM: Michelle Taylor, Senior Secretary, City Clerk ~'\ f Margaret Parker, Secretary TO: SUBJECT: Executed Documents DATE: July 22, 2003 Enclosed is a copy of the fully executed Agreement pertaining to the following resolution: 2003-120 Purchase and Sale Agreement (Parcels Located at Northwest Comer of University Parkway and Northpark Boulevard) I have also enclosed a copy ofthe executed Amended Commitment Schedule for Note No. B-94- MC-06-0539-A which was adopted at the Council meeting of July 21,2003 (Agenda Item No. 16). Let me know if you have any questions. Thank you, Margaret Enclosures cc: Barbara Lindseth (with enclosures) Barbara Sharp (with enclosures) Musibau Arogundade (with copy of Purchase and Sale Agreement) ,. ** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT ** RESOLUTION AGENDA ITEM TRACKING FORM Meeting Date (Date Adopted): ~- '2- (;"3 Vote: Ayes 1- 'l Nays R 22. A Item # ..(3- Abstain Change to motion to amend original documents: Reso. # On Attachments: ~ Contract term: -- Note on Resolution of Attachment stored separately: ~ Direct City Clerk to (circle 1): PUBLISH, POST, RECORD W/COUNTY ,. <.0 - .it -C) ~~ Date Sent to Mayor: Date of Mayor's Signature: (.,,4 -05 Date ofClerk/CDC Signature: (". 5' c, -"', Resolution # c. {X:.. I Z C.D3 - d () . ..(---) Absent B :3C:~. -ZC05 - I d- 0 Null/Void After: &0 {)i'~:" I ~ -(-O'S By: - Reso. Log Updated: Seal Impressed: ./' -- Date Memo/Letter Sent for Signature: 60 Day Reminder Letter Sent on 30th day: 90 Day Reminder Letter Sent on 45th day: See Attached:;/' Date Returned: I). lS.a .;;; See Attached: See Attached: Co -f,," c<~ Request for Council Action & Staff Report Attached: Updated Prior Resolutions (Other Than Below): Updated CITY Personuel Folders (6413, 6429, 6433, 10584, 10585, 12634): Updated CDC Personnel Folders (5557): Updated Traffic Folders (3985, 8234, 655, 92-389): Copies Distributed to: City Attorney Parks & Rec. Code Compliance Dev. Services Police Public Services Water Notes: YesL No By Yes No..L By Yes NoL By Yes No ..L By Yes No ..L B FDA / MIS Finance Others: BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.) Ready to File: _ Date: Revised 01/12/01 '! " ** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT ** RESOLUTION AGENDA ITEM TRACKING FORM See Attached: ,,/ Date Returned: 1\-" - 0 <-, See Attached: See Attached: Meeting Date (Date Adopted): (, - Z - C'5 Item # fZ 2 Z C, Vote: Ayes I -', Nays e- Abstain Change to motion to amend original documents: Reso, # On Attachments: ~ Contract term: Note on Resolution of Attachment stored separately: ~ Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY By: ~, (,-~-Q3 Date Sent to Mayor: Date of Mayor's Signature: (" - ,\-03 Date of Clerk/CDC Signature: (0 -- :5-<,,2';> Date Memo/Letter Sent for Signature: I,; -(,_ -0"'> 60 Day Reminder Letter Sent on 30th day: 90 Day Reminder Letter Sent on 45th day: Request for Council Action & Staff Report Attached: Updated Prior Resolutions (Other Than Below): Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634): Updated CDC Personnel Folders (5557): Updated Traffic Folders (3985, 8234, 655,92-389): Copies Distribnted to: City Attorney / Parks & Rec, Code Compliance Dev. Services Water Public Services Police Notes: Resolution # 2co3 - \ 2' 0 ~ Absent &- ~'5:E- c DC /20<::) 3 -2 0 1 Null/Void After:!.::: () DP>'1.J / IS' -1-0_-'3 , Reso, Log Updated: Seal Impressed: .,/ /"" Yes--..L- No By Yes No~ By_ Yes No-L B Yes No.--L B Yes NoL B EDA ./ MIS Finance Others: BEFORE FILING, REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term, etc,) Ready to File: _ Date: Revised 01/12/01